One thing that is interesting about the debate so far: the almost exclusive focus on 'engineers'...the term seems to be generally used to include anyone who can write code, at whatever level (pretty sure a lot of the H1Bs are actually sysadmins and such who actually *can't" write code)...as opposed to electrical, mechanical, and structural engineers.
But as important as engineering is, there are a lot of other skills also needed to grow the American economy. The biotech industry is very important, and while it does need some engineers, the key need is for scientists: molecular biologists, for example. Pretty sure that Ruxandra Teslo, for instance, could add a lot of value in an entrepreneurial US biotech company. (Indeed, Vivek's own company, Roivant, surely needs more people in the biological sciences than it does engineers)
There are also a lot of shortages among skilled workers who don't need to be college graduates..for example, there is a shortage of machinists, which is getting worse as older ones retire and younger people have not followed them into the field.
Skilled trades are a sadly neglected field. I have a friend who is in the Millworkers Union here in South Florida. Back in the late 1980's he would ask us if we knew of any young people who liked working with their hands and heads that would like a career building things. Unfortunately we did not have any potential candidates. Our friend said they could never fill these apprenticeship classes. Move up to 2024 and they still cannot fill these classes. Sad!
To earn a degree in a hard science, math or engineering fields you have to be able to read, write and be competent in math from grade school thru high school. Fail to do this and you will likely not make it thru college in these, three fields of study. The Chicago public school system does an abysmal job in teaching students in these areas. I would bet a few dollars that the percentage of K-12 students that make it to college, earn a degree in science, math or engineering, from Chicago public schools is very, very low.
Nice treatment of a complex issue. It is important to focus on legal non-immigrant visas. An H1-B is a visa.
Understandably, there is a lot of anger attached to the whole open border and illegal aliens issue, but H1-B has nothing whatsoever to do with that. So, let's compartmentalize.
There is a tendency to use the shorthand of referring to non-immigrant persons seeking temporary employment as "engineers" when, in fact, the eligibility for the program is vast including fashion models. It can include math, engineering, medicine, administration, and a number of fairly pedestrian occupations including college teachers.
This is not a program to attract "elite workers" as Vivek has said on several instances.
The base requirement is "specialized knowledge" and a bachelor's or higher degree that supports that specialized knowledge. There is no experience in the field requirement. If there were a sweet spot it would be an American university educated foreigner who has just graduated.
Bottom line is H1-B visas do not require exceptional qualifications, years of experience, or advanced degrees.
There is an entirely different program -- E-1/2/3/4/5 -- that provides visas (often permanent green card work visas) for persons with extraordinary qualifications.
As an example, an investor may attain an E-5 visa in return for making a substantial investment in a US based company. Colllege professors w PHDs, inventors, medical researchers are in the bullseye for this program.
These are elite workers and there is a requirement for distinction in the field, an advanced degree, and years of extensive experience. These folks are the ones Vivek is referencing.
The employer in the H1-B scenario applies via an LCA (labor conditon application) to the Dept of Labor in which it makes certain serious oath bound representations including that they will pay fair market value wages and that it will not negatively impact US workers.
There was once a requirement to have exposed the job to US workers before attempting to find a non-immigrant worker with specialized knowledge.
So, you have the employer petitioning the Dept of Labor via the LCA, receiving approval, and then posting the job.
Non-immigrant workers then apply for that job. If given the nod, they apply for a H1-B visa with job offer in hand.
In reality, there are foreign based H1-B processing mills that handle all of that for the non-immigrant worker. It is exactly like using an expediter to get a passport.
The rubs I see are:
1. The implication by every employer in their sworn LCA is they cannot find American workers to do these jobs and they will pay the same wages to H1-B workers as to American workers.
There is currently no requirement for the company to document its search for workers amongst US workers. There once was.
2. In reality, many of these companies do not even recruit at American schools with pertinent academic programs.
3. There is the implication that employers pay lower wages to H1-B workers. This appears to generally be true. Employers control that worker via the H1-B program and the ability to renew the first 3 years for another 3 making a total of 6.
Portability for H1-B holders is a real problem.
4. With the DOL handling the LCA and the DHS' USCIS (US Citizenship and Immigration Services), and the State Dept issuing the actual visas, nobody is doing any audit work to ascertain if the employer is actually complying with the LCA., Nobody.
