Roundabout with H-1B

Are we being underbid? - Pic courtesy of Wikipedia

by Trebor Snillor

Today I’m in Starbucks, during a holiday week. The temperature is plummeting outside and the throng has moved indoors.. I’m composing this in an easy chair next to the front door. Burrr! Today’s blog topic is one I’ve touched on in other blog entries (“Oink!”, “Stratus World”). I’m speaking specifically this time of the controversy surrounding H-1B visas granted to immigrants in the United States. Most of such immigrants come from India and China though many other countries also indulge. H-1B visas were conceived as a way to fill specialty US jobs (in science, medicine, engineering, accounting) with foreign brain power. The idea was that the jobs were unfilled – why not answer the call with 3-year visas?

This Road to Hell was paved with good intentions; limits were placed on duration and number of people. Politicians didn’t want to horn in on American jobs did they? (Or did they have something else in mind?).. The law is now a labyrinth of codas, exceptions and dangling participles – it makes the tax code look simple. The Fortune 500 companies of America were smitten with this mother lode of cheap white collar labor – how could they not exploit it? The issue has been conflated into a political issue, but I have to say it’s one that mostly pits populist Republicans (anti H-1B) against rich, patrician Republicans who are vested in the Fortune 500 (pro H-1B).

LOSE-LOSE SITUATION

Note -- the following discussion uses software engineering as an example, but it is equally applicable to accounting, medicine and other areas.

I have a good friend in human resources at a large accounting firm. He tells me that a newly minted American computer science graduate programming java commands $90K/year nowadays. That same job can be filled by H-1B Outsourcing firms for $65K/year. Software engineering isn’t controlled by organized labor – it responds directly to market pressures. Indians and Pakistanis have effectively underbid Americans for the same work assignments.

The cost to American citizens: We shrink the “specialty employment” pool dramatically. The only American grads commanding $90K will be the top 2% of the class. Otherwise the form letter reads “all jobs are filled at this time – thank you for your interest”. A question to Americans might be: have we bid the price too high for what we do?

The cost to employers: In treating software design as a generic commodity you get high turnover, buggy code and a serious lack of standards or continuity in your whole operation. A permanent employee can better understand history, strategy, business rules and overall company direction. A contractor is less likely to feel like a stake holder when a 3-year egg timer ticking away in the background. Throw in some language and cultural barriers – you have a situation that evokes the Neiman Marcus slogan: “Quality is remembered long after price is forgotten”..

The cost to the United States of America: The list of “specialty fields” has expanded to include basically any middle class occupation that is heavily dependent on computers or internet connections. Doctors’ jobs are even at risk as it becomes easier to farm out tests and x-rays to a Pakistani clinic halfway around the world. America’s middle class is hit by a wrecking ball of “friendly” outsourcing.

Where do we go from here? Some of the same people vehemently opposed to H-1B are also free market apostles who would be mortified by wage controls, hiring restrictions or unionization. Politicians tend to engage in double-talk and leave the status as quo.

CONCLUSION

If we do nothing, we will end up with an odd sort of America. Sanjay and Priya will make $65K a year which is still enough to live a middle class lifestyle. They will have a new Toyota Camry and a nice starter home. American-born John and Karen will be struggling to drive a used Yaris and will live in a dumpy apartment. It seems they can only find work as a car wash manager and a restaurant hostess. The America I describe isn’t so far away or ridiculous – it’s already under way. Something needs to be done, the question is “what?”

© 2014 Snillor Productions