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U.S. should import more skilled workers
Commentator Will Wilkinson
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TEXT OF COMMENTARY
Scott Jagow: A new report says that within seven years, the U.S. needs hundreds of thousands of new graduates in math and science fields. That's to keep up with the rest of the world.
But commentator Will Wilkinson says an advanced degree in science won't necessarily protect Americans from cut-throat competition.
Will Wilkinson: If you're a highly-skilled worker, America needs you. But if you've got a foreign passport, we probably won't let you in.
The U.S. issues only 65,000 H-1B visas for skilled workers each year and that's not very many. Senators McCain and Obama have both said they would support raising the cap. They acknowledge we need more skilled workers, and they're right. Yes, it would be good for innovation and growth and it would bring down the prices of goods created by skilled workers, but here's another reason you might not have thought of: Wage inequality.
Increases in wage inequality over the past few decades is primarily a story of the supply and demand of skilled labor together with the effects of technological innovation. Wage increases tend to track improvements in the productivity of labor and gains in productivity tend to be driven by innovations that help workers do more in less time. But in recent decades, technical innovation has increased the productivity of more highly-educated workers faster than it has for less-educated workers. These growing inequalities in productivity have helped create growing inequalities in wages.
But that's not the whole story. The American system of higher education produces skilled workers too slowly to keep up with the demand. This scarcity in the supply bids up the wages of the well-educated even more, further widening the wage gap. If we raised visa quotas on skilled labor, that would help bring supply in line with demand and reduce the wage gap between more and less skilled workers.
These days, almost everybody but their beneficiaries think agricultural subsidies are a lousy idea. They benefit a few already relatively wealthy American farmers and agribusiness firms to the detriment of poor farmers around the world. But H-1B visa restrictions are subsidies that benefit relatively rich domestic workers over their poorer foreign peers, and so it turns out many of us liberal-minded college grads are enjoying our own protectionist boost.
In this case, it seems the moral outrage is... well, we seem to be keeping it to ourselves.
Jagow: Will Wilkinson is a research fellow at the Cato Institute.
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I'm surprised no one else agrees with Will. who among us doesn't shop around for the best price. If the same stereo costs $20 less at Best Buy than at Circuit City, where are you going to buy it? Do you care about the employees at Circuit City? Why not? Who benefits from the lower prices? You do. What if virtually the same server can be bought from Dell (in TX) that can be bought from HP (in CA) but for $200 less? Where will you buy the server? Would your answer change if you lived in CA? A lot of you are saying it has nothing to do with supply and demand, that it's all about price. Well, price has a lot to do with demand and supply. In fact, price is the reflection of supply and demand. If you restrict the supply of a good or service, you distort its price. In this case, by restricting the supply of foreign workers, you distort the price of the service they provide upward, forcing everyone else to pay more. You subsidize those that would compete against them at the expense of everyone else.
The DOL states in their Strategic Plan for 2006-2001: "...H-1B workers may be hired even when a qualified U.S. worker wants the job, and a U.S. worker can be displaced from the job in favor of the foreign worker."
This in not competition. The H-1b visa-hiring program never requires employers to consider local talent: US citizens and green card holders.
Allowing this type of employer behavior means that no matter how talented, no matter how many degrees we have, the American Dream of opportunity, merit, and the pursuit of happiness will remain behind the very real barrier of employment discrimination.
"Increases in wage inequality over the past few decades is primarily a story of the supply and demand of skilled labor"
since when is the cato institute an advocate of socialism?
wasn't the cato institute founded by Charles Koch, a liberatarian who believes firmly in letting supply and demand determine price?
or does cato only believe in free markets when workers are on the losing end?
