[achompas]

If anyone is curious where the mistake is in this article's reasoning, it's in the assumption that people are more or less interchangeable, and that all you have to do is train them to be Xes, and you can have as many Xes as you want.

What about the assertion that companies are struggling to fill these roles because (a) they demand more from potential candidates while (b) offering no more in wages than what we saw 10 years ago (edit: 15 years ago, according to Salzman et al. [1])? For example,

"Or is the hidden truth quite simply that large supplies of guest workers allow many firms to swap out higher-paid, high-skill domestic workers for lower-paid, high-skill guest workers?"

The article spends very little time arguing for the training of Xes and much more time arguing for higher wages for potential Xes. This gets rehashed on HN all the time: offer Xes more, and maybe they won't roll over to finance instead of accepting your offer.

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RESPONSE TO PG'S EDIT: discrediting the source is kind of misguided for two reasons: (1) their wage data comes from the Census Bureau (see pg. 19 of [1]) and (2) the Brookings Institution essentially agrees with the EPI [2]:

"[I]t is likely that the extra supply of foreign-born workers does bring downward pressure on the wages of incumbent workers, as research suggests."

I don't think you could accuse Brookings or the Census Bureau of having a similar agenda.

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FINAL EDIT: PBS quoted Brookings out of context, and I took it at face value. The paper doesn't support the EPI's findings, and the full Brookings quote is below:

From a theoretical standpoint, it is likely that the extra supply of foreign-born workers does bring downward pressure on the wages of incumbent workers, as research suggests.20 Yet, it appears that demand is so strong relative to supply that even the inflow of H-1B workers is not enough to meet the demand of U.S. companies and push wage growth down to normal levels.

Ugh. Apologies to PG and HN for citing this blindly.

[1] http://www.epi.org/publication/bp359-guestworkers-high-skill...

[2] http://www.brookings.edu/research/papers/2013/05/10-h1b-visa...

[jvrossb]

I don't think there's granular enough information in there to support your conclusion.

To illustrate, imagine that IT workers used to get paid a $100k real wage in 2000 and a $50k real wage today. Imagine computer scientists and programmers got paid a $100k real wage in 2000 and get a $150k real wage today. Bundling them all into IT would lead you to mistakenly conclude that a computer scientist would expect to make as much today as they did 10 years ago.

Can someone confirm this logic is correct?

I don't know what the real stats are, but you haven't provided them. I also notice that the Brookings article you linked states that real wages have increased for those occupations in the past few years, but I don't how if at all they are bundling professions differently.

"Or is the hidden truth quite simply that large supplies of guest workers allow many firms to swap out higher-paid, high-skill domestic workers for lower-paid, high-skill guest workers?"

The Brookings article you cited states the opposite. Foreign workers get paid more. If there truly are enough good programmers and computer scientists available in the states is there a conspiracy to subject oneself to the nightmarish visa system and pay high legal fees to be able to hire foreign workers and pay them more than Americans, all the while not offering high salaries to qualified Americans? What would motivate one to do that other than a shortage of qualified candidates?

[achompas]

To be fair, it's not my conclusion. I just suggested an alternate explanation. :)

You're right that the Brookings article suggests that my quote isn't the case. I wish we had more information on how they controlled for different effects. IIRC BLS etc don't generally control for cost-of-living, and Brookings doesn't discuss the issue except for in the conclusion:

Likewise, the bureau should also consider how demand and supply play out in regional or metropolitan area labor markets, since job search and recruitment often happen locally.

I'd be interested in seeing those results, as I would expect a greater concentration of H1B workers in large metropolitan areas (SF/SV, NYC, Boston), where wages are much higher than the flyover states (where I'd expect less racial/ethnic diversity).

[jvrossb]

Good point on the location of H1B hires. I wish we had more info too, it almost feels like nobody is genuinely trying to measure the right things and instead retro-fitting data to fit their conclusions :/

[pg]

The finance companies competing for programmers are also American. So even assuming that SV companies could draw star programmers away from Goldman Sachs by paying them more, there would still be exactly the same net shortage of them in the US.

[achompas]

The article is addressing a shortage of workers for STEM jobs. Quote from the article:

"If you're a high math student in America, from a purely economic point of view, it's crazy to go into STEM." The best of these students flock to Wall Street and corporate law firms and the rest end up employed in non-STEM jobs which often pay less and underutilize their skills.

If SV companies could draw star programmers away from Goldman, we'd then be talking about a finance shortage, no?

[don_draper]

The finance companies pay considerably more than Silicon Valley companies thus don't have the same problem with filling positions as SV does. Do you disagree with that?

Search 'finance companies lobby h1b visa'. Nothing Then search 'bay area companies lobby h1b visa'. Tons of results.

[pg]

I don't know whether finance companies pay or whether they have less problem hiring people. But what difference would it make it that were the case? We're talking about the same pool of people. The specific companies where the shortfall appears doesn't make any difference to the argument for immigration.

[don_draper]

We're talking about supply and demand. Wall Street understands that if the demand for talent is higher than the supply then the solution is to pay more, not whine about it.

[muzz]

If price is allowed to rise, demand drops.

[danmaz74]

Price is already allowed to rise. Any company can offer a higher salary to its engineering candidates.

[muzz]

Great, so the market-clearing level should be reached and there is neither shortage nor surplus.

[prostoalex]

Finance shops typically contract through an outsourcing agency. Wipro, Tata and InfoSys are typically among the most prolific filers for H-1B, and those filings fell significantly in 2009 post financial crisis.

[WildUtah]

If the finance companies couldn't hire top techies, they'd be fine.

It's a Red Queen race; whoever runs the fastest front-running operation skims all the rent from naïve institutional and individual investors. If everybody is 200ns slower, everybody is in the same position as before. All the talent invested in saving a few ns does no good to the world; it just changes the relative position of finance companies.

They might even be happier if there were fewer techies they could hire.

[rogerchucker]

I'm not sure why you keep bringing up the Brookings paper [2] to support the authors' case. They clearly said this at the beginning: "Without attempting to fully resolve this complex issue, new detailed data on H-1B wages by occupation, presented more fully here, suggests that the H-1B program helps to fill a shortage of workers in STEM occupations."

[achompas]

Here's the Brookings quote in full context:

From a theoretical standpoint, it is likely that the extra supply of foreign-born workers does bring downward pressure on the wages of incumbent workers, as research suggests.20 Yet, it appears that demand is so strong relative to supply that even the inflow of H-1B workers is not enough to meet the demand of U.S. companies and push wage growth down to normal levels.

You're absolutely right--what lazy work by PBS (and me, for assuming they fact-checked). Ugh.