There is no good reason for this

by on February 11, 2009 at 11:32 am in Law | Permalink

Thomas Friedman reports:

…the U.S. Senate unfortunately voted on Feb. 6 to restrict banks and
other financial institutions that receive taxpayer bailout money from
hiring high-skilled immigrants on temporary work permits known as H-1B

It is, however, another unintended consequence of bail-outs and we can expect riders like this to increase as the amount of money spent is increased.

1 thehova February 11, 2009 at 11:43 am

wow. What’s the rational behind such a restriction. ugghhhh.

2 Half Sigma February 11, 2009 at 12:13 pm

God forbid that American taxpayer funds be used to hire Americans.

3 svend February 11, 2009 at 12:15 pm

ahem, that should be “working class”, not “world class”.

4 John Thacker February 11, 2009 at 12:17 pm

The amendment was sponsored by Sen. Grassley (R-IA) and Sen. Sanders (Socialist-VT). It appears to have been adopted via voice vote, so there’s no rollcall.

The rationale is the same as the rationale behind “Buy American,” presumably. Like Professor Cowen, I’d expect more of this.

5 jim February 11, 2009 at 12:25 pm
6 Deepak Jois February 11, 2009 at 12:27 pm

Interesingly, this might actually be a *good* thing for tech workers hoping to work in US, who now stand a bigger chance of getting through in the H1B lottery.

7 babar February 11, 2009 at 12:45 pm

i’m sure there are plenty of ways of getting around it — like outsourcing to a US based contractor with one employee.

8 Floyd B. Pishko February 11, 2009 at 12:52 pm

I’m an H1-B worker and have been on some form of H1-B or OPT over the past 6 years and pay my taxes diligently every year. I object to _my_ taxpayer money being used with that restriction attached.

9 Anthony February 11, 2009 at 1:34 pm

There is a good argument for limiting (and more importantly, modifying) the H1-B system. But that should be done separatly, in the open, and not tucked into a rider in the bailout.

On the other hand, if the bailout doesn’t restrict the number of H1-Bs overall, that increases the number of H1-Bs available for productive, profitable industries in the U.S., which seems like a gain.

10 holmegm February 11, 2009 at 2:42 pm

Wow – you mean as government expands more, we get more arbitrary regulations? Who could have predicted this?!?

Every day is filled with such childlike wonder for the left 🙂

11 agm February 11, 2009 at 2:57 pm

There is no good reason reason that accords with my economics and politics for this…

Given that we are openly in the stage of throwing stuff at the wall and hoping something sticks in terms of bailouts anyways, it’s never too early to start prepping for the next election season.

12 Colin Danby February 11, 2009 at 3:15 pm

As a native-born American, I have far more in common with hard-working, tax-paying H-1B workers than with nativists, of any country.

13 LZ February 11, 2009 at 3:22 pm

Randal, your so-called “large global corps” do not have to use H-1B visas. They could just as easily open a research center in Bangalore or Shanghai and hire the same people, who then do not pay American taxes. With H-1B visas, those people pay American taxes, help American companies, buy American products, and otherwise support America. When they get old, they return to their home countries, so Social Security gets a double benefit.

Supply does create its own demand because helping American companies allows them to invest more, and American companies are much more likely to hire American citizens (though not exclusively) than companies from other countries when making their investment decisions.

But let’s just assume the world economy is a zero sum game, believe that world economy never expands, and pretend that there is no competition in the global stage.

14 Joen February 11, 2009 at 3:42 pm

“The only people FOR h1-B visas are

1. The uninformed
2. Bill Gates and large global corps playing wage arbitrage
3. Recipients of h1-b visas”

I’m a US citizen. I’m informed. I’m not Bill Gates (I want to agree with you on this one but I can’t). I’m in favor of H-1B visas. Hence your statement is false.

15 Barkley Rosser February 11, 2009 at 4:12 pm

OK, so sure, this restriction is pretty arbitrary and silly at some level.
But, is anybody out there at this juncture going to seriously argue that
the increase in the ratio of CEO pay to bottom tier worker pay in the US
from about 42 to one in 1982 to somewhere between 275 and 531 to one (or
probably about an increase by an order of magnitude, this seems to be the
current range of estimates) is really defensible when the ratio in UK is
25 to one, and in Germany and Japan respectively 11 to one and 10 to one?

If anybody out there wants to argue that the US market for CEOs is some kind
of poster boy for free market competition and Pareto efficiency, well, I
have this bridge somewhere that…

16 Ami February 11, 2009 at 4:45 pm

I’m a American born tech worker, with H1B and green card tech worker friends. I agree the H1B limitations tying visas to particular jobs put the workers at a disadvantage and therefore make them more exploitable/lower cost. But the fact that I think H1B is rigged to favor corporations over employees doesn’t mean I support restricting the flow of foreign-born workers. Basically I believe the distinction between American citizen and non-American citizen shouldn’t be a factor in my ethical calculations and believe that, given a level playing field and functioning markets, letting the market allocate jobs/employees will result in the most efficient use of labor to provide the most benefit to society. Of course it is more complex than that, politically I also support some loss of efficiency in order to reduce inequality (no I don’t like that CEO wages are so inflated, though I think there’s more to it than simply capping them), but that’s a different issue entirely. By restricting free flow of labor, we are perpetuating inequality, not reducing it.