You may harken back to the So Cal Con Edison incident of 2015 wherein this public utility fired its entire engineering staff of 400 and outsourced its engineering to offshore entities as well as hiring some H1-B workers.
I learned the intimate details of this fiasco whilst floating in a pool in Mexico at a resort with a former CEO of So Cal Con Edison. He was the predecessor to the then current CEO who fired all the engineers.
I tell you this because CEOs are right at the point of the spear on such macro labor issues including Elon Musk. I like Elon, but on this subject he's sort of full of shit.
If I were the controller of this program, I would expand it, dramatically actually, but reinvigorate the requirement that employers exhaust their attempts to fill these jobs with US citizens.
I would allow every foreigner who attains a degree in anything STEM to remain in the US for 5 years after graduation to seek a job.
The percentage of foreign students in American schools is less than 6% in a body of 19,000,000 students and about 55% of the foreign students are in STEM. So, you are looking at about 600,000 students annually.
Legal immigration should add to the gene pool of the US.
Footnote: Never discussed, but relatives (wives and children over 21) of H1-B visa holders can also work in America using a different program.
E5 can be abused as well. Once had a guy ask me to write a letter for him saying I was interested in investing in his company to support his E5 application. I felt a lot of empathy for him, since he was a great guy and truly trying to build a company but I didn't write the letter. BEST WAY-scrap all immigration and charge for it!
The U of I loves getting full fare from overseas students. Also, a good portion of the investment in residences and Green Street business comes from Chinese families wanting to move their money overseas and escape draconian regulation in in PRC.
Makes no sense from a national perspective to be subsidizing Chinese nationals education. Also pushes out fully qualified US kids to be replaced by Chinese kids.
There is a tiered system for tuition. International students pay more. Hence, there is an economic incentive for universities to accept a lot of international students. The demand curve for education at top schools is almost inelastic.
The problem with this solution is that it does not eliminate the possibility that an immigrant will pay and then file for benefits--many of which are not available to our citizens.
Assessing the "talent" of an applicant for a job is also not solely data driven--much is subjective. One certainly hears much from tech folks that are displaced by H1B visa jobs. Is that ok? Should a one-time fee or price offset the years, or in some cases, generations of past contributions to our country.
Anecdotal evidence from various folks tells me that some of those here on H1B visas are being paid below market wages--which they resent but the corporation benefits. We as taxpayers do not, since the below market wage implies lower taxes paid. Why should our corporations be the only beneficiary of this subsidy?
I'd suggest an alternative proposal, with a much higher fee some of which should go directly to government--perhaps a special fund to reduce our federal debt might be of benefit.
Clearly it is not a straightforward issue that can be solely solved by free market pricing mechanism.
I agree with most of what you wrote except number nine, because you do have to vet more carefully those who come from hotbeds of radical Islamic terrorism, as we have seen that not doing so is very dangerous and has proven to be an abysmal failure. All you have to do is look at the consequences of policies like those in Germany, France and England and you know that to be the case.
I do like the idea of allowing the free market to determine who pays.
It is worth noting that Yasser Arafat was an engineer, George Habash and Bashar Assad and Che Guevara are/were doctors. Fortunately, none of them emigrated here.
People are customers as well as suppliers. Most people are assets, not liabilities. From a pure numbers perspective peak high school graduation is 2025 or so. Being part of a shrinking population causes all sorts of problems. Look at Chicago Public Schools.
The reasons don't really matter. Managing fixed costs with smaller volumes is hard. Closing schools is hard even when it's the right thing to do. There are going to be plenty of private schools that close too.
Growing up I experienced illegal immigration in its early forms, the late 70's early 80's and it was almost entirely from Mexico and it was field labor in the Columbian Basic area of the my home state of Washington. It also had a very different feel in that almost all of the families that came to this small town had a plan and property back in Mexico. Most had a decent home and were simply bring along the entire extended family, leaving a few back home, for a 5-10 year period until they saved up enough cash that they could smuggle back across the border to live on for the rest of their lives. I can't remember what the typical target number was, but dollars in Mexico had a large exponential purchasing valuation in private markets. The kids would go to school, sometimes absent when picking needed to be done. I remember a couple of kid's families hitting their mark and just dissapearing.
