Silicon Valley's Push For Cheap Immigrant Workers Is Good For America

Reuters

Silicon Valley has been lobbying for more leeway to hire non-citizen workers on temporary visas. And if the immigration reform bill that the Senate is considering passes, they will get it.

Tech companies say they need this flexiblity to recruit talented workers they can't find in the United States.

Critics of the policy say there are plenty of Americans with technological skills, and that tech firms just want a bunch of cheap, mid- to high-skill laborers to replace more expensive Americans.

Both of these factors are at play, though as we wrote last week, there is no overall shortage of workers with STEM (science, technology, engineering and mathematics) degrees in the United States. But whether Silicon Valley's goal is to recruit unavailable workers or to drive down wages, the policy is still a good thing.

At least, it's a good thing for essentially everyone who isn't an American working in the tech sector. If you're not a provider of technology services, you're a consumer of them — and lower wages in the sector mean cheaper technology products.

Several people involved in the technology industry contacted us after last month's article and said things like this:

Tech companies do not need more H-1B visas to find and hire the top tech talent in the world. [...] If each of the H-1B visas were going to the best and the brightest, then surely these employees would be among the highest paid tech workers in the US [...] That is most definitely not the case - they are instead among the lowest paid. At my company, H-1B visas are used to hire cheap, low skilled engineers, not the next Alan Turing.

Dr. Ron Hira — a public policy professor at Rochester Institute of Technology — testified to a Senate committee about the tech industry's reasoning to seek these workers:

The bulk of demand for H-1B visas is driven by the desire for lower cost workers, not by a race for specialized talent or a shortage of American talent. All of the top 10 H-1B employers in FY12 used the program principally to outsource American jobs to overseas locations.

However, here's the good news.

If Silicon Valley is really using foreign born talent in order to replace American-born workers because it's cheaper, it's awesome for essentially everyone who isn't an American working in the tech sector.

Think about it this way. Over the past several decades, jobs in many fields have flowed from Americans to non-Americans who work for lower wages. This can lead to declining wages and job opportunties for Americans who work in these fields. But it also leads to declines in prices and increases in standards of living for Americans who don't work in those fields. And overall, it grows both the American economy and those of countries abroad.

But only some sectors are subject to this kind of competition. If your job function can physically be performed outside the United States, then you're vulnerable to outsourcing. If you provide a service that actually has to be performed in the United States, your job can only shift to someone else who can be here, which means that immigration policy provides a barrier against wage competition.

In sectors where workers are insulated from foreign competition, costs keep rising. Think health care and education. Meanwhile, international wage competition has hit hard in sectors where workers tend to have low- or medium-skills and corresponding wages, like manufacturing and agriculture. This means some Americans have really lost out due to trade, even as it grows the economy and enriches Americans overall.

Allowing more high-skill immigration will switch this dynamic: the losers on the wage side will be affluent workers, while the winners on the price side will still be the overall population. That is, this is a kind of immigration that doesn't just grow the economy but makes it more equitable.

And the broadly-shared benefits of high-skilled immigration are large. According to a recent Brookings Institution report, the typical college educated foreign-born worker adds $56,658 to the U.S. economy on top of his or her salary, which is four times the surplus created by the average non-college educated Mexican immigrant:

Brookings

Bringing more wage completion to the States in the form of H-1Bs has the potential to make technology, education and health care cheaper. Whether or not you consider that a bad thing depends on whether you're at personal financial risk.

Still, we're not saying that the only reason that tech firms want more visas is that they want to recruit mediocre talent to replace Americans, because that's extremely unfair to say to both the companies that participate and the often highly-qualified people who they recruit to fill crucial positions.

All we're saying is if this is a major part of the H-1B motivation, how exactly is that a bad thing?

Tech companies want more foreign born workers because they cannot find the talent they want who are willing to work for the price they want to pay.

From the perspective of a tech worker, in the best case the company is getting incredible talent from abroad. In the worst case the company is trying to replace them with a cheaper employee.

From the perspective of the rest of the country, Americans should be rather pleased with both the best and the worst scenario. The best means the rest of us get great talent from the rest of the world. The worst means that technology gets cheaper.

For people on the outside of the tech business, high-skill temporary work visas are pretty great.