17 hern February 11, 2009 at 7:18 pm

its not bad at all, its good. that way those foreigners dont enter the country and take our jobs and not pay taxes. duhhhhh.

if an h1b worker moves to a state with strict clean air laws, hes basically just sucking up the positive externalities for free without being

a) american
b) taxpayer


18 mulp February 11, 2009 at 7:26 pm

H1-Bs are
– high tech indentured servants who cannot switch jobs in the US freely; they are tied to their sponsoring employer
– can not afford to piss off their employer, say by reporting illegal activity at their employer, as their employer can terminate them and thus terminate their visa
– hardly qualify as any sort of free trade in the first place

And for free traders, all restriction on immigration shoud be removed so labor are as free as goods in moving around the world. To defend H1-Bs is as protectionist as Smoot-Hawley because the point is to allow wealth into the US, the primo human capital, while preventing those who can gain the most from entering the US, the Mexican laborer.

19 Bushequalhitler February 11, 2009 at 8:09 pm

So, I take it that you are all for freeing these indentured servants by giving them permanent residency upon graduation, right, mulp?

No? I did not think so. Then please spare me your facetious concern for the poor H1B visa recipients. They aren’t so concerned about being servants. They are more concerned to be sent back home after wasting 6 years of their life getting a degree that is worth a pitcher of piss in their home country.

20 Tushar February 11, 2009 at 8:35 pm

I’m on H1B working for Merrill Lynch, well…Bank of America now. I was hired after completing a bachelors degree from Buffalo. I’m stunned. What do people have against high skilled immigrants? Is the logic that since we cant stop the Mexicans lets stop the Indians and Chinese? I paid full out of state tuition to go to school here, I’m proficient in the language and well..i dont know what else to say. If you call $63K/year with benefits slave labor, i think im a happy slave. twits

21 MikeP February 11, 2009 at 8:49 pm

The three biggest problems with H1Bs are:

1. There should be no limit in number.
2. There should be no limit on duration.
3. There should be no limit in how long it takes to find a job.

But for now H1Bs are better than the only politically discussed alternative: prohibiting free people from their highest value employment.

22 Ricardo February 11, 2009 at 9:35 pm

Scrap the H1B system — and replace it with a UK- or Singapore-style skilled immigration system where highly educated individuals with professional work-experience can come to the country to look for a job and have no restrictions on changing jobs.

But until we have this, H1B is better than nothing. In finance, most big banks already have offices or subsidiary offices across Asia. Cut off H1B visas for them and they’ll simply farm more work out to the non-U.S. offices.

23 Ricardo February 11, 2009 at 11:55 pm

Since there will never be enough resources devoted to policing it properly, better to shut the whole system down.

If you shut the system down, the same companies that now recruit international students on college campuses for U.S.-based positions will say, “Sorry, we can’t hire non-citizens because of new visa regulations but I can put you in touch with our Singapore recruitment office — the taxes are lower there and you’re only a four-hour flight from home.” I have an Indian friend with an MBA who was rejected for a U.S. visa when her company wanted to send her here — so they found a Singapore assignment for her instead and getting the visa was very easy. After a year, she started getting advertisements in the mail from the government trying to convince her to apply for permanent residency. This state of affairs benefits the U.S. how, exactly?

24 MikeP February 12, 2009 at 1:10 am

H1B’s have persuaded people not to go into computer programming? That’s pretty hard to believe, though I suppose overwrought and unfounded tales of calamity can’t help.

Certainly those who actually make an effort look comparatively at jobs find software engineer to be the number one best job, with a growth rate over the next 10 years of 46%, compared to financial occupations that don’t make the top 50 and whose growth rate is only 14%.

25 Ricardo February 12, 2009 at 1:19 am

Policies like H1-B have persuaded American young people that there’s no future for them in computer programming, that the only jobs worth having in the globalized future will be as dealmakers — investment bankers at the high end, real estate agents and mortgage brokers at the low end.

Nonsense. People who make a living as deal-makers need to be big talkers and have intuitive interpersonal skills. Some of the best don’t even have college degrees. The overlap between people who would be successful computer programmers and who would be successful deal-makers is very small. People with the intelligence and skill to become computer programmers who try their hands at deal-making tend to burn out very quickly. They either get bored or find they aren’t any good at it. The myth of a reserve army of unemployed tech workers in the U.S. is just that — those who work hard to keep their skills up to date and relevant tend to find work.

