Software is one of the few STEM fields where one can get a fantastic job with just a Bachelor's. In most other engineering fields, a MS gives you a significant boost, and a PhD may do so as well.
The reality is that in most of those fields, few Americans get an MS/PhD. Go to a typical engineering department and you'll often see the majority of advanced degree students are foreigners.
So it's a question of: Do we want to continue to train foreigners, only to not have them contribute to the US economy?
If you move out to the pure sciences, you pretty much need a PhD to get a good career. Once again, a big chunk, if not the majority, are foreigners.
Look around at the highly skilled folks you see who are not of US origin, and you'll find most of them are in the US due to the H1-B program (only a tiny percentage come via other programs like the O visa).
Yes, H1-B is often abused, but this is the reason it exists. It's a lot harder to get an H1B visa and then permanent residency if your degree is in the humanities, for example.
I think vast majority of Americans not going on to higher education is because system is so screwed up due to debt and unlimited student visas.
Debt means most Americans go "I need to enter into the job market so I can pay off these debts".
Also, alot of foreign students are willing to work/study insane hours because visa hanging over their head. I have a friend who got MS in Engineering but didn't want to continue because he looked at what's required and started talking with his mentor about his PhD. His mentor said it's 996 schedule and if you don't want to, I can likely find a student visa student who will.
> I think vast majority of Americans not going on to higher education is because system is so screwed up due to debt and unlimited student visas.
International students percentage is about 6% of total high education population [1]. We can say that their percentage in higher in some fields/degrees. But overall they are not significant reason High Education is not affordable. Actually for undergraduate (majority of international students) they will pay more tuition and many colleges wants to admit more to subsidize domestic students.
> Debt means most Americans go "I need to enter into the job market so I can pay off these debts".
Study abroad is expensive and you still need to enter the job market to earn your living and probably pay your dept (some will take loans to study in the US). This applies quite well to international students too.
> I think vast majority of Americans not going on to higher education is because system is so screwed up due to debt and unlimited student visas.
For undergrad, I understand the frustration, although student visas have almost nothing to do with it. As an example, when I was in my undergrad (for engineering), there was only one foreign student in my engineering classes. Almost all the foreign students were at the MS/PhD level. The number of foreign students in the undergrad population was easily under 5%, if not under 1%.
Probably true in most no-name state schools.
> Debt means most Americans go "I need to enter into the job market so I can pay off these debts".
An MS is only 2 years, and you should go only if it's fully paid for (quite often the case in engineering). And you typically don't accrue interest on undergrad debts for those 2 years - so it's only delaying paying off debts by 2 years.
No - most Americans don't do MS in engineering, simply because they don't want to and don't value it.
> Also, alot of foreign students are willing to work/study insane hours because visa hanging over their head. I have a friend who got MS in Engineering but didn't want to continue because he looked at what's required and started talking with his mentor about his PhD. His mentor said it's 996 schedule and if you don't want to, I can likely find a student visa student who will.
Entirely dependent on the advisor, although I do suspect your anecdote is becoming more common. Also, likely more common at top tier universities and less so in no name state universities.
The reason why foreigners get those degrees is because it's a way for them to stay in the USA longer. I have a friend who didn't win a renewal for their H1B and they signed up for a master's program and applied for a different VISA. So yeah, some foreigners get them because their hands are forced.
Isn't it well known that the main reason that most foreigners have advanced degrees is because that's how they get into the country legally in the first place?
I don't see many people getting employed straight out of undergrad from India or China and moving to the US directly. They get their advanced degree here first to get into the country then they get employed...
> Isn't it well known that the main reason that most foreigners have advanced degrees is because that's how they get into the country legally in the first place?
Yes, and ...?
I mean, if it were a requirement to start a business and employ 10 Americans gainfully, would you go and say "Yeah, but the reason so many foreign born people do that is so they can get in legally."
So?
As long as they have higher level training than most Americans, and as long as we spend money training them (via research/teaching grants), isn't it a good idea to keep them?
