Good summary of the H-1B situation! One thing I think you missed is that we should allow H-1B spouses to work. Currently that's only possible if you have an approved I-140 and (slow) EAD paperwork. Forcing these people (mostly women) to become housewives is not ok. And it makes it a lot harder to recruit talent from Western countries where spouses *expect* to be able to work.
I had an H-1B engineer working for me. Excellent engineer with a Ph.D. from a major US university. He couldn't renew the visa and had to leave the country two years ago. We have struggled to find a good replacement since then because there are few Americans going to school for that skill set. He seems happy working in Britain right now.....
Although I hate to admit it, I often find the Cato Institute to be a good source of info and opinion about all things immigration-related. They recently posted a piece that seems to significantly undermine the claim that H-1b visa holders are tethered to their employers. Not vouching for it, but here it is:
Of course, given the extent to which tens of millions American citizens work under conditions roughly akin to indentured servitude, this seems to be a particularly stupid argument with which to attack the H-1b program.
Glad to see this writing debuking the myth foreign workers taking away high-skilled jobs. As someone who has tried to find job aboard, I found companies generally are less willing to sponsor work visa unless they have absolutely no one on shore to fill in that position. This situation mostly applies to a small number of positions that requires extremely high-skilled individuals. The paperwork and the uncertainty about visa outcome are enough to make most companies switch to domestic or onshore candidates.
What global firms do is hire high end candidates based upon their student visas and stem exceptions and then try to go the H-1B route (or green card) after that. If the lotto option fails, the hire is often sent abroad to work in an overseas office.
I think the backlash from activists who want to reform the H1-B visa is completely warranted. While H1-B employees are technically not bonded to their job, there is definitely increased friction when they do want to change employers, and there are so many horror stories I've heard when an employer messes up part of the application/transfer/renewal process and the employee is put into visa limbo or just has to leave the country (which the USCIS is never in a position to resolve and tends to be unsympathetic toward).
I think an even worse gap in the program that is often overlooked in this conversation is the process for legal graduates of US universities who hold an F1/OPT visas to convert to H1-B. These students are thrown into the same lottery as everyone else, and -- especially beginning during the Trump administration -- it was extremely common for these visa holders to strike out waiting for their visa to come through in the lottery after two or three years in a row.
It's possible that, statistically, the program works pretty well, but unfortunately the immigration system puts people in a series of precarious positions that wreck peoples' lives frequently enough that every immigrant I know knows at least a few people who were totally screwed over by an employer or by the USCIS. There is a real human cost to this that I think needs to be kept in mind, which feels a bit absent from this analysis.
Aside from any theoretical willingness to accept low wages, the visa issues just introduces a ton of friction into the labor force, which most economists recognize as a bad thing. The threat of having to leave the US means there's more "quiet quitting" for months on end as the job search stretches out -- who would take the risk of quitting until another job is lined up? And not every potential employer is willing to do the paperwork of moving visas across. Small employers in particular are unlikely to have the experience (or the HR department) to navigate it, making them less likely to extend offers.
I live in Vietnam where the equivalent kind of visa has an even shorter 15 day expiry date, which just exacerbates all of the above issues. I know lots of companies that won't touch any kind of "weird" hire because they don't want to have to figure out a new process. And I know lots of people who do the absolute minimum for weeks or months on end while they look for something better, which is a loss for both sides.
To say nothing of the tremendous amount of honestly needless stress when an employee suddenly loses their job for whatever reason (perhaps the company went under or has a reduction in force) and suddenly has a ticking clock to find a new job or have their entire life turned up side down by leaving the country.
As you say, a lot of this could be mitigated by greatly extending the period you're allowed to be between employers. Six-months seems a pretty reasonable number to me, too.
