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Mark Nelson

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Thomas Friedman, the Pollyanna of Globalism

February 16, 2009

New York Times columnist Thomas Friedman spends a lot of time globetrotting, and when it comes to emerging economies, he seems to always find something to like. In a column  from last week, he used a tongue-in-cheek quote from The Indian Express  as a springboard to launch a broadside regarding US immigration policy. The quote is a comment on how the US could quickly solve its financial crisis:

“All you need to do is grant visas to two million Indians, Chinese and Koreans,” said Shekhar Gupta, editor of The Indian Express newspaper. “We will buy up all the subprime homes. We will work 18 hours a day to pay for them. We will immediately improve your savings rate — no Indian bank today has more than 2 percent nonperforming loans because not paying your mortgage is considered shameful here. And we will start new companies to create our own jobs and jobs for more Americans. "

Friedman goes on to criticize the Obama administration for putting in place restrictions on the use of H1-B visa holders to fill jobs created by stimulus programs. Friedman says it is self-defeating to purposefully not use the "first-round intellectual draft choices".

The Party Line

Companies like Microsoft, Google, and my employer trot their representatives in to Congress every year to lobby for increased H-1B allocations, claiming that declining CS and engineering enrollment in the US makes it impossible to fill their ranks without going overseas. 

 At the same time, the ranks of the discontented fill their representatives' ears with tales of abuse and jobs lost to H1-B, having to train their H1-B replacements, and downward pressure on engineering salaries.

In theory, H1-B jobs can only be filled when a qualified applicant can't be found using conventional channels. Of course, while the law says you have to try to fill the job, it doesn't say how hard you have to try. This certainly leaves some wiggle room for abuse.

And H1-B jobs are not supposed to depress wages, because employees must be paid the prevailing wage. But in US corporations, wages are still mostly confidential, making comparisons hard to perform.  Because of the difficulties inherent in switching jobs while on an H1-B visa, it seems possible that employees might be subjected to lower wages.

So What's the Problem? 

You don't have to be much of an economist to surmise that allowing additional programmers into the pool has a depressing effect on salaries.  But at the same time, if my employer can't staff projects in the US, there is no doubt the work will be given to teams in Bangalore or Shanghai, meaning my higher-salaried position might be eliminated entirely.

Personally, I think the system we have in place now works. Our economy is dependent on immigration to generate growth, and bringing people in to create new high-paying jobs seems like a sensible way to do it. Given those jobs, they pay taxes, buy houses, and that's a good thing. Congress has the power to tinker with the numbers every year, so they can reduce quotas when the job market sours and increase them when it improves.

I have no doubt that I'd have an easy time finding a hundred people with hard luck stories they blame on immigration, but policy makers have to look at the big picture: overall employment and salary growth.  Even as rough as things are right now, people in our profession are still beneficiaries of low unemployment and real salary growth. Given that, I fully expect the lobbying for increased H1-B quotas from our business leaders to continue unabated.

 So What's the Problem? 

What do you think?  Is my view of the big picture really accurate? Or is the H-1B program just a way for Microsoft to pay lower wages?


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