I'm currently involved with immigrating to Canada as a skilled worker, and I've previously worked in the US on multiple J1 visas, and applied for a H1B.
My take on all of this is that bringing in foreigners in this way destroys the whole supply and demand setup of jobs and employees.
As an example, let's say company A wants to hire a salaried employee for $x. After 6 months of not finding anyone, they should offer more money, etc. until eventually someone is found. If this is across the country for a given profession, then more students will be educated in that field, and the supply of employees will match the demand that has grown and salaries will go up and down in relation to how well the supply matches the demand.
With programs like the H1B and similar, when Company A doesn't find an employee for $x, they don't have to offer more money, they just bring in someone from overseas. In this way Company A is getting employees for less than the supply/demand equation says it should be able to in their local country.
This means Company A makes bigger profits, and people inside the given country are now earning a lower wage than they otherwise should be if Company A had to raise salaries because of a lack of supply of employees for the demand in the given field.
Here in Canada it happens all the time. All the big players (McDonalds, Wal-Mart, KFC, etc.) have an agreement with the govt. where they don't even have to go through the process to hire a foreign worker, it's automatically rubber stamped. When they can't find a local to work for minimum wage, they just bring in a foreigner to do it. So now even though there is not a supply of Canadians willing to work at KFC for minimum wage, KFC can fill those positions, have higher profits, and there are thousands (millions?) of people living in Canada with a standard of living below that which the average Canadian will accept. In my town tehre are lots of foreigners living 10 to a house because they don't earn enough money to do it any other way.
This is not a good thing for a country, or the people in it. It is a good thing for the big companies that now make bigger profits, thanks to being able to get employees at a lower salary.
The problem is that reality is messy. There are a lot of factors that gunk up a good theory. Higher demand can lead to higher wages if we restrict immigration, but if American students raw out of highschool are not thinking 5 to 10 years into their future when they pick a major, supply is not going to jump like the growing industry needs it to.
The issue is compounded when popular media artificially lowers the level of "glamor" in the industry. Shows like The Big Bang Theory are entertaining, but I don't think many people watch them and say "that is what I want to be a part of".
Now, of course individual companies can spike their salaries and pull in talented programmers, but I think most of those will be cannibalized from other companies. If supply is dwindling then raising wages can work for individual companies, but not I think for the industry as a whole.
> If supply is dwindling then raising wages can work for individual companies, but not I think for the industry as a whole.
It's interesting you look at this from the perspective of benefiting the companies. My discussion was about the lack of benefit to the employees and people in the country in general.
> supply is not going to jump like the growing industry needs it to.
Industry only needs supply to jump fast so that profits can jump fast. Let's face it, if Apple can't get enough Software Engineers fast enough, iOS 7 might be delayed and profits might be reduced, but they're not going to fail because they can't get enough good employees fast enough.
The approach of bringing in foreigners absolutely supports faster growth for the companies, and higher profits for the companies, but it's not doing anything to help employees or the people in that country on the whole.
Is it really worth lowering the overall wages and standard of living of people in your own country so that the companies can make higher profits faster?
Have you spent any time in developing and undeveloped countries? Do you have any idea what would happen to your life if we averaged out the standard of living across all countries?
After living in Ecuador, Bolivia, Peru, etc for years, I honestly believe the majority of people in the developed world would die if they were forced to live like that.
> The immigrant will either spend or invest his pay.
This is flawed logic for two reasons:
1. As I'm an immigrant here myself, I have a lot of friends that are also immigrants, although most are of the kind I discussed, working minimum wage for the Wal-Marts of the world. I can guarantee you, they send every penny they can spare to their family in their home country, and themselves live in second world conditions (10 to a house, eating rice for every meal, hand washing clothes, absolute minimum heat in the winter etc. etc.) so they are spending extremely little. A local person earning that same money would be spending/investing more.
2. These immigrants are earning $x, likely minimum wage. So they only at most $x to spend or invest. The employer would have had to increase wages to $x+y to attract a local, so that local would be spending or investing $x+y, which would be better for the economy.
Bringing in people to work for less money than a local person would do it only helps the company increase profit.
