Economic Nationalism Alert

Of H1-B visas, Dean Baker writes:

By increasing the supply of highly skilled workers, the H1-B program undoubtedly reduces the wages for the most affected occupations. According to standard trade theory, this is precisely the point of the program. Allowing firms to get lower paid workers will reduce their cost and increase the economy’s potential output. It is the same argument that is used for the gains from getting cheap textiles or steel from foreign producers.

The argument from high-tech employers, that they simply can’t get enough high tech workers in the United States is ridiculous on its face. If these jobs paid millions of dollars per year (like jobs at Wall Street investment banks), then highly skilled workers would leave other occupations and develop the skills necessary to work in high tech occupations. Obviously, Bill Gates and the other high tech employers cited in this article want to be able to employ high tech workers at lower wages. The issue is wages, not a shortage.

It must be hard to know what you want. I imagine Baker wants to reduce national inequality. But increasing the supply of skilled labor would directly counteract the main economic cause of increasing inequality. So why isn’t this notable egalitarian doing cartwheels trying get the government to print H1-Bs like Mugabe prints money? Oh, because the people getting those jobs don’t already have American citizenship.

It seems that improving the material welfare of a great number of skilled foreign-born workers while at the same time lowering American income inequality would be quite appealing to certain people. But hey, screw reducing inequality if it helps foreigners! Much better to exacerbate national inequality by using immigration restrictions to reduce the relevant labor supply and increase the wage premium for skill. Then, when inequality surges further, we can lay the blame on the rich people who would have liked to welcome more high-skilled immigrants and then tax the crap out of them and the now-even-richer domestic tech workers whose wages we are subsidizing through immigration controls. Brilliant!

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