You're assuming people are really learning anything in those programs that they wouldn't have had in their undergrad. I've never met an American with an undergrad who is underperforming compared to their foreign MS counterparts. The MS is merely a cheaper tool to get into the country than other investment visas plus you get credentialed. I think it's also a bit of a validation tool that the person actually has studied at the same level as US counterparts. I have met some people from India who were surprised at how difficult college was when they came to the US compared to back in India.
Ooh yes, let's address next how US top universities are all profit machines incentivized to take as many foreigners as possible, driving up the tuition they can charge so US citizens can't afford to get degrees. Let's do talk about how if you get a part time job to be able to pay for college then they yank your financial aid.
While foreigners definitely are a cash cow, I think you'll find in STEM fields most foreign PhD students are not paying tuition, but are instead funded by US grants.
As for the cost of tuition, there are many, many reasons, and I suspect if you did a PCA, you'll find "raising tuition to milk foreigners" to be of minimal impact.
In my state, for example, a local university publicized their finances going back decades, and the increase in tuition has been mirrored by a drop in state support per student. Overall the university is not making more money per student than they were 30 years ago - the only thing that changed is the entity making the payments.
US tech exports in 2018 was $338 billion. Tech is our biggest export by far. Think of the US tech industry as a siphon that sucks in wealth from foreign countries. Would you want to make that siphon bigger or smaller?
If you want to make that siphon bigger — and more competitive — how would you do it? By limiting the people that can work in tech to whoever companies can hire locally, or by bringing in the smartest people from around the world?
Does "The US" siphon that money off? Or Meta, Google, Amazon, Microsoft, etc. siphon that money off? And where and to whom does it go from there?
The major benefit of reducing or eliminating the H1B visa program is that those companies can continue to do well, and Americans can do well along with them.
The money this siphon brings in is benefiting not just tech workers and tech shareholders. When the money is spent it turns the wheels of our economy, which leads to prosperity for all Americans, not just the 8% or so that work in tech.
The tech industry vacuums up money from foreign countries and pumps it into the economy of our country. The beneficiaries include all Americans, including those who work in restaurants, retail, healthcare, insurance, education, housing, transportation, entertainment and so on.
Limiting tech industry to whoever companies can hire locally will hurt its global competitiveness. Such a move will not just hurt the few would-be tech immigrants that are prevented from immigrating, but American prosperity in general.
When is that prosperity coming to the US? It seems that it's been leaving the US for the past decades and life is harder and harder and the American Dream is hardest to attain in decades.
Restricting or eliminating the H1B visas will cause these companies to hire more in oversea offices. Consulting companies however are a whole other deal.
Because the talent is already here or will be here (on h1b/o1). It's common complaint I hear from people doing offshore consultancies type of businesses that their best workers leave for US $$$ paycheck.
As somebody who does not live and work in the US, it seems plausible to me that the H1B system helps prevent other countries from obtaining similar talent hubs as Sillicon Valley. A lot of the talent is in the US, which attracts more companies, which attracts more talent, which means it's easier to go to the US and work there and start companies there than to do it anywhere else.
There’s also the easier financing, but yes - I’m sure the outcome is dominated by the network effect of having denser talent. That’s one of the reasons Silicon Valley is so hard to replicate elsewhere.
> phrased differently, the goal is to help industry, not hurt workers. hurting some workers is an acceptable cost, not the goal.
The phrase "help industry" has many dimensions. The simplest of course is that by increasing labor supply and suppressing wages it increases profit margins, rewarding shareholders.
Another important function is that by having more workers overall in the US, it increases the productivity of the domestic industry itself, due to increased competition for jobs driving up the productivity of the average worker. This in turn makes the industry more competitive vs its equivalents in other countries.
The average worker (whether permanent resident or temporary/H1B) who doesn't have significant investments likely doesn't receive much of those productivity gains, since they mostly go to capital owners.
Long term, it boosts returns to capital while capping returns to labor, the same trend noted by Thomas Piketty some years back.
I dont think there long term impacts are so clear or cynical. the question is less about productivity, but network effect, number of jobs, and quality of jobs.