Overall I agree with your 10 points. A few comments.
The recommendation of the use of the price system to allocate immigration starts at the middle. Prices are used to allocate scarce resources. Without immigration quotas, the right to immigrate is not a scarce resource. So it is necessary to grasp the nettle of setting quotas before you can implement a price system. That is the first step, and the real challenge.
Who pays is really a non-issue. The Coase Theorem/tax incidence analysis/the theory of compensating differentials implies that to at least a first order approximation the identity of the immigrants admitted and their compensation net of any price paid to immigrate will be the same regardless of who formally pays. For example, if firms pay they will reduce the compensation they pay by the amount of the fee. In essence, compensation will be the value of the immigrant to the company minus the immigration fee. The fee is a wedge between the value to the employer and the compensation paid to the immigrant, regardless of who pays the fee.
You might argue that immigrants would be capital/liquidity constrained and would be unable to pay. Markets will work around that. Hiring companies can provide financing. An immigration loan market will develop. Etc.
Just set the system up so that both companies and immigrants can bid for slots. A company can bid, win a slot, and find the best available athlete to fill it. A immigrant can bid, win, and find an employer. If financing is an issue, the employers would tend to win most of the slots.
A price system is superior to a lottery system because it allocates the scarce slots to the most productive. However, the creation of a secondary market for slots can mitigate that problem. There is a mutually beneficial trade between low skill individual who wins the lottery and the high skill individual who doesn't.
The real issue is that we can come up with great plans on our blogs, substacks, or ivory towers, but no policy plan survives first contact with the politicians. I guarantee that any quota system that emerges from Congress and the bureaucracy would not be a simple "there will be X immigration slots in year Y, allocated by a price system."
One illustration. This system would result in virtually all immigrants being high skill individuals. Now that may be highly desirable, but the ag industry will raise holy hell. Given the influence that industry exerts there will be some carve out, or quota set asides for certain industries.
But that will lead to all sorts of subterfuge, e.g., an Indian PhD bidding for an ag quota slot, or a tech company setting up/buying an ag subsidiary. That is, any system that is intended to segment the market/price discriminate will lead to arbitrage and corruption.
And a pure price system would create political pressure from the low skill sectors like ag, meatpacking, etc., to pull back on enforcement of immigration laws.
Another likely flash point is national origin. Back in the day I remember national immigration quotas, with Ted Kennedy and other Irish pols pushing for generous quotas for Irish. Again, a pure system of X immigrants in year Y would result in huge ethnic disparities in the composition of those winning the right to immigrate. Such disparities will not be politically sustainable, IMO.
I could go on. But the basic idea is that what you and I and Gary Becker like about a price system is exactly what politicians hate about it.
Meaning that for a variety of reasons I doubt Congress would implement a price mechanism even if it does establish quotas. A lottery system is more likely, and cynic that I am, for the exact same reasons that Congress won't implement a price system, it will also restrict "scalping" in secondary markets.
The current brouhaha over "skilled" immigration seems akin to white northern attitudes during the great migration. Replace "steel mill" and "factory" terminology with "tech" and "coding".
Minimum wage laws in a production economy may have kept "undesirables" out for a while - but it bore a cost: higher steel prices on domestically produced lower quality vs foreign produced steel. Eventually the "tech" companies will take operations to the cheaper labor or will succumb to foreign competitors.
It seems we are trying to "fix" a broken public education system by instituting immigration policy which places protections around certain jobs - that barrier isn't going to artificially raise the IQ/ethic/productivity of domestic candidates (kind of like the axiom of Rodney Dangerfield's Thornton Melon: if you want to look skinny, hang out with fat people)
What form should an immigration market take? Are there a fixed number of slots and participants use a Dutch auction to price them? Can the slots be sold like other property rights if an immigrant wishes to leave the US and someone else wants to pay them for that immigration right? What non-price limits to avoid negative externalities, such as restrictions on criminality or contagious disease, would we want to set?
People are willing to pay to come here, illegals are paying tens of thousands of dollars in travel costs and to coyotes. Once the border is controlled, almost anything can be on the table. Control the border first, then we can discuss who we want to come here and what the price should be.
