Employer power, high-skill immigration and what we're really talking about There's a lot I disagree with in Ross Eisenbrey's NYT piece on high-skilled immigration, but I'll start with this: The bill's authors, led by Senator Orrin G. Hatch, Republican of Utah, argue that America would benefit from letting more immigrants trained in science, technology, engineering and math work in the country, with the sponsorship of high-tech companies like Microsoft and I.B.M. ... But the opposite is the case: the bill would flood the job market with indentured foreign workers, people who could not switch employers to improve their wages or working conditions; damage the employment prospects of hundreds of thousands of skilled Americans; and narrow the educational pipeline that produces these skilled workers domestically. ... Moreover, too many are paid at wages below the average for their occupation and location: over half of all H-1B guest workers are certified for wages in the bottom quarter of the wage scale. Bringing over more - there are already 500,000 workers on H-1B visas - would obviously darken job prospects for America's struggling young scientists and engineers. Eisenbrey is probably right that employers have too much power in the current system. But surely the solution then is to reduce their power rather than restricting immigration and all the benefits that come with it. This is one of the reasons that the Peri-Orrenius-Zavodny idea for a visa flexible-cap and trade system is so attractive. By embracing market forces and allowing employee portability, it increases protections for both foreign workers (who can move freely across firms that hold H-1Bs, which they can buy at auction) and US-born workers (because the cost of the permit means that hiring a foreign worker for the same job is slightly more expensive). Assuming we're not going to get that, I'd rather the US simply increase the number of H1Bs and green cards without narrowly targeting STEM workers for more visas. Yet even if we do target STEM workers, which already account for the majority of annual H-1Bs granted anyways, then limiting immigration for fear that it will disincentivise Americans from studying in these fields still seems like wrongheaded logic. For one thing, how big a problem are we talking about? I don't know where Eisenbrey is getting his data from when he says that "over half of all H-1B guest workers are certified for wages in the bottom quarter of the wage scale." He doesn't say and there is no link embedded. Pages 16-18 of the Characteristics of H-1B Specialty Occupation Workers from the Department of Homeland Security list the mean and median incomes by profession for H-1B recipients in 2011. The median income for initial employment of all H-1B employees is $62,000, and it's even higher in the STEM categories. More than three-quarters of these incomes are above $53,000. And the median rises to $75,000 for continuing employment H-1B holders. The median income for a native-born US household in 2011 was $50,801. This isn't a good comparison - the US number includes both high- and low-skilled native-born workers, and we would need to compare across job categories anyways, as Eisenbrey notes. But in that case, he also needs to adjust for experience and credentials and other criteria: immigrants tend to be younger, so it doesn't make sense to compare mid-career computer scientists born in the US against recent grads. The point, though, is that these incomes aren't exactly poverty-level, and there's a limit as to how abusive employers can be in most high-skilled jobs. Since there is nothing stopping foreign workers (in particular those who command salaries like these) from moving back to their home countries or elsewhere, I think it can be safely assumed that they're choosing to stay here. At the very least, Eisenbrey's "indentured" label is a massive and frankly irresponsible exaggeration - especially since the US is not the only developed country that wants these workers. But the real problem with Eisenbrey's conclusion can be shown via reductio ad absurdum. I'm not usually a fan of these, but in this case I think it's instructive. Assume that starting tomorrow, the US forced the evacuation of, say, half the country's foreign-born STEM workers on top of ending the H-1B program entirely. There would instantly be huge employer demand for those STEM workers still in the US and consequently tremendous wage inflation in these jobs. The price signal might even incentivise a big share of liberal arts majors to stop drafting novels and start cranking out code. Great. And the result is that: 1) The US economy has shrunk because there are fewer people making stuff and doing things, 2) Its productive capacity is diminished because that's what happens when you remove immigrants from job sectors where they have imperfect substitutability with native-born workers. This is true mainly of very low-skill jobs and very high-skill jobs of the kind we're talking about here. 3) The foreign workers end up somewhere else, and despite Eisenbrey's touching concern that they not be indentured here, they end up having to move to to a country where they will likely be paid less. And since the US doesn't want them anymore, this actually increases the indenturing power of the non-US employer that does get them. 4) Some US students who would have otherwise trained to be writers or graphic designers end up studying physics or computer science. 5) It becomes a less interesting and diverse economy (we get fewer novels, and no I don't mean that flippantly). All of these results would be true in kind if the US just restricts the immigration of STEM workers, as Eisenbrey desires - only the scale would differ. Again, I think it would be much better to allow more broad-based immigration without attempting to single out sectors for either temporary visas (H-1Bs) or permanent residency (green cards). Doing so would remove the skewed incentives that are reasonable to complain about. But I also think that even a flawed policy of singling out STEM workers and allowing them to compete in these fields is better than the status quo, which restricts their numbers and, for that matter, the numbers of all other kinds of immigrants. (The recent frameworks from the President and Senators recommend automatically giving green to workers with advanced degrees in STEM fields, which presumably would also open up space for more non-STEM grads to get the temporary H-1Bs. Could be better but it's still an improvement.) But even if one disagrees on the merits of these approaches, it's simply wrong to ominously warn that allowing in more foreigners would "darken job prospects for America's struggling young scientists and engineers," without explaining what that means. Yet Eisenbrey adds this: But [bringing over more STEM workers] would also hurt our efforts to produce more: if the message to American students is, "Don't bother working hard for a high-tech degree, because we can import someone to do the job for less," we could do significant long-term damage to the high-tech educational system we value so dearly. The last sentence contradicts itself. If the US is importing foreign workers to do the same jobs for less, then how is it that the country overall will produce less? By Eisenbrey's own assumptions it will quite obviously produce more, unless he thinks that the native-born workers who would otherwise have taken those jobs will produce absolutely nothing else in another job. And that is self-evidently ridiculous. But his basic argument he is saying is that having more workers compete for a given job lowers the ultimate cost for the employer of offering that job. The whole point of the lump of labour fallacy is that the labour market isn't static in this way - more people doesn't just mean more competition for the same jobs, it also means a bigger economy with more innovation-producing interactions and ultimately more jobs of other kinds. Eisenbrey doesn't buy this, whereas proponents of a more-liberalised immigration policy do buy it (the latter obviously including me). That's really what the economic debates around immigration almost always boil down to, and issues of employer abuse and the like are subsets of this more fundamental disagreement.