> I dont think there long term impacts are so clear or cynical
The economic impacts I described are looking backwards, not forward, and the data is pretty clear that long term returns on capital swamp the returns on labor (especially since the 1970s). STEM workers have been somewhat insulated from that due to the industries they work in growing in the past few decades faster than the labor supply. It's anyone's guess whether or not either trend will continue into the future.
> the question is less about productivity, but network effect, number of jobs, and quality of jobs.
I'd argue productivity and returns to capital are almost everything when it comes to what informs immigration policy from an economic lens. "Network effect" is a mechanism, not an outcome, and outcome metrics like "quality of job" or even "quality of life afforded by a job" are not a concern of such policies. On average, they might improve, or they might get worse, but productivity and returns on capital will always go up, whether they require workers or not.
I understand that you are trying to make a point about return on capital, but I dont understand how you are connecting it to the question of H1-B visas and if local benefits to industrial expertise outweigh the downward pressure from labor competition.
> I dont understand how you are connecting it to the question of H1-B visas and if local benefits to industrial expertise outweigh the downward pressure from labor competition.
Because what you are calling "local benefits to industrial expertise" is ultimately realized in the form of returns on capital.
Whether these benefits outweigh the costs is an open question.
When the tech industry's growth was very talent constrained as it was in the last few decades, arguably opening labor competition had the effect of increasing overall growth (mainly through new production invention). The list of immigrant technologists who have created new technologies and products - and jobs as a result - could probably fill an encyclopedia.
It's unknown whether that type of growth - the kind that creates more and better jobs - will continue, especially given recent developments in AI.
If the benefits going forward are largely going to be based on massive increases in labor efficiency, then it's not as clear that the benefits (mostly to capital) outweigh the costs (mostly to labor). Most business models in AI are predicated on replacing people, who are expensive, not making more or better goods. Sure, we'll get some neat robots along the way that actually make stuff, but that will likely be a small fraction of the money to be made.
Or perhaps we are at the dawn of a new era of technology which will make more and better jobs. We'll see.
OK, so you were changing the topic to something else you wanted to talk about. That was not clear to me. I thought you were making a rebuttal to what I was saying.
Correct, if you look at my comment I was unpacking what the phrase "to help industry" could mean, not rebutting your comment.
It's relevant to the original context because what helps industry (in terms of immigration regulation) might or might not help workers in that industry.
> Existing studies that show an increase in capital’s share of income miss the growing role of depreciation in short-lived capital, in items such as software, says MIT’s Matthew Rognlie in “Deciphering the Fall and Rise in the Net Capital Share.”
Subtracting depreciation isn't a fair comparison. The example uses software as a short-lived asset. Has the monetary value of Google's search algorithms depreciated? They've been upgraded with routine investment, but the scale of the returns on their upkeep vastly outweighs the capital investment, otherwise Google wouldn't be so profitable.
Software of the internally-developed sort isn't even depreciable [1], so it's not clear how its value for these purposes would be determined (short of assuming it represents a percentage of the business's value).
Also, from the paper linked in your article:
> Once all compensation of employees at the sawmill is
subtracted, the remainder is its gross capital income. Some of this capital
income will be paid to lenders in the form of interest, some will be paid
to the government in taxes on profits, and the rest may be retained on the
balance sheet of the sawmill or distributed as dividends to shareholders.
Gross capital income is thus a very broad concept, encompassing funds that
are ultimately paid out to many different recipients—it is unaffected, for
instance, by the split in financing between debt and equity.3
GROSS VERSUS NET: CONCEPTS An alternative to gross value-added is net
value-added, which subtracts depreciation. This can be divided into labor
and net capital income, the latter being gross capital income minus depreciation.
Everything which I have emphasized above are examples of returns to capital. Excluding them from consideration in this presentation is ignoring how a large amount of returns are channeled to owners of capital.
Debt-holders gain from interest and shareholders are enriched via dividends and share buybacks that never appear on the article's net income derived graph.
Of course, when you willfully ignore those huge tranches of returns, then housing looks like a major factor, because it is the common asset class that has been on a largely unchecked inflationary track.