If there is any doubt that the H1B visa program lowers wages for tech employees I suggest you look at equivalent jobs between the defense industry (which can't use H1B visa employees as they are not US citizens) and commercial companies.
There really is no question that corporations use lower priced immigrant labor in tech to replace higher priced American workers. Companies such as Infosys base much of their business model on doing just that, and they have over 300,000 employees, many working as contractors at US companies.
Not to run down these workers. They are just trying to get to a better standard of living and are a huge positive to corporations trying to staff up for projects. Yet, it isn't even close to fair to put an IT guy in Schaumburg's job out for bid to an army of IT guys coming in from somewhere with 1/10 of the standard of living as the incumbent enjoys in the USA.
It is a perplexing issue, and I have worked with some of the greatest immigrant labor in US history. These guys take huge risks to come to the USA and the guys I have worked with continue their risk-seeking when they get something going in here. For every Elon Musk there are hundreds of failures, who are also very smart and work very hard.
The USA should definitely encourage creative hard workers to do business here, but should also not allow our own labor to be bid down. Not the simplest needle to thread.
As I just commented at Ruxandra Teslo's substack:
One thing that is interesting about the debate so far: the almost exclusive focus on 'engineers'...the term seems to be generally used to include anyone who can write code, at whatever level (pretty sure a lot of the H1Bs are actually sysadmins and such who actually *can't" write code)...as opposed to electrical, mechanical, and structural engineers.
But as important as engineering is, there are a lot of other skills also needed to grow the American economy. The biotech industry is very important, and while it does need some engineers, the key need is for scientists: molecular biologists, for example. Pretty sure that Ruxandra Teslo, for instance, could add a lot of value in an entrepreneurial US biotech company. (Indeed, Vivek's own company, Roivant, surely needs more people in the biological sciences than it does engineers)
There are also a lot of shortages among skilled workers who don't need to be college graduates..for example, there is a shortage of machinists, which is getting worse as older ones retire and younger people have not followed them into the field.
agree! Where I would draw the line is the soft bullshit majors like Women's Studies etc. None of them. Engineers, STEM, business, history.
Skilled trades are a sadly neglected field. I have a friend who is in the Millworkers Union here in South Florida. Back in the late 1980's he would ask us if we knew of any young people who liked working with their hands and heads that would like a career building things. Unfortunately we did not have any potential candidates. Our friend said they could never fill these apprenticeship classes. Move up to 2024 and they still cannot fill these classes. Sad!
Meant to include link:
https://www.writingruxandrabio.com/p/on-skilled-immigration
To earn a degree in a hard science, math or engineering fields you have to be able to read, write and be competent in math from grade school thru high school. Fail to do this and you will likely not make it thru college in these, three fields of study. The Chicago public school system does an abysmal job in teaching students in these areas. I would bet a few dollars that the percentage of K-12 students that make it to college, earn a degree in science, math or engineering, from Chicago public schools is very, very low.
Nice treatment of a complex issue. It is important to focus on legal non-immigrant visas. An H1-B is a visa.
Understandably, there is a lot of anger attached to the whole open border and illegal aliens issue, but H1-B has nothing whatsoever to do with that. So, let's compartmentalize.
There is a tendency to use the shorthand of referring to non-immigrant persons seeking temporary employment as "engineers" when, in fact, the eligibility for the program is vast including fashion models. It can include math, engineering, medicine, administration, and a number of fairly pedestrian occupations including college teachers.
This is not a program to attract "elite workers" as Vivek has said on several instances.
The base requirement is "specialized knowledge" and a bachelor's or higher degree that supports that specialized knowledge. There is no experience in the field requirement. If there were a sweet spot it would be an American university educated foreigner who has just graduated.
Bottom line is H1-B visas do not require exceptional qualifications, years of experience, or advanced degrees.
There is an entirely different program -- E-1/2/3/4/5 -- that provides visas (often permanent green card work visas) for persons with extraordinary qualifications.
As an example, an investor may attain an E-5 visa in return for making a substantial investment in a US based company. Colllege professors w PHDs, inventors, medical researchers are in the bullseye for this program.