26 babar February 12, 2009 at 6:55 am

this legislation does not limit the total # of H1Bs, so the H1B program is not an issue with this legislation. it’s not anti-H1B at all. it’s actually a measure to _increase_ average compensation within finance IT.

(does someone think that the H1B program has reduced compensation in the former investment banking sector to below what an american worker would find acceptable? this would be the only argument against this measure. i have been in finance IT for a while — it pays pretty well compared to other IT jobs. like most jobs in finance it should probably pay less.)

27 ScentOfViolets February 12, 2009 at 1:07 pm

But let’s just assume the world economy is a zero sum game, believe that world economy never expands, and pretend that there is no competition in the global stage.

Uh-huh. And is the economy expanding now? Tell me, you do believe in empiricism, don’t you?

I’ve watched 100,000 jobs vanish in biotech over the last year. Yet bloviations from ignorant blogs such as this one seem to think there is a shortage of scientists and engineers.


Got in one. When various ‘leaders’ decry the lack of engineers or scientists, or what have you, what they really mean is that lack of engineers who are willing to work for the wages these ‘leaders’ want to offer. Sort of like when certain Ag-corp people say they need immigrants because ‘Americans just won’t do that kind of work’. What they mean is that no one will do stoop labor for the wages and benefits offered. You can’t get someone to work at a hog facility, even if you offer $9/hr (true story), and this means that illegals have to be called in? How about you offer $18/hr or $36/hr? I’m pretty sure that at some price, Americans will be more than willing to work those jobs.

That’s just not the price certain people want to pay.

28 Half Sigma February 12, 2009 at 1:31 pm

People who think computer programming is so great, read my blog post on why a career in computer programming sucks.

A big part of the suckage has to do with the foreignization of the industry.

29 Anonymous February 12, 2009 at 5:13 pm

Bushequalhitler wrote: “So, I take it that you are all for freeing these indentured servants by giving them permanent residency upon graduation, right, mulp?”

What I am saying is that if anyone believes that free trade is a virtue, then labor should be free to move across borders as well, and not be restricted to just some classes of labor. H1-Bs and all the other funny visa programs are the Smoot-Hawleys for labor. The attempt is to setup a favorable movement of labor that profits limited segments of Americans: corporations looking for indentured servants, wealthy looking for indentured childcare and housekeepers, farmers looking for indentured pickers. Smoot-Hawley didn’t seek to prevent trade; it sought to shift the trade to benefits the same groups then as the immigration policies seek to benefit today.

When those who talk of free trade as benefiting everyone also say that free movement of labor benefits all, then we will no longer have any debate over H1-B visas.

As to my personal views, well, I’m a pragmatist like Obama. I would like to as a first step eliminate the border restrictions with Canada and Mexico so that movement is as easy as between the States, just as the EU has done. Once the Americas are one “AU” like the EU, then the next logical step would be to join the two.

NAFTA was sold to Canada and Mexico, and especially to Mexico as lowering of barriers that would benefit them as much as it benefited the US, but instead the implementation by both Clinton and Bush (both constrained by conservative Republicans) has disadvantaged the citizens of all three nations. The result is a trade relationship that is really more restrictive then free than what existed before. NAFTA was supposed to reduce the pressure to migrate from Mexico to the US, but instead intensified it. H1-Bs are the invention of the “microsofts” who benefit from free trade in labor in the face of the conservative opposition to immimgration on the basis that immigration destroys America for Americans.

H1-Bs allow the philosophy and principles of free trade to be abandoned.

30 MikeP February 12, 2009 at 5:42 pm

When those who talk of free trade as benefiting everyone also say that free movement of labor benefits all, then we will no longer have any debate over H1-B visas.

You are deluded. The operative debate is not between those who allow for H1B’s and those who believe that immigration should be unrestricted. The operative debate is between those who allow for H1B’s and those who believe that immigration should be very restricted.

I’m sure that it would receive the endorsement of all the free market, free trade economists in the US, …

As am I.

…and sail through Congress.

Very doubtful.

In case you haven’t been paying attention recently, Congress doesn’t listen to free market, free trade economists.

31 MikeP February 12, 2009 at 6:38 pm

I’ve worked before with H1B visa workers so can speak from an insider’s perspective. I was startled at the high salaries posted on the breakroom wall in those letters that get publicly posted so everyone can know what the H1Bs are making.

Oh, and this company was a couple years old, had less than 50 people, and had no multinational presence, so I don’t know where that is coming from.

If your argument is that the number of visas is so limited that they are snapped up in hours — so only well connected and powerful corporations these days can get them — that is highly likely and it is an implicit subsidy.

As I said way upthread, the problem with H1B visas is that they are limited in number, duration, and mobility. But I don’t imagine that any political process is going to push them to be more free. The only politically viable direction I see them taking is toward more restrictions — as evidenced by the original post.

32 flash games May 10, 2009 at 1:31 am

Free market economics only works well until we have to compete with other countries. every economist knows that. then we must protect ourselves at the highest expense, from clogging immigration to amassing tariffs.

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