Finally, your article from 2015 argues that the overall trend will reverse and labor's share of GDP will start increasing. Here's what has actually happened since then:
The brief spike in 2020 was due to pandemic era redistribution policies like the child tax credit, among others. Since those have been repealed, labor's share has continued its prior trend downwards.
The interesting thing about the return to labor vs capital line of argument is that generally speaking, capital doesnt consume the types of product that labor is interested in.
When productivity goes up, that doesnt mean workers are making 10X as many houses or hamburgers, which capitalist are eating.
For me, this begs the questions of what exactly is being produced when we say worker productivity has increased, and where is it going? If it is "stuff" being produced, surely it should be evident somewhere, like massive exports hoarded stockpiles. Alternatively, the productivity is an illusion because there is a corresponding inefficiency or deadweight loss, like paying some service workers to create problems and paying others to fix them.
In my experience close to 100% of productivity increases accrue exclusively to shareholders.
When my companies have produced more output from the same inputs (or the same output from less inputs in the case of mass layoffs), we return the cash to shareholders by way of a stock buyback or special dividend the following quarter.
Maybe in some companies they instead give workers raises or outsize holiday bonuses, but I’ve never seen this.
What about the output goods produced? if you make 200% more hamburgers, the shareholders arent eating them. If every US company has doubled production, where is all this stuff piling up?
> For me, this begs the questions of what exactly is being produced when we say worker productivity has increased, and where is it going?
Power.
Political power: policies written to benefit the highest bidder.
Financial power: more leverage in being able to dictate terms of borrowing by workers - and being able to force the government to borrow from capitalists instead of levying taxes on them.
Physical power: Being able to buy/influence law enforcement (themselves a type of worker) to protect the capitalist's interests over those of other workers.
Increasing worker productivity manifests as greater returns that predominately go to capital owners, not workers. That concentrated wealth in the hands of capital owners is wielded as power in the political, economic, and physical realms.
The "product" that the increased productivity buys is control over policy at whatever level of government, not more washing machines or tires.
Returns of what? I feel like this argument is leaving out words and skipping logical steps. Hamburgers are a product, cars are a product, cleaning services are a product. Wealth is not a product.
If you have a company and worker productivity goes up 200%, where does the product go? Wealth created selling that product may go to the owner, and carry power with it, but that doesn't answer the fundamental question. Where is the product?
> If you have a company and worker productivity goes up 200%, where does the product go?
In a mature industry, there is no new product, because all else equal, demand doesn't change. The company makes the same amount of product, but with fewer workers (aka layoffs).
Even in an industry serving growing demand, increase in worker productivity is not the cause of increase demand for product produced by that industry. Any growing enterprise knows it's first more important to focus on demand than increasing productivity, usually by hiring workers at the lowest cost possible. Otherwise, your competitor will serve your customers needs before you do. Premature optimization is a waste.
What increases demand for products is technological innovation plus a need/desire for more personal convenience, comfort, and time, coupled with the funds to purchase those in the hands of a growing population. Why have most companies have staked their future profits on the developing world's demand growth? Because the developing world has the desire for all of the above plus a growing population.
The question of where the new product goes has nothing to do with the question of worker productivity unless the workers have the funds to purchase those products. The product goes where the purchasing power is.
Capital's share of the return, however, goes into assets and as I described earlier, power. It doesn't go into purchasing any increase in product created.
>The question of where the new product goes has nothing to do with the question of worker productivity unless the workers have the funds to purchase those products. The product goes where the purchasing power is.
That is my exact question, who is purchasing the goods? we have high employment and have supposedly high productivity. We dont have massive national export surplus. You say capital isn't purchasing the goods, so what gives?
Where is the black hole that is consuming all of the goods, if the workers dont get them, the rich dont get them, and they aren't exported.
> Where is the black hole that is consuming all of the goods, if the workers dont get them, the rich dont get them, and they aren't exported.
Take new cars as an example. We are producing fewer of them [1], they are larger and more expensive, and they are mostly being sold to wealthier people. So yes in this case, capital owners (people more likely to have more wealth) are the ones purchasing the product.