These are elite workers and there is a requirement for distinction in the field, an advanced degree, and years of extensive experience. These folks are the ones Vivek is referencing.
The employer in the H1-B scenario applies via an LCA (labor conditon application) to the Dept of Labor in which it makes certain serious oath bound representations including that they will pay fair market value wages and that it will not negatively impact US workers.
There was once a requirement to have exposed the job to US workers before attempting to find a non-immigrant worker with specialized knowledge.
So, you have the employer petitioning the Dept of Labor via the LCA, receiving approval, and then posting the job.
Non-immigrant workers then apply for that job. If given the nod, they apply for a H1-B visa with job offer in hand.
In reality, there are foreign based H1-B processing mills that handle all of that for the non-immigrant worker. It is exactly like using an expediter to get a passport.
The rubs I see are:
1. The implication by every employer in their sworn LCA is they cannot find American workers to do these jobs and they will pay the same wages to H1-B workers as to American workers.
There is currently no requirement for the company to document its search for workers amongst US workers. There once was.
2. In reality, many of these companies do not even recruit at American schools with pertinent academic programs.
3. There is the implication that employers pay lower wages to H1-B workers. This appears to generally be true. Employers control that worker via the H1-B program and the ability to renew the first 3 years for another 3 making a total of 6.
Portability for H1-B holders is a real problem.
4. With the DOL handling the LCA and the DHS' USCIS (US Citizenship and Immigration Services), and the State Dept issuing the actual visas, nobody is doing any audit work to ascertain if the employer is actually complying with the LCA., Nobody.
You may harken back to the So Cal Con Edison incident of 2015 wherein this public utility fired its entire engineering staff of 400 and outsourced its engineering to offshore entities as well as hiring some H1-B workers.
I learned the intimate details of this fiasco whilst floating in a pool in Mexico at a resort with a former CEO of So Cal Con Edison. He was the predecessor to the then current CEO who fired all the engineers.
I tell you this because CEOs are right at the point of the spear on such macro labor issues including Elon Musk. I like Elon, but on this subject he's sort of full of shit.
If I were the controller of this program, I would expand it, dramatically actually, but reinvigorate the requirement that employers exhaust their attempts to fill these jobs with US citizens.
I would allow every foreigner who attains a degree in anything STEM to remain in the US for 5 years after graduation to seek a job.
The percentage of foreign students in American schools is less than 6% in a body of 19,000,000 students and about 55% of the foreign students are in STEM. So, you are looking at about 600,000 students annually.
Legal immigration should add to the gene pool of the US.
Footnote: Never discussed, but relatives (wives and children over 21) of H1-B visa holders can also work in America using a different program.
JLM
www.themusingsofthebigredcar.com
Excellent points, esp about family/spouses and the typical poor adherence to recruiting from local pools.
E5 can be abused as well. Once had a guy ask me to write a letter for him saying I was interested in investing in his company to support his E5 application. I felt a lot of empathy for him, since he was a great guy and truly trying to build a company but I didn't write the letter. BEST WAY-scrap all immigration and charge for it!
I visited two class A engineering schools and they are loaded with Chinese nationals taking up all the space where American kids can’t get in
If they were to stay here after graduation it might be ok but 95% go back to China
So our citizens can’t compete
It’s a rigged system against our kids
The U of I loves getting full fare from overseas students. Also, a good portion of the investment in residences and Green Street business comes from Chinese families wanting to move their money overseas and escape draconian regulation in in PRC.
Makes no sense from a national perspective to be subsidizing Chinese nationals education. Also pushes out fully qualified US kids to be replaced by Chinese kids.
There is a tiered system for tuition. International students pay more. Hence, there is an economic incentive for universities to accept a lot of international students. The demand curve for education at top schools is almost inelastic.
This is terrible and probably breaking many laws
In securities we would call this conversion
International students pay in-state tuition (in many states) as long as they are illegal.
The problem with this solution is that it does not eliminate the possibility that an immigrant will pay and then file for benefits--many of which are not available to our citizens.
Assessing the "talent" of an applicant for a job is also not solely data driven--much is subjective. One certainly hears much from tech folks that are displaced by H1B visa jobs. Is that ok? Should a one-time fee or price offset the years, or in some cases, generations of past contributions to our country.
