Saturday, April 7, 2007

Limiting H1Bs: Bad News for US Workers

This year, only about half of the foreign engineers and other temporary workers that US businesses need will be allowed to come here.

Some would have us believe this is good news for American workers. Not true.

When a foreign worker comes to the US under an H1B, most of their paycheck stays here - in the form of mortgage payments, rent, car payments, supermarket and utility bills, taxes, school fees, entertainment, air travel home, and all of the other stuff people in this country spend their paychecks on. Every cent spent here is good news for someone working in those industries.

When that worker isn't allowed to come to the US, none of their paycheck gets spent here: it gets spent (via outsourcing contracts) at supermarkets and gas stations and schools in China, India, Russia, Singapore, Malaysia, or the Philippines.

Limiting H1Bs means more money sent overseas, and less spent here - which impacts everyone - from waitresses to landlords to teachers to the folks who work the ticket booth at the local cinema to the guys working the pit in the local car repair shop.

During the early years of this decade, Singapore's economy was in a slump. The government there pays its members well, and as a result has one of the world's smartest groups of policy makers. They studied the various options and decided the best way to fix their economy was not to overly protect local talent but instead to recruit as many smart people as they could, from the four corners of the Earth.

Entrepreneurs, scientists, entertainers, researchers - even assembly-line workers - answered the call, breathing new life into Singapore's high-value-add industries: software manufacturing, pharmaceutical research, private banking and wealth-management, and even aerospace.

At the time the policy was announced, there was a certain amount of unhappiness expressed by locals, but within two years of the enactment of this policy, the positive effects of the influx of talent started to become apparent and unemployment actually dropped. Money started flowing into the economy from the new immigrants and banking customers, the value of property starting to rise, the value of exports started to increase, and the economy boomed.

Remind you of anything? Perhaps America in the golden century 1850-1950?

Singapore continues to offer a home to the kind of talent refused entry to the US, and continues to build their economy and talent pool as a result. According to the latest published figures on, in 2006, more than 27% of the people employed in this country of fewer than five million people were legal foreign workers.

By contrast, according to the US Bureau of Labor, the US employed just over half the number of "foreign born workers", per capita, in 2006.

The anti-immigration folks would try and have you believe that there are US-born software engineers and knowledge workers that are having a terrible time finding work in the US. This is not true. The reason many companies are outsourcing as much as they are is that there is a shortage of talent available to grow new industries, not an over-abundance of it.

And the reason we're losing other jobs? Outsourcing, based on an inability to fill the jobs using in-country talent brought in from outside the US, and the consequent drain of cash away from local economies.

The argument against immigration is counter-productive: wages paid outside this country benefit no US workers. Wages paid in the US benefit everyone. The talent that we clearly need should be allowed to live here, and add their paycheck to the local economy.

1 comment:

Vishal Soni said...

Very nice point for Anti-H1b folks. H1b are healthy for US economy. Infact the very fundamental of US economy rests on the shoulders of talent across the globe. And why these so called Anti H1b folks woke up only in 21st century?