Friday, November 03, 2017

So.... about those H1Bs

Everyone loves to hate H1Bs.

They take American jobs, they work longer hours for less money, they speak in strange languages, they eat weird foods that make the cafeteria smell, they drive badly, they don't understand our culture, etc... etc...

Far be it from me to grudge you a pet peeve, but here is some stuff about H1Bs you might not hate quite so much.

(If you are Steve Bannon, then you kind of hate everyone and everything cause you are just that way... so this won't make much difference to you).

1) H1Bs were hired because Gen X didn't have enough manpower - As the US became more prosperous, it became very expensive to manufacture in the US. As heavy industry left, the US economy became more dependent on software driven growth. There simply weren't enough people in Gen X or Baby Boomer Cohort II to meet the demand for software programmers. That's why so many H1Bs were hired. This injection of cheap labor allowed the US economy to remain viable even though industrial production shifted overseas.

2) H1Bs are like cheap oil (the US can't do without it) - Today there are a lot of Gen Y/Z people, so you might expect that the H1B intake reduces, but it won't - because H1Bs are the "cheap oil" of the labor market. Even with the pressure on the labor market from millions of millenials entering the workforce, the price of the labor in the US will remain high. This has nothing to do with "avocado toast" type factors, but with the cost of education in the US. With the USG spending so much money on entitlements for its aging Boomer population, it can't afford to fund the large numbers of educational institutions need to train all the millennials. So Gen Y/Z ends up bearing a greater fraction of the cost of education, this raises the cost associated with hiring a millennial. With high ranking execs demanding high raises and salaries, it is not possible to pay a large workforce comprised of poorly trained millennials. With boomers expecting their IRAs to keep growing forever, companies have to keep showing rising profits. So the only option is to get cheap labor - i.e. H1Bs or outsourcing.

3) H1Bs buy houses at inflated prices - This would seem like something you could use against them, but this is actually good for the US. When H1Bs buy houses, they often do so with cash they have earned here or with money they have converted to dollars from whatever they may have inherited from elsewhere. This is an effective wealth transfer from their home country to the US.

4) H1Bs pay social security and taxes even if they don't stick around to collect them - As so many H1Bs go back to their country after a few years, they never collect on the social security and medicare contributions they have made. This ensures that aging Boomers have more of a social security and medicare benefits than they would have had if they had if the same benefits had been paid by Gen Y/Z workers.

5) H1Bs pay visa processing fees - For every application that is made for an H1 visa, the US treasury gets a nice chunk of fees. These fees allegedly go towards paying most of the processing costs but there is plenty left over.

Now before you start with "its not about legal immigrants - it's about illegal immigrants" - Actually the same thing works in a modified form for illegal immigrants. They aren't going away any time soon either unless robots become a thing - and you will need cheap H1B labor to make robots happen... etc.. .etc... etc...

I can't make people stop hating the H1B system - there is always going to be something people don't like about it. Someone somewhere is always going to lose a job or a sense of job security from this kind of import.

That said - if you want to end this program - then you should recall the parable of the goose that laid golden eggs.


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