H1-B visa workers are potential immigrants, legal, tax-paying, law-biding immigrants. Yet, H1-B workers' situation has been worsened in the last 20 years: first, Bush Administration cut the total number from 75k per year to 30k or 35k per year. Then, this ludicrous lottery system was introduced to reward cheating - cheating like IT service companies from certain country to sign up as many jobs as possible to enter the lottery, crowding out workers of the rest of the world who enter only once. Therefore, the result is unexpected favor cheaters and drives talents from undergrads and grads students out of the job market and out of the immigration.
It is ironic that Trump was the first president who brought this issue up because he wanted to close illegal immigrant loophole and boost legal immigrants. Democrats, however, always want to boost illegal immigrants because they think those once-illegal ones would reward the party with votes. Think again?
Excuse me but Trump did not take any serious steps to "close the illegal immigrant loophole," only performance art about walls and border detention cruelty. The only serious step needed would be to make it illegal for a company to hire illegal aliens, as it is in Canada. That's why there is no large illegal immigrant problem in Canada---they can't get jobs. Furthermore, the Trump administration actively throttled all aspects of legal immigration, trying to effectively destroy it, and it almost worked. They certainly didn't want to boost it (Stephen Miller?)
As far as I can tell, when they do plant raids and gather up the illegal immigrants, they don't arrest the managers. You could probably do the same raid 6 months later and round up as many illegal workers. It is all just performance theater. The businesses like having a cheap compliant workforce.
This is probably the best paper on the impact of the H1B (forthcoming, Journal of Political Economy): https://www3.nd.edu/~kdoran/Doran_Visas.pdf. It uses random variation due to the lottery. It does find some modest rent-shifting from US workers to firm profits as a result of the H1B.
This seems to miss the main point. The system, like any form of bonded labor, makes it easier for employers to abuse their workers, and this is what Musk is doing.
That would just be solved by the increased grace period, I think. If workers had 6 months to find a new job instead of 2, they'd be able to quit very easily.
If I remember correctly, the employee is tight to the employer for 1 year and could change jobs after. And after 18 months they’re free to move inside EU to a different country. It totally make sense to gradually lift restrictions with time.
Even better, whatever the process to get the visa, in the end the immigrant gets it, not the employer for 2 years or however long. That way if the employer tries it on, the immigrant can look for another job, same as any native worker.
I think even with a longer grace period, monopsony power of employers would increase and hiring from the external market would yield some substitution from wages to profits.
This is exactly correct. The point is that bonding the employee to the employer through the H1B generates greater levels of monopsony power (i.e. https://www.journals.uchicago.edu/doi/abs/10.1086/688877) whereas immigration in general does not.
I think that one thing that was missed here is that many H-1B applicants are actually in the US -- they are here as students and wish to stay here. Besides salary issues they may be preferred just because they are motivated by a strong desire not to ever return to their own country.
The type of low level project work done by the majority of H-1b holders could easily be done by American graduates of second or third tier schools (a STEM degree is not even necessary - just a bit of training). Much of the work is done overseas, of course, with the H-1b and “training visa” types being only the thin end of the wedge.
Of course, leftist rules discriminating against contractors means companies will outsource and offshore more in any case.
We need to find a way to encourage/incent/force US employers to train and develop American workers.
Equally, foreign graduates of good programs who get the high end jobs need to be offered easier ways to extend their stay (after their graduate and STEM extension visas expire) for those willing to become American citizens or green card holders. I would prefer to have citizens rather than green card holders. A lot of the high end H-1b recipients migrate to the green card option as a glorified work visa , so one needs to include tech industry green card holders in any analysis of economic/wage impact.
The long term effects can be pernicious. I think of what has happened to low wage jobs- the kind my generation worked at. The staff was usually a motley collection of school kids working afternoons, nights, weekends and summers plus full timers who were high school dropouts, recovering addicts, ex-cons, etc. It was a pretty fickle and unreliable workforce (lots of turnover) and employers had to spend a lot of time juggling schedules.
