The most counterintuitive finding: cutting H-1B quotas didn't help American workers, but it did make the remaining H-1B pool less innovative. Employment losses were heaviest at both the lowest AND highest wage levels, filtering out the most exceptional talent while concentrating visas among mid-skill workers and Indian-born computer workers due to network effects.
Classic unintended consequence -- the policy achieved neither goal. Opponents didn't get more jobs for Americans, supporters lost the highest-impact innovators who drive patents and startups.
I doubt it was due to network effects. I’m probably one of those top quartile potential H1-B holders that never applied. My main reason for not applying is that the random nature of the lottery reduces the RoI on finding a US job so much that it becomes rational to stay in Sweden and focus on local / remote consulting opportunities. As I understand it the way those Indian IT firms get around that is that they hire locally in India and send in applications for more staff than they want visas for. So they can get around the lottery dynamics through collective action, something I can’t do.
That used to be a common abuse vector, but that loophole was fixed last year. Apps are deduped now (1 person, 1 app). It's still a lottery that is oversubscribed by something like 3x.
How does 1 person, 1 app do anything to fix body shops flooding the zone by submitting apps for all of their employees knowing that most won’t win the lottery but whoever does they’ll ship to the US to subcontract out. All of the large Indian body shops have more employees than the cap.
Yes, that is still a problem, which is somewhat mitigated by the $200 fee to enter the lottery currently. The proposed change of giving higher odds to higher wages instead of a flat lottery is a step in the right direction.
I believe he wasn't even thinking about duplication of applications per person, but the following scenario. Correct me if I'm wrong:
Company A would like to hire 1000 qualified IT personnel. An Indian workforce provider has e.g. 10000 qualified people and would be able to get 5000 of them to apply for the visa. From those that win the lottery (e.g. 1 in 3) you would easily cover the demand of the Company A. Economy of scale works here.
Were the most innovative people actually "lost" or did they just switch to something like the O1 Visa which isn't subject to quota, and highly innovative people should qualify for?
I would guess that they found different ways to stay and work. I know that some companies send people to their office abroad (e.g., Canada or Europe) until there's a workaround by doing the green card process or applying H1B until it works out.
I did not end up using it, but I have personally "lost" the H1B lottery 3 times. I was also subject to the option above at some point.
drafting specific, targeted policies in the hopes of achieving a targeted outcome (without any unintended consequences) is very difficult - it's almost as if human minds are not smart enough to consider all possible outcomes, and all possible ramifications!
That's why i dislike gov't intervention - in most cases, these policies are drafted by vested interests, to the exclusion of some other group (who often then bear the brunt of the externalized cost of such a policy).
What we really need is a meta-policy to address this meta-problem. For example, before passing a law, politicians are required to sponsor a contest with a prize of $100K for the best argument that the law will create unintended consequences.
> This sounds like a great natural experiment (the quota dropped by 3x!) until you realize that they weren't even coming close to hitting the old quota, and the number of approved h1bs actually rose in the two years after the quota was dropped.
A lot of voters, MAGA and democrat have shown they do not want any more immigrants. It doesn’t matter what a paper says if they don’t read it. Democracy is about giving people what they want, good and hard. Just do it already, stop the visas, don’t dangle false promises over immigrants heads.
So this demonstrated in effect widespread h1b abuse by corrupt corporations like infosys and tata comprises the bulk of h1b hiring. No surprise whatsoever.
Half the people complain about H-1B and the other half complain about outsourcing. Neither of them makes sense to me, but the outsourcing angle even less so. It's just labor cost arbitrage for knowledge work. And soon that arbitrage opportunity will perhaps shift from humans to llms. What is the issue with that?
The “competition is scary, let’s build walls” approach usually looks good in the short term for a segment of workers, but over the long term it tends to weaken the economy. A country that shuts out global talent not only loses people who would have filled skill gaps, it also loses many who would have built the next companies, industries, or research breakthroughs.
Not to mention, if companies can’t hire the talent they need in the US, they won’t just “make do” with whoever’s available... they’ll move operations elsewhere, which means fewer opportunities for the very people immigration restrictions are supposed to help.
''Time and again through our history, we have discovered that attempting merely to preserve the comfortable features of the present, rather than reaching for new levels of prosperity, is a sure path to stagnation'' - Alan Greenspan (https://www.federalreserve.gov/boarddocs/speeches/2004/20040...)
Anyone who doesnt believe that, look at Canadas big industries like banking or telecom. They’re coddled by the government against competition and totally fail to compete or innovate at all. There’s 50 other examples of protectionism failing too.
> I am sure people understand that H-1B issues are just red herring.
I don't 100% agree. H-1B visa holders, if laid off, have 60 days to find another job or leave the country.
This means they have much much lower negotiation power and will likely try and avoid at all cost being laid off, and will accept worse condition to stay in the US.
This is a detriment to the whole working class, because:
- US workers are now competing with other workers that will accept worse condition
- US companies can leverage H-1B workers as leverage against the negotiation power of US workers
I've seen this with my own eyes. When my previous employer announced forced RTO, all holders of the equivalent of H-1B visas just accepted it automatically, because rejecting would have meant (most likely) getting out of the country.
And the company was able to easily let go (or accept the resignation of) workers with stronger rights.
An over-supply of workers just weakens labor power, it's basic supply&demand reasoning: it's crazy that people don't realize that open borders and unchecked immigration is the most anti-worker thing one could do.
The solution to that is to give more rights to people on visas, and yet pretty much nobody supports that. Not Ds, not Rs, not corporations, and certainly not the people who complain about H-1B.
this is the thing that is missed often in recent convos. h1b not only enables you to hire cheaper, but also give much bigger leverage and power over worker. maybe now there are plenty of candidates on the market, but still having immigrant on visa for cheaper is, cynically, much better deal for corps.
It's not basic supply and demand--indeed, most economists are pro immigration. Bryan Caplan went as far as advocating for open border (admittedly he's more libertarian than most).
Labor market is complicated because jobs are not a finite pool that people compete over. New workers are also new consumers, who create new jobs as well. If more workers are always bad for other workers, declining birth rate (ie fewer future workers) would be a good thing.
> It's not basic supply and demand--indeed, most economists are pro immigration. Bryan Caplan went as far as advocating for open border (admittedly he's more libertarian than most).
> New workers are also new consumers, who create new jobs as well.
New workers with much lower purchasing power will not be consuming as much/as well. Heck, a lot of companies are known to hand out directions on how to get food stamps upon hiring (i think Walmart was one of the notable cases).
Without proper rights may get new consumers but you may also get more pressure on the welfare system (which is already weak in the US).
> If more workers are always bad for other workers, declining birth rate (ie fewer future workers) would be a good thing.
You skip the part where declining birth rate is a very strong in developed countries but not as strong (in some cases, not strong at all) in not-equally developed countries.
Classic unintended consequence -- the policy achieved neither goal. Opponents didn't get more jobs for Americans, supporters lost the highest-impact innovators who drive patents and startups.