Just a couple of days after I wondered aloud what Ron Unz now thinks of H-1B, today’s San Jose Mercury News ran his op-ed on the subject. Unfortunately, he still thinks Silicon Valley firms (I call them “Intels”) use the visa program responsibly, though he now concedes that the outsourcing firms (“Infosyses”) abuse it. Worse, his solution would not work, I believe.
As a libertarian, Unz instinctively reaches for market-based solutions, in his case an auction system, possibly inspired by FCC auctions for radio/TV bandwidth: The visas would go to the highest bidder, rather than doled out by lottery as at present. On the (false) assumption that the Intels pay their H-1Bs fairly while the Infosyses use H-1Bs for cheap labor, Unz reasons that the Infosyses could not afford to bid; the auction fee would wipe out the cost savings accrued by hiring the foreign workers. This would achieve Unz’s desired goal, which is to give the visas to Intels rather than to the Infosyses.
I do agree that the outcome would be as Unz posits, but I strongly disagree with his premise that this solves the H-1B problem.
The research, both quantitative and qualitative, clearly shows that the Intels do pay below-market salaries to their foreign workers. As I’ve said, although the Intels pay more than the Infosyses do, that is because the two types of employers hire different types of workers. The Intels get a price break on their type of worker, and the Infosyses do so on theirs. But they are BOTH saving money.
So a shift of the allocated visas from the Infosyses to the Intels would not make things any fairer, nor would it reduce the harm the visa brings to U.S. citizens and permanent residents. On the contrary, the notion that “We’ll give the good jobs to the foreign workers but save the mundane ones for Americans” is more than a little disturbing.
As an example, Unz sets a scenario of the Intels being willing to bid $20,000 per visa in the auction. He assumes, just as a rough figure, that the Infosyses are saving $20K in salary, so any bid of at least that much would force the Infosyses out of the bidding. Let’s look at that figure a little more closely.
Actually, both types of employers are saving much more than $20,000. Since the visa is good for six years (more if the employer is sponsoring the worker for a green card, as the Intels tend to do), that $20,000 figure needs to be multiplied by at least 6.
So, would the Intels be willing to bid, say, $100,000 per worker? That looks extremely doubtful to me, for psychological reasons. Unz’s view of “free” markets, which in this case would mean bidding the true value of the worker, is grossly oversimplified. Employers just could not bring themselves to pay such a large fee