With the massive influx of illegals from the 1990s onwards, illegals effectively supplanted that hodgepodge American workforce. An illegal will work full time all week long and and is unlikely to quit. They weren’t getting paid more than the Americans- they were more reliable. This was fantastic for low end service employers. Meanwhile, American schools kids, high school dropouts, ex-cons and recovering addicts got less employment opportunities.
H-1bs, graduate/stem visas, green cards and illegals have all been great for US employers. Has the current system been beneficial to US society? I am not so sure.
This is a lump-of-labor fallacy. This assumes there was a fixed quantity of work, and undocumented immigrants somehow outcompeted Americans on the margins. This also assumes employers wanted to take on teenagers (laws restrict the number of hours and times a minor can work; a teen cannot work during school hours because they can't skip classes to work), or dropouts, ex-convicts and addicts (because they are problematic).
This also assumes an equal work ethic and ability on the part of Americans. In the case of dropouts and addicts, there are some clearly psychological and behavioral issues that doom them to unemployment and underemployment and these were present *before being frustrated by dim job prospects* .
Ex-convicts have the hardest time, though. Even in the absence of immigrants, a former inmate often wants to re-establish their life after they served their time but found that a criminal record freezes them out of legitimate job opportunities; for felonies, this is at least 80% of employment.
Thank you, I live in Irvine, CA - where there are large groups of these workers living in apartments all rented out for them and using corporate credit cards that expense living expenses. They get paid peanuts for doing rather simple project management jobs, that could easily be done here. They are watched and don't complain out of fear of getting shipped back to India.
not necessarily. Overseas jobs are mostly assembly line jobs but domestic H1-b visas are given to R&D, programers, bankers, analysts, etc. who are high paying jobs and supposedly talented workers that America needs.
Thank you for writing this! Extending the grace period is a great first step to target in these uncertain times. Please consider signing and sharing this petition on the topic:
To first order immigration is a net plus: those willing to upend their lives and move to a foreign country, often without valid immigration status, are going to be in the upper fractions of self-confidence in their ability to trade high quality labor for good wages. In an economy with still substantial financial capital (wealth) relative to actual real (thermodynamic) valuations this is an interesting perturbation theory problem. If the measure is real growth then importing talent with the top intellectual capital value (current and projected) is optimal. Having spent my career in basic physical science the value of foreign talent is so great it is difficult to estimate how great it is. At the National Lab level it takes huge effort and expense to get H-1B visas for scientists to become staff scientists who have done post-docs in the US so the system rewards many of the best scientists in the world. Pushing up standards in science is always good.
My spouse teaches in an inner-city elementary school. Each year, up to half of her class is immigrant children (most from Trumps s****le countries, many from refugee camps). Usually, at least a couple don't speak a word of English at the beginning of the year. Kids in the class are translating for them. However, their families are focused on the American Dream and are working hard to escape poverty. Invariably, the kids are graduating from high school and many go to college.
This is how the United States and Canada were built. It is where our future growth lies.
Yeah, I remember when Trump said that line about people from s*****le countries. Rather than the "how dare you call them s*****le countries, you racist" reaction he got in the media, the better response would have been "Because being from a s*****le country doesn't mean they're s****y people, you racist."
The H-1B workers I know are in two camps: those tech workers who work for outsourcing companies at extremely low wages, just hoping to log enough hours to eventually apply for citizenship and finance workers who are beholden and regularly flout financial reporting ethics to over-state the companies profits or hide losses.
Good summary of the H-1B situation! One thing I think you missed is that we should allow H-1B spouses to work. Currently that's only possible if you have an approved I-140 and (slow) EAD paperwork. Forcing these people (mostly women) to become housewives is not ok. And it makes it a lot harder to recruit talent from Western countries where spouses *expect* to be able to work.
Ahh, good point.
Yeah, and weirdly L1 spouses are allowed to work.