Anecdotal evidence from various folks tells me that some of those here on H1B visas are being paid below market wages--which they resent but the corporation benefits. We as taxpayers do not, since the below market wage implies lower taxes paid. Why should our corporations be the only beneficiary of this subsidy?
I'd suggest an alternative proposal, with a much higher fee some of which should go directly to government--perhaps a special fund to reduce our federal debt might be of benefit.
Clearly it is not a straightforward issue that can be solely solved by free market pricing mechanism.
I'd get rid of the benefits. You lose your immigration privileges if you file for benefits. Instead, you get to go back.
I agree with most of what you wrote except number nine, because you do have to vet more carefully those who come from hotbeds of radical Islamic terrorism, as we have seen that not doing so is very dangerous and has proven to be an abysmal failure. All you have to do is look at the consequences of policies like those in Germany, France and England and you know that to be the case.
I do like the idea of allowing the free market to determine who pays.
Fair point on terrorism. I should have included that. It is assumed they are peaceful and want to improve America, not tear it down.
It is worth noting that Yasser Arafat was an engineer, George Habash and Bashar Assad and Che Guevara are/were doctors. Fortunately, none of them emigrated here.
People are customers as well as suppliers. Most people are assets, not liabilities. From a pure numbers perspective peak high school graduation is 2025 or so. Being part of a shrinking population causes all sorts of problems. Look at Chicago Public Schools.
CPS has its own problems. Probably not a good example! But, demographically, people are having fewer children
The reasons don't really matter. Managing fixed costs with smaller volumes is hard. Closing schools is hard even when it's the right thing to do. There are going to be plenty of private schools that close too.
First we must stop illegal immigration, tho setting a high price on legal immigration can help.
What price? Prior full year’s median IRS, changing each July 4 (or 3 months after April 15?).
So about $60k in 2024 from 2023.
Illegals pay twice that.
Companies paying illegals become liable for paying that.
Then, if too few/ many come, there can be some discount or surcharge to change the total level.
I’ve long agreed with Becker on this idea.
Stopping illegals first remains the key requirement.
Most current govt employees would be more productive in assisting in deportation of illegals.
agree, stopping illegal immigration is key, and will still be necessary with a price system of immigration
Growing up I experienced illegal immigration in its early forms, the late 70's early 80's and it was almost entirely from Mexico and it was field labor in the Columbian Basic area of the my home state of Washington. It also had a very different feel in that almost all of the families that came to this small town had a plan and property back in Mexico. Most had a decent home and were simply bring along the entire extended family, leaving a few back home, for a 5-10 year period until they saved up enough cash that they could smuggle back across the border to live on for the rest of their lives. I can't remember what the typical target number was, but dollars in Mexico had a large exponential purchasing valuation in private markets. The kids would go to school, sometimes absent when picking needed to be done. I remember a couple of kid's families hitting their mark and just dissapearing.
Overall I agree with your 10 points. A few comments.
The recommendation of the use of the price system to allocate immigration starts at the middle. Prices are used to allocate scarce resources. Without immigration quotas, the right to immigrate is not a scarce resource. So it is necessary to grasp the nettle of setting quotas before you can implement a price system. That is the first step, and the real challenge.
Who pays is really a non-issue. The Coase Theorem/tax incidence analysis/the theory of compensating differentials implies that to at least a first order approximation the identity of the immigrants admitted and their compensation net of any price paid to immigrate will be the same regardless of who formally pays. For example, if firms pay they will reduce the compensation they pay by the amount of the fee. In essence, compensation will be the value of the immigrant to the company minus the immigration fee. The fee is a wedge between the value to the employer and the compensation paid to the immigrant, regardless of who pays the fee.
You might argue that immigrants would be capital/liquidity constrained and would be unable to pay. Markets will work around that. Hiring companies can provide financing. An immigration loan market will develop. Etc.
Just set the system up so that both companies and immigrants can bid for slots. A company can bid, win a slot, and find the best available athlete to fill it. A immigrant can bid, win, and find an employer. If financing is an issue, the employers would tend to win most of the slots.
A price system is superior to a lottery system because it allocates the scarce slots to the most productive. However, the creation of a secondary market for slots can mitigate that problem. There is a mutually beneficial trade between low skill individual who wins the lottery and the high skill individual who doesn't.