Also, for a while we have been shifting towards a services based economy, so for a lot of this production growth, you won't see physical products. For example, you can't see the software IDE subscription I signed up for yesterday.
We also don't have a national export surplus because we import so many goods that are not worthwhile to manufacture here, while we export a ton of services, petroleum, and other raw extracted materials, all industries that scale with technology/capital/machinery and not labor.
This still seems to negate the point you made earlier that there are huge productivity gains and 100% of them have gone to shareholders. It doesn't seem realistic that they are using all of the new services. I feel like I'm repeating myself, so I think this is the last post.
> This still seems to negate the point you made earlier that there are huge productivity gains and 100% of them have gone to shareholders.
I didn't say 100%, I said most (re-read my comments upthread). Please don't misrepresent my words. I choose them carefully.
Greater productivity does not automatically equal a commensurate increase in products/services delivered, which seems to be the flawed assumption you are unable to get past.
Here is a concrete scenario to illustrate this.
A company makes 1M units of a product at a cost of $1/unit, and sells them for $1.50/unit. Profit/unit is $.50.
Productivity doubles, so the same million units can now be produced for $.50/unit. When sold for $1.50, profit is now $1/unit.
The $.50/unit increase in profit goes mostly to shareholders.
There are no new products, no new services.
In reality, demand varies over time, so product output varies with that, but the gains in profit mostly have gone to shareholders.
The only time they ever go to labor is when labor is in short supply or when labor organizes to demand a larger share.
> If harm was the goal, something like a STEM worker tax or cutting R&D tax incentives would be easier
These would affect all STEM workers equivalently. The H1-B program, whatever one thinks of its merits, hurts domestic STEM workers and helps immigrant STEM workers.
Perhaps the result is that the overall opportunities are greater because the larger talent pool results in more companies being formed. That depends a lot on how mature the industry is, and whether technological trends like generative AI will replace large swaths or STEM workers altogether.
Hypothetically it exists to allow companies to hire singular overseas experts like von Braun or Einstein that don't have domestic equivalents. It has become totally accepted to lie on the application though and now it is used to hire Java developers.
That is incorrect. People with exceptional abilities are covered under EB-1 green cards (and O-1 visas). H-1B was created to bring people in specialty occupations requiring a bachelor's degree or equivalent experience. A Java developer definitely meets the bar (with the right degree or experience).
True, but at the same time immigrants have nothing to lose and everything to gain, thus in many cases they will work harder/longer and as result often be more skilled than an average developer.
And in general skilled immigration has many times over been proven to only benefit the country and that java developer you mention.
That's a sign of how accepted it has become to say that you can't find any local workers that know Python when filling out the H1-B forms. The requirement is there but it's normally overlooked.
"The intent of the H-1B provisions is to help employers who cannot otherwise obtain needed business skills and abilities from the U.S. workforce [...]"
This piece of misinformation seems to be trotted out every time H-1B is discussed. H-1B is not for "extraordinary ability", the O-1 is. The H-1B is just designed for regular workers in a "specialty occupation". This is how Congress designed it in the Immigration and Nationality Act.
The reality is US is a tech powerhouse, many successful companies have been started by former h1b holders and US tech workers are highest paid in the world (even PPP adjusted). What you're hearing is not the reality - it's just vibes.
Not really, O-1 is essentially a visa to bring a specific person to the US. While H1B is a wide net (yes, visa given to a specific person, not what I'm saying).
o-1 is to bring Albert Einstein and h1b is to bring some physicist that matches criteria.
As in, O-1 is person-focused, while H1B is role-focused.
>h1b is to bring some physicist that matches criteria.
those are exceptional cases. The majority of the 65K year h1b visas granted every year are for filling IT related positions. Mostly dev related positions.
Global competition exists. If US companies can't hire the best, others will. I hope you don't assume that all the best workers/researchers are born within US borders.
Do you think the average H1B or other visa holder in STEM is among “the best”? I’m forced to hire non-American engineers (contractors) because my company is too cheap to pay for and commit to paying American workers full time for a couple of years. There are certainly a ton of qualified Americans who can work for us (fully remote) for not much more money, and their native English skills would make them objectively better at the position. I would even hire juniors straight out of school, but the corporate bs gets in the way.
