Recent revelations about the firing of American tech workers and their replacement by temporary visa holders reveal, in the starkest way, why many Americans are wary of the impact of untrammeled immigration. Workers in American companies have been removed from their jobs not because they could not perform them, but because their replacements, largely from India, are simply cheaper and, likely, more malleable.
The H-1B temporary visa program was purportedly designed to help tech firms hire specialized talent to fill needs not adequately addressed by the U.S. labor market. But what it has really become is a way to lay off workers for cheaper ones.
Silicon Valley’s Phony War
A looming shortage of domestic tech talent has long been a siren song played in Silicon Valley by grandees such as Facebook’s Mark Zuckerberg. It is common to hear them claim the visa program must be expanded for them to compete.
Immigrant entrepreneurs and technical staff are hugely important, but the notion about “shortages” of IT workers is dicey at best. A 2013 report from the labor-aligned Economic Policy Institute found that the country is producing 50 percent more IT professionals each year than are being employed. EPI estimates “guest workers” now account for one-third to one-half of all new IT job holders, much of them through contracts with Infosys and Tata Consultancy Services, both based in India. These two firms, according to EPI, have cost over 12,000 U.S. workers their jobs this year alone.
Another report, this one from economic consulting firm EMSI, estimates that there are now more than three times as many new IT graduates as openings. So the H-1B program seems to be less about talent shortages and more about simply replacing higher-paid tech workers with cheaper ones. Wages for such workers are estimated to be between 20 percent and 49 percent lower than those of U.S. workers.
Critically, these sojourners are not likely to become Americans and contribute, long-term, to our society. The vast majority, as the progressive magazine Mother Jones suggests, are here temporarily. These are not tech prodigies seeking to live free in their new country; the vast majority only stay for a few years, and less than three percent ever apply for permanent residence.
Why outsourcing matters
Why do we have immigration? Historically, we have benefited greatly from the immigration of talented, entrepreneurial people – or simply hard working ones – who want to stay here permanently and develop our economy. This is quite different from replacing American skilled laborers with cheaper temporary ones culled from an outsourced workforce.
H-1B may be good for tech companies, but, perhaps, not so good for those who work for them. Despite a powerful tech bubble, programmer salaries have risen only modestly over the past few decades, notes the Economic Policy Institute. Those in the new, young, heavily immigrant tech workforce often are willing to live in crowded apartment complexes, or buy or rent a house, sometimes in an almost absurdly distant periphery of the region, in ways many Americans might resist.
Bringing in these outside workers defeats one of the greatest benefits of immigration: the desire of immigrants to make it long-term in this country. Immigrants by nature tend to be more entrepreneurial than the native born – twice as likely, according to the Kauffman Foundation, to start a business. But these laborers, part of a vast network of temporary workers, are not likely to start the next Google or Intel; and if they do, it’s likely they will do it in India or somewhere else.
From top to the bottom
It’s not only the IT workers who have been dealt a blow by a senseless immigration policy. The long-term mass migration from developing countries, much of it illegal, notes a U.S. Civil Rights Commission report, clearly depresses working-class wages. Here in Southern California, immigrants and their offspring have borne the brunt of a painful transition from a high-wage economy into one increasingly dominated by low wages. The great tragedy in the move to increase the minimum wage to $15.00 in Los Angeles is not that it violates market religion but that it covers nearly half of the workforce.
One can dispute the economic effects of such moves – certainly, for people who get a raise, it’s a godsend. But it also seems certain that some businesses will move or automate more of their activities to reduce labor costs. If we had a labor shortage, this would not be so much a problem, but with an expanded legalized immigrant population, largely poorly educated, competition for these $15-an-hour jobs is likely to be very intense.
Just as business has lost touch with the cause of the middle class on the H-1B visa issue, the progressive Left often misses the point here. It seems to ignore the economic costs for working-class citizens, or how the ever-expanding pool of now-legalized residents will immediately be eligible, notably here in California, for the social services that, hitherto, went to citizens and legal residents.
One would think that these policies would be politically fraught with peril, but a majority of Democrats, according to a recent Rasmussen poll, go well beyond amnesty and a gradual path to citizenship, which most Americans properly support. A majority of Democrats, for example, even favor extending to the current undocumented residents the right to vote – something the vast majority of the electorate rejects. Cynically, this would assure a permanent progressive majority – but at the cost of constant pressure to increase welfare benefits and social spending, largely by taxing further the middle and upper-middle class.
Time for a ‘Do-over’?
Immigration needs to be tied to the ideal – however unfashionable in parts of the media and the academy – of citizenship. Neither pushing for temporary visas for tech workers, nor rapidly legalizing the undocumented, promotes this value.
There also needs to be a very different approach to the economy. America’s golden age of immigration – from the late 19th and early 20th centuries – took place amidst repeated labor shortages. The country needed every kind of immigrant – from mechanics and engineers running an expanding industrial economy to people who would do hard physical work in factories, mines and farms.
By some measurements, those newcomers, although many struggled, enjoyed far better prospects to move up than those arriving today; today, nearly a third of immigrant children live in poverty, nearly twice the rate of native-born parents, and are far more likely, according to a study from the Foundation for Child Development, to drop out of school.
Today, we hardly have a labor surplus or a surfeit of high-paid jobs. This is particularly true in Southern California, where middle- and high-wage blue-collar jobs have been eroding for a generation. Immigration can be part of the solution if more skilled and entrepreneurial newcomers are welcomed here. Some estimate there are 1.5 million skilled workers and their families that are legally here but not on the path to citizenship.
For poorer migrants, we need to make sure that those who immigrate either fulfill necessary niches (such as agricultural labor), as opposed to competing with already existing lower-wage workers, and are generally people likely to work, as opposed to consuming government services. As higher minimum wages force businesses to rationalize, this is probably not the time to flood the economy with low-skilled workers. Without a growing economy, under any circumstances, the importation of more poor people, no matter how great their work effort, is unlikely to benefit the economy much.
None of this suggests that immigration is bad for the country. It has always been our “secret sauce” in our competition with Europe, which greatly struggles with diversity, and East Asia, where mass immigration, outside of Singapore, is rarely embraced. Precisely because it is so important to our future, we need to develop better ways to channel the flow of newcomers so that the future is better – both for them and for the rest of us.
Cross-posted at New Geography.
Originally published in the Orange County Register.