The real issue is that we can come up with great plans on our blogs, substacks, or ivory towers, but no policy plan survives first contact with the politicians. I guarantee that any quota system that emerges from Congress and the bureaucracy would not be a simple "there will be X immigration slots in year Y, allocated by a price system."
One illustration. This system would result in virtually all immigrants being high skill individuals. Now that may be highly desirable, but the ag industry will raise holy hell. Given the influence that industry exerts there will be some carve out, or quota set asides for certain industries.
But that will lead to all sorts of subterfuge, e.g., an Indian PhD bidding for an ag quota slot, or a tech company setting up/buying an ag subsidiary. That is, any system that is intended to segment the market/price discriminate will lead to arbitrage and corruption.
And a pure price system would create political pressure from the low skill sectors like ag, meatpacking, etc., to pull back on enforcement of immigration laws.
Another likely flash point is national origin. Back in the day I remember national immigration quotas, with Ted Kennedy and other Irish pols pushing for generous quotas for Irish. Again, a pure system of X immigrants in year Y would result in huge ethnic disparities in the composition of those winning the right to immigrate. Such disparities will not be politically sustainable, IMO.
I could go on. But the basic idea is that what you and I and Gary Becker like about a price system is exactly what politicians hate about it.
Meaning that for a variety of reasons I doubt Congress would implement a price mechanism even if it does establish quotas. A lottery system is more likely, and cynic that I am, for the exact same reasons that Congress won't implement a price system, it will also restrict "scalping" in secondary markets.
great points about what might happen! Immigration loan market...spectacular idea.
The current brouhaha over "skilled" immigration seems akin to white northern attitudes during the great migration. Replace "steel mill" and "factory" terminology with "tech" and "coding".
Minimum wage laws in a production economy may have kept "undesirables" out for a while - but it bore a cost: higher steel prices on domestically produced lower quality vs foreign produced steel. Eventually the "tech" companies will take operations to the cheaper labor or will succumb to foreign competitors.
It seems we are trying to "fix" a broken public education system by instituting immigration policy which places protections around certain jobs - that barrier isn't going to artificially raise the IQ/ethic/productivity of domestic candidates (kind of like the axiom of Rodney Dangerfield's Thornton Melon: if you want to look skinny, hang out with fat people)
What form should an immigration market take? Are there a fixed number of slots and participants use a Dutch auction to price them? Can the slots be sold like other property rights if an immigrant wishes to leave the US and someone else wants to pay them for that immigration right? What non-price limits to avoid negative externalities, such as restrictions on criminality or contagious disease, would we want to set?
People are willing to pay to come here, illegals are paying tens of thousands of dollars in travel costs and to coyotes. Once the border is controlled, almost anything can be on the table. Control the border first, then we can discuss who we want to come here and what the price should be.
If there is any doubt that the H1B visa program lowers wages for tech employees I suggest you look at equivalent jobs between the defense industry (which can't use H1B visa employees as they are not US citizens) and commercial companies.
Great analysis, Jeff and I agree with it; make the immigrants pay the taxpayer rather than intermediaries like drug cartels.
Government always is the problem. Lobbyists pay them to create visa's for individual industries and distort the markets based on the paymaster.
Excellent points JC.
There really is no question that corporations use lower priced immigrant labor in tech to replace higher priced American workers. Companies such as Infosys base much of their business model on doing just that, and they have over 300,000 employees, many working as contractors at US companies.
Not to run down these workers. They are just trying to get to a better standard of living and are a huge positive to corporations trying to staff up for projects. Yet, it isn't even close to fair to put an IT guy in Schaumburg's job out for bid to an army of IT guys coming in from somewhere with 1/10 of the standard of living as the incumbent enjoys in the USA.
It is a perplexing issue, and I have worked with some of the greatest immigrant labor in US history. These guys take huge risks to come to the USA and the guys I have worked with continue their risk-seeking when they get something going in here. For every Elon Musk there are hundreds of failures, who are also very smart and work very hard.
The USA should definitely encourage creative hard workers to do business here, but should also not allow our own labor to be bid down. Not the simplest needle to thread.