I don't think countries should hire the best. Pretty good should do. They should foster a greater sense of community within their borders. Now, I'm not against immigration. I myself am an immigrant. But I think there's too much global fluidity and not enough attention paid to taking care of one's own.
That's exactly the reason. I don't remember working with any H-1B visa people in the 90s then the dotcom boom happened and demand soared. A couple years later I started working with H-1B engineers and my salary flatlined for over decade since.
You're not missing anything. Other than that, seemingly, STEM roles are the only industry where the laws of supply and demand do not apply, and a positive supply shock of something does not, for some reason, drive down the price.
If a supply shock doesn't drive down the price then it suggests that the supply constraint was larger than than the shock and that the market was being artificially constrained to prevent the prices from rising to meet demand.
It's also possible that the supply itself is what creates more demand. People who move to the US are probably less risk-averse than the average person, and more likely to start new companies, creating more jobs.
STEM roles already pay incredibly well in this country, and even more so if you compare it globally.
What is the downward price shock you're talking about? What do you think the salary would or should be, assuming all H1B worker are magically gone the next day?
Have you engaged with the Card vs Borjas literature at all? We learn about the world by studying it, not by simply thinking about it from one's armchair.
Put simply: It is in the national interest to have the world's most talented technologists here. It is yet more in the national interest that they work here, for us, and not for our enemies. One of the best ways we can compete with China is to attract their best and brightest with our free society and high wages.
I'm not saying it's good or bad at brain drain, I'm just saying without knowing how many people overseas are worth "draining" that's not an argument.
The program might have been designed for this, sold as this, but it's definitely not used for that anymore.
H1B was created in 1990, that's when Russia (and ex-USSR in general) had a lot of idle brains that wouldn't mind moving to the US. Today isn't 1990 tho.
my apologies, I was just being sarcastic in my initial comment… the brain draining other countries by taking in 65k or whatever yearly is … funny for the lack of worse but respectable word :)
You are missing that it is used a lot in spite of that process (1) being a major administrative headache for the users, both employees and employers, (2) costly compared to hiring "locals" although that's moderated by perhaps lower salary with not a huge amount of evidence, and (3) rather unpredictable and risky for both employees and employers.
The US owes much of its success to its ability to poach talent from other countries. By letting all the people who would start competing firms move to the US instead international competition is reduced and the products built in the US are better.
The program exists to get skilled workers into the US. It has done this well. There are few other programs to get them in and onto a pathway to permanent residence and citizenship. STEM wages don't exist in a vacuum. Increased utility to the US economy is more important than them. The US government rightfully determined that having people like Elon Musk here makes this nation more competitive. Likely the effect was also to increase software engineering compensation but that's harder to tell.
Tech exists in a globally competitive market: the companies will exist where the skilled workers are, and the tax benefits will occur there. The US's large immigration rate is a precondition for maintaining its tech dominance and all of the benefits thereof.
you can grow the sector. there's not a fixed supply of jobs. getting more talented people into your economy will likely just lead to more companies, more agglomeration effects etc. it's good.
I think you should ask why any feature of our immigration system exists. Each way is cruel, byzantine and expensive for no discernible benefit to anyone except the directors of those programs.
As Asimov pointed out, "[t]here is a cult of ignorance in the United States, and there has always been." American culture is profoundly anti-intellectual. Every Dunning-Kruger rando thinks they have something valuable to contribute to every discussion.
EU also has a lot of immigrants as well, and also an even bigger culture of education and intellectualism. Why then don't they have more successful tech companies?
I think you're omitting the giant impact of the FED, wall street, power of the USD world reserve currency and the VC investor incentives of risking billions on ideas that may or may not be profitable, with the low risk for investors if their investments don't pan out.
It's all downstream of the US's incredible geopolitical luck after World War 2.
The latest Gallup polling suggests anti-vax sentiment is at an all-time high. In no other comparable country on earth do 45% of people say vaccines shouldn't be mandatory. And it's not the foreigners on visas who are contributing to anti-vax sentiment.