See social impact bonds crypto and ESG this is the tail end of a 50-year plan
I had an H-1B engineer working for me. Excellent engineer with a Ph.D. from a major US university. He couldn't renew the visa and had to leave the country two years ago. We have struggled to find a good replacement since then because there are few Americans going to school for that skill set. He seems happy working in Britain right now.....
Although I hate to admit it, I often find the Cato Institute to be a good source of info and opinion about all things immigration-related. They recently posted a piece that seems to significantly undermine the claim that H-1b visa holders are tethered to their employers. Not vouching for it, but here it is:
https://www.cato.org/blog/not-indentured-h-1b-workers-are-switching-employers-more-ever
Of course, given the extent to which tens of millions American citizens work under conditions roughly akin to indentured servitude, this seems to be a particularly stupid argument with which to attack the H-1b program.
Glad to see this writing debuking the myth foreign workers taking away high-skilled jobs. As someone who has tried to find job aboard, I found companies generally are less willing to sponsor work visa unless they have absolutely no one on shore to fill in that position. This situation mostly applies to a small number of positions that requires extremely high-skilled individuals. The paperwork and the uncertainty about visa outcome are enough to make most companies switch to domestic or onshore candidates.
Unfortunately nobody seemed to bother asking US workers.
I guess we'll just go with experts, they've never failed us yet.
What global firms do is hire high end candidates based upon their student visas and stem exceptions and then try to go the H-1B route (or green card) after that. If the lotto option fails, the hire is often sent abroad to work in an overseas office.
Keep in mind H-1B is not the only work visa class. I am on E-3 and a friend at Twitter is on L-1.
Also people don’t stay long on H-1B - companies will generally help you move to Green Card.
I think the backlash from activists who want to reform the H1-B visa is completely warranted. While H1-B employees are technically not bonded to their job, there is definitely increased friction when they do want to change employers, and there are so many horror stories I've heard when an employer messes up part of the application/transfer/renewal process and the employee is put into visa limbo or just has to leave the country (which the USCIS is never in a position to resolve and tends to be unsympathetic toward).
I think an even worse gap in the program that is often overlooked in this conversation is the process for legal graduates of US universities who hold an F1/OPT visas to convert to H1-B. These students are thrown into the same lottery as everyone else, and -- especially beginning during the Trump administration -- it was extremely common for these visa holders to strike out waiting for their visa to come through in the lottery after two or three years in a row.
It's possible that, statistically, the program works pretty well, but unfortunately the immigration system puts people in a series of precarious positions that wreck peoples' lives frequently enough that every immigrant I know knows at least a few people who were totally screwed over by an employer or by the USCIS. There is a real human cost to this that I think needs to be kept in mind, which feels a bit absent from this analysis.
Aside from any theoretical willingness to accept low wages, the visa issues just introduces a ton of friction into the labor force, which most economists recognize as a bad thing. The threat of having to leave the US means there's more "quiet quitting" for months on end as the job search stretches out -- who would take the risk of quitting until another job is lined up? And not every potential employer is willing to do the paperwork of moving visas across. Small employers in particular are unlikely to have the experience (or the HR department) to navigate it, making them less likely to extend offers.
I live in Vietnam where the equivalent kind of visa has an even shorter 15 day expiry date, which just exacerbates all of the above issues. I know lots of companies that won't touch any kind of "weird" hire because they don't want to have to figure out a new process. And I know lots of people who do the absolute minimum for weeks or months on end while they look for something better, which is a loss for both sides.
To say nothing of the tremendous amount of honestly needless stress when an employee suddenly loses their job for whatever reason (perhaps the company went under or has a reduction in force) and suddenly has a ticking clock to find a new job or have their entire life turned up side down by leaving the country.
As you say, a lot of this could be mitigated by greatly extending the period you're allowed to be between employers. Six-months seems a pretty reasonable number to me, too.
