It kind of does matter, since none of these IT workers are making $4 an hour.
Still, the point is the same. You can ship in an Indian IT worker and pay him (or her) less than market rate. The claim that they can’t find Americans to do the job is pure bullshit. We’re not talking about needing an expert in underwater rocket science, and the only person in the world who is qualified lives is Uzbekistan. Colleges churn out many thousands of IT people a year. But the foreign workers are cheaper, so we hear the companies whine about “Ohhhh, we can’t find enough workers, so please grant us a bunch of H1Bs.”
So what is the market rate for these jobs?
They can stay in India or China and work there, if the end result of them coming here is to flood the market with low-rent semi-competent workers, and thereby reduce my value in the workforce.
More than what the Indian guys are getting, you can be sure. The exact number is beside the point.
People keep saying that free trade “raises living standards”, is this on average? There are a shit ton of very poor people in this world. If free trade is only about raising average living standards it would seem that the best action for the current wealthiest countries would be against free trade. I’m not an economist could someone explain the value of free trade to me.
If your work can be done by “low-rent semi-competent” workers, that sounds like a problem that will catch up with you eventually. How long do you think that regulation is going to be able to protect the little inefficiency you are apparently inhabiting? Why should companies pay you an inflated wage when everyone else in the world has to fight for their salary?
Protecting labor markets is a thing that countries do. I get that, and that’s fine. But betting your entire financial stability on that seems pretty risky.
H-1B petitions require that the petitioning employer pay the prevailing wage for the position and geographic location of the job,as determined by the Department of Labor, or what they are paying US workers for that job and location, whichever is higher. I’m sure there is fudging, but that’s a Dept. Of Labor enforcement issue.
Eva Luna, Immigration Paralegal
generally speaking, there is no legal requirement to attempt to find US workers before hiring H-1B workers (that’s generally only required for the green card process).
If anyone is curious how the prevailing wage is determined, or wants to search wages by occupation and location and level, here’s a little light reading for you.
That’s pretty slipshod on the details, though. I think there’s no question that market models show that universally open trade in the long run improves overall national economies and living standards for all participating countries. The thing is, as the fellow said, in the long run we’re all dead.
A more candid take from Mankiw on the same issue is here:
“Ultimately”, “in the long run”, “eventually”. I’m not disputing any of those claims, but I don’t think it’s unreasonable to want to see some numbers attached to them.
As economist Paul Krugman subsequently pointed out in a more nuanced discussion:
Emphasis added. So I don’t think it’s really useful to look down one’s nose and say “tut tut, economists all agree that free trade is ultimately beneficial to all!” That misses the point that in the meantime it can have many consequences that are not beneficial to substantial numbers of people.
Here are a few articles on the subject:
Sure, but like kimstu’s article alludes to, if you’re a Western worker, having to compete with these developing country people is crappy for the developed country’s workers- if your job isn’t outsourced entirely, the market rate settles out somewhere far less than it would have been in an entirely domestic labor market.
It’s common sense- if you restrict your say… IT hiring to Western Europe, Canada and the US, your salaries will be all about the same. Throw a shitload of Indian workers willing to work for 60% (or less) of the going rate into the mix, and your going rate will go down- it’s how markets work.
Problem is, with the H1-B visas, these companies are doing a sort of de-facto market manipulation and basically screwing domestic IT workers.
Nobody seems to be offering any actual evidence that these workers are paid less than the going rate. As I said earlier:
Those developed country people are going to be screwed eventually anyway if they can’t think of a way to stay competitive. Pretty soon, other countries are going to develop the management and infrastructure capacity of the U.S., and there really will be no reason not to outsource.
I have a family member whose job got outsourced. Instead of crying in his milk, he took a position managing the office overseas. I had another family member who got out priced by cheap foreign labor. He went back to school and retrained in a more skilled profession. Sure, it’d be awesome if they had an easier path. But since when was life easy?
I’m a Californian, and that means my family has, at least twice, packed their bags and moved in search of economic opportunity. Chances are your family did the same at some point. If we aren’t willing to be nimble, to take risks, to keep growing our skills, and to find the most productive niches we can find, we are in a lot of trouble.
The world is changing, and that doesn’t have to be a bad thing for us. More and more middle class people can be a GREAT thing for everyone. But we need to be willing to meet those changes head on, not try to insulate ourselves in a bubble.
This is what I don’t get. If you are currently on top and the only possible option is to eventually descend to the average. The only successful strategy should be to put it off for as long as possible.
It depends. For example, here’s what the Department of Labor thinks the going wage is for software applications developers in the Orlando metro area. (Level 1 generally means entry level for someone with a related bachelor’s degree, plus up to ~ 2 years of experience. Level 4 is senior level.)
Who says that? Certainly any elimination of an inefficiency will be detrimental, at least in the short term, to those who enjoyed the benefit of it. We should provide reasonable care for such unfortunates. What we shouldn’t do is fight the losing fight some propose, especially when in doing so it unfavorably impacts the nation in the aggregate and the battle is at some point inevitably lost. Restricting free trade is pandering and folly. We need to deal with the fact that we’re not competitive in some arenas.
If you lived in India or China and the opportunity to work in the US came up, would you take it? I certainly would and I won’t blame (or discourage) others for doing the same thing.
Thanks.