Mr. Wilkinson's argument that we should attack wage inequality in this country by issuing more H-1B visas to foreign workers is the silliest argument I've ever heard on Market Place. Rather then increase the wages of the less skilled by increasing their skill level, he wants to reduce the wages of skilled workers, by importing highly trained workers from other countries. These other countries have spent scarce resources to train those workers for jobs badly needed in their own economies. In effect Mr. Wilkinson's proposal amounts to the short sighted suggestion we source education to other economies. Why should America bother to educate its own citizens if we can import educated workers more cheaply then growing them at home? After all, it takes just as long to educate a PhD in India or China as it does in America. [And we don't have to spend any tax money to school these imports]
7/16/2008: I had to shake my head as I listened to your Marketplace report this morning. For 25 years, I've watched as my husband, who has a Ph.D. in chemistry, struggles to find steady work in his chosen field -- a soft-money research fellowship here, a teaching position there. He has been forced to look outside chemistry to make a living, and I live with his disappointment every day. Please don't tell me there's a shortage of highly skilled workers.
You're damn right! I'm actually in agreement with the proposal to selectively increase immigration limits for high-value occupations and organizations. Having these Phds and other professionals immigrate will not threaten me or my career, they will help grow the country and allow America to play a leading role in the inevitable efficiencies to be gained from planetary integration.
Fareed Zakaria makes somewhat the same case in his new book. America has exhausted its natural resources and we are in debt for generations to come. China is in the ascendancy.
America's survival depends on attracting the world's best and brightest individuals to live here. We are not animals who have to fight over a piece of carcass. If ever a country was founded with the potential to unite the world, it was the United States.
An attitude of exclusion is not the American tradition. Not unless you agree with hillbilly intermarriage. The paranoid and provincial reactions to this story are the old Pat Buchanan politics, extreme and unwarranted. They will not stand in the way of inevitable progress, whether it comes by choice or by necessity.
Will needs to get his facts straight. Engineering and Science compensation has been falling since the 1970's inspite of the large increases in productivity he mentions.
I find it very odd too, that he finds the income disparity between skilled and unskilled workers so onerous. Remember wage earners are also consumers. A consumption based economy cannot survive if everyone is too poor to buy anything.
Is Will not aware of the enormous compensation differences between management and workers? CEO pay is now over 400 times that of the lowest paid employee. That number is, to me, revolting. Does that bother Will, too?
Maybe we need to raise visa quotas for CEOs.
Taken to its logical extreme slavery is the end of the cheap labor game. Is that what Will is advocating?
One solution to ensure that foreign skilled worker compensation does not undercut native skilled worker compensation is to set up an auction system for H-1B visas. The current market compensation would serve as the minimum allowable bid. A company that wished to employ a foreign skilled worker, would have to offer a bid that was at least as high as the minimum allowable bid. With the limited number of H-1B visas for foreign workers, companies would need to offer better compensation than the going rate in order to have a chance at hiring the foreign skilled worker. Each auction would take place within a well-defined occupational category. This would drive skilled worker compensation up, not down.
Why are you giving time to the corporate shiil -The Cato Institute, and promoting these lies?
Not one person agrees with the need for H1-B's. Prior to the last time an increased passed, members of congress were told there was not going to be a vote and went home . a Few members stayed and it passed secretly.
This about supply and demand. Increase supply, pay lower wages. Why don't you interview Jim Matloff or some of the displaced workers whose complaints and plight is dismissed as "anedotecal".
Lets do the math 65,000 * 6 (years the visa is valid) = 390,000 . So 200,000 mobile people doing what you do, stragetically placed in your market area, who get paid $20.00 hour brings YOUR salary to - guess what ?
Keep the lies and misinformation out of the media unless you are also prepared to present the other side. If I wanted the corporate dogma, I would listen to the television news
While I normally agree with the free market principles espoused by CATO, as a victim of insufficiently metered immigration for all reasons, I disagree. In the year 2000 when IT salaries were 20% higher than now (in spite of the dollar being worth 20% more) there were no ill effects on the economy. Workers in every field found their wages rising, and employers treated their employees great. And corporations were prospering in spite of paying well. Today? C'mon? The reason things are much worse: hundreds of thousands of H1-b workers who have lowered salaries in real terms by about 50%. Would Mr. Wilkinson like to go back to his 1997 salary for principle?
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