H1-B visa workers are potential immigrants, legal, tax-paying, law-biding immigrants. Yet, H1-B workers' situation has been worsened in the last 20 years: first, Bush Administration cut the total number from 75k per year to 30k or 35k per year. Then, this ludicrous lottery system was introduced to reward cheating - cheating like IT service companies from certain country to sign up as many jobs as possible to enter the lottery, crowding out workers of the rest of the world who enter only once. Therefore, the result is unexpected favor cheaters and drives talents from undergrads and grads students out of the job market and out of the immigration.
It is ironic that Trump was the first president who brought this issue up because he wanted to close illegal immigrant loophole and boost legal immigrants. Democrats, however, always want to boost illegal immigrants because they think those once-illegal ones would reward the party with votes. Think again?
Excuse me but Trump did not take any serious steps to "close the illegal immigrant loophole," only performance art about walls and border detention cruelty. The only serious step needed would be to make it illegal for a company to hire illegal aliens, as it is in Canada. That's why there is no large illegal immigrant problem in Canada---they can't get jobs. Furthermore, the Trump administration actively throttled all aspects of legal immigration, trying to effectively destroy it, and it almost worked. They certainly didn't want to boost it (Stephen Miller?)
As far as I can tell, when they do plant raids and gather up the illegal immigrants, they don't arrest the managers. You could probably do the same raid 6 months later and round up as many illegal workers. It is all just performance theater. The businesses like having a cheap compliant workforce.
This is probably the best paper on the impact of the H1B (forthcoming, Journal of Political Economy): https://www3.nd.edu/~kdoran/Doran_Visas.pdf. It uses random variation due to the lottery. It does find some modest rent-shifting from US workers to firm profits as a result of the H1B.
This seems to miss the main point. The system, like any form of bonded labor, makes it easier for employers to abuse their workers, and this is what Musk is doing.
That would just be solved by the increased grace period, I think. If workers had 6 months to find a new job instead of 2, they'd be able to quit very easily.
European Blue Card is way better in this regard.
If I remember correctly, the employee is tight to the employer for 1 year and could change jobs after. And after 18 months they’re free to move inside EU to a different country. It totally make sense to gradually lift restrictions with time.
I wish they also would be able to quit and start or co-found a company without additional visa hassles.
Even better, whatever the process to get the visa, in the end the immigrant gets it, not the employer for 2 years or however long. That way if the employer tries it on, the immigrant can look for another job, same as any native worker.
I think even with a longer grace period, monopsony power of employers would increase and hiring from the external market would yield some substitution from wages to profits.
This is exactly correct. The point is that bonding the employee to the employer through the H1B generates greater levels of monopsony power (i.e. https://www.journals.uchicago.edu/doi/abs/10.1086/688877) whereas immigration in general does not.
I think that one thing that was missed here is that many H-1B applicants are actually in the US -- they are here as students and wish to stay here. Besides salary issues they may be preferred just because they are motivated by a strong desire not to ever return to their own country.
The type of low level project work done by the majority of H-1b holders could easily be done by American graduates of second or third tier schools (a STEM degree is not even necessary - just a bit of training). Much of the work is done overseas, of course, with the H-1b and “training visa” types being only the thin end of the wedge.
Of course, leftist rules discriminating against contractors means companies will outsource and offshore more in any case.
We need to find a way to encourage/incent/force US employers to train and develop American workers.
Equally, foreign graduates of good programs who get the high end jobs need to be offered easier ways to extend their stay (after their graduate and STEM extension visas expire) for those willing to become American citizens or green card holders. I would prefer to have citizens rather than green card holders. A lot of the high end H-1b recipients migrate to the green card option as a glorified work visa , so one needs to include tech industry green card holders in any analysis of economic/wage impact.
The long term effects can be pernicious. I think of what has happened to low wage jobs- the kind my generation worked at. The staff was usually a motley collection of school kids working afternoons, nights, weekends and summers plus full timers who were high school dropouts, recovering addicts, ex-cons, etc. It was a pretty fickle and unreliable workforce (lots of turnover) and employers had to spend a lot of time juggling schedules.