About 1: Either the money comes back to the US eventually, or if it doesn't, the Fed can just run slightly looser monetary policy.
About 2: The solution is of course, to set up a second firm to compete with the first one. The wages saved should thus eventually go away from being excess profit to making prices cheaper for the consumer.
> Either the money comes back to the US eventually, or if it doesn't
That may be the most superfluous statement I've ever read.
> The solution is of course, to set up a second firm to compete with the first one. The wages saved should thus eventually go away from being excess profit to making prices cheaper for the consumer.
And it will put every local person out of a job, or force them to work for a wage lower than they were willing to accept in the first place, thus driving down minimum wage. That's a great way to turn your country into a developing one.
> And it will put every local person out of a job, or force them to work for a wage lower than they were willing to accept in the first place, thus driving down minimum wage. That's a great way to turn your country into a developing one.
I can't tell if you're trolling or not, either.
I hope, you know, wages are high in the rich world because of high productivity (in sectors that produce tradeable goods)? Not because we have _not_ allowed foreigners to come in. (And if I lived in a country where that was the case, I'd be off for a less fragile economy within days.)
Immigration used to be much easier in Europe and the USA in the 19th century. When those countries first became great.
Full disclosure: I am leaving Europe for Singapore. A country with a very business-friendly immigration policy.
> That's a great way to turn your country into a developing one.
Poland and a few other countries to the east of Germany joined the EU. Their inhabitants now have the right to work everywhere in the EU. Did wages in the rest of the rich parts of the EU fall down to Polish levels? No.
They did not fall significantly at all (although in some countries wages stagnated much like in the US). Self-employed wages (plumbers being a common example) may have fallen, but salaried rates did not seem to in aggregate. I hired many people from Poland, as they were very good and well qualified, but did not pay them less. Offshoring still pays less, so that is common too, but then the cost of living is still less in those countries.
Thanks, Justin! Yes, e.g. German wages haven fallen due to the EU expansion. If at all, the German labour market is stronger than before. (But there are other confounding factors, like broader labour market reforms that provided some much needed flexibility. Also Germany did not really have a minimum wage, and now they introduced something like it. (I'm not too current on that. Wikipedia probably knows more.))
I'm also working with lots of Polish people. (And I won't even escape them in Singapore.)
>> Either the money comes back to the US eventually, or if it doesn't
> That may be the most superfluous statement I've ever read.
To elaborate: Either the money comes back into the US, then it doesn't matter for aggregate demand that it was sent out as remittance first. Or, if the money doesn't come back, then the Fed can just react by printing more money. (And the American public profits by getting some labour just for some pieces of paper---or more accurately, for some entries in a database.)
My take on all of this is that bringing in foreigners in this way destroys the whole supply and demand setup of jobs and employees.
As an example, let's say company A wants to hire a salaried employee for $x. After 6 months of not finding anyone, they should offer more money, etc. until eventually someone is found. If this is across the country for a given profession, then more students will be educated in that field, and the supply of employees will match the demand that has grown and salaries will go up and down in relation to how well the supply matches the demand.
With programs like the H1B and similar, when Company A doesn't find an employee for $x, they don't have to offer more money, they just bring in someone from overseas. In this way Company A is getting employees for less than the supply/demand equation says it should be able to in their local country.
This means Company A makes bigger profits, and people inside the given country are now earning a lower wage than they otherwise should be if Company A had to raise salaries because of a lack of supply of employees for the demand in the given field.
Here in Canada it happens all the time. All the big players (McDonalds, Wal-Mart, KFC, etc.) have an agreement with the govt. where they don't even have to go through the process to hire a foreign worker, it's automatically rubber stamped. When they can't find a local to work for minimum wage, they just bring in a foreigner to do it. So now even though there is not a supply of Canadians willing to work at KFC for minimum wage, KFC can fill those positions, have higher profits, and there are thousands (millions?) of people living in Canada with a standard of living below that which the average Canadian will accept. In my town tehre are lots of foreigners living 10 to a house because they don't earn enough money to do it any other way.
This is not a good thing for a country, or the people in it. It is a good thing for the big companies that now make bigger profits, thanks to being able to get employees at a lower salary.