With the massive influx of illegals from the 1990s onwards, illegals effectively supplanted that hodgepodge American workforce. An illegal will work full time all week long and and is unlikely to quit. They weren’t getting paid more than the Americans- they were more reliable. This was fantastic for low end service employers. Meanwhile, American schools kids, high school dropouts, ex-cons and recovering addicts got less employment opportunities.
H-1bs, graduate/stem visas, green cards and illegals have all been great for US employers. Has the current system been beneficial to US society? I am not so sure.
This is a lump-of-labor fallacy. This assumes there was a fixed quantity of work, and undocumented immigrants somehow outcompeted Americans on the margins. This also assumes employers wanted to take on teenagers (laws restrict the number of hours and times a minor can work; a teen cannot work during school hours because they can't skip classes to work), or dropouts, ex-convicts and addicts (because they are problematic).
This also assumes an equal work ethic and ability on the part of Americans. In the case of dropouts and addicts, there are some clearly psychological and behavioral issues that doom them to unemployment and underemployment and these were present *before being frustrated by dim job prospects* .
Ex-convicts have the hardest time, though. Even in the absence of immigrants, a former inmate often wants to re-establish their life after they served their time but found that a criminal record freezes them out of legitimate job opportunities; for felonies, this is at least 80% of employment.
Thank you, I live in Irvine, CA - where there are large groups of these workers living in apartments all rented out for them and using corporate credit cards that expense living expenses. They get paid peanuts for doing rather simple project management jobs, that could easily be done here. They are watched and don't complain out of fear of getting shipped back to India.
Would improved access to H1-b visas reduce the incentives for firms to set up larger operations in foreign countries?
not necessarily. Overseas jobs are mostly assembly line jobs but domestic H1-b visas are given to R&D, programers, bankers, analysts, etc. who are high paying jobs and supposedly talented workers that America needs.
Jobs outsourced to East Asia are often in manufacturing, but plenty of IT and of course customer support jobs are outsourced to e.g. India.
Thank you for writing this! Extending the grace period is a great first step to target in these uncertain times. Please consider signing and sharing this petition on the topic:
https://www.change.org/p/extend-h1b-grace-period
To first order immigration is a net plus: those willing to upend their lives and move to a foreign country, often without valid immigration status, are going to be in the upper fractions of self-confidence in their ability to trade high quality labor for good wages. In an economy with still substantial financial capital (wealth) relative to actual real (thermodynamic) valuations this is an interesting perturbation theory problem. If the measure is real growth then importing talent with the top intellectual capital value (current and projected) is optimal. Having spent my career in basic physical science the value of foreign talent is so great it is difficult to estimate how great it is. At the National Lab level it takes huge effort and expense to get H-1B visas for scientists to become staff scientists who have done post-docs in the US so the system rewards many of the best scientists in the world. Pushing up standards in science is always good.
My spouse teaches in an inner-city elementary school. Each year, up to half of her class is immigrant children (most from Trumps s****le countries, many from refugee camps). Usually, at least a couple don't speak a word of English at the beginning of the year. Kids in the class are translating for them. However, their families are focused on the American Dream and are working hard to escape poverty. Invariably, the kids are graduating from high school and many go to college.
This is how the United States and Canada were built. It is where our future growth lies.
Yeah, I remember when Trump said that line about people from s*****le countries. Rather than the "how dare you call them s*****le countries, you racist" reaction he got in the media, the better response would have been "Because being from a s*****le country doesn't mean they're s****y people, you racist."
The H-1B workers I know are in two camps: those tech workers who work for outsourcing companies at extremely low wages, just hoping to log enough hours to eventually apply for citizenship and finance workers who are beholden and regularly flout financial reporting ethics to over-state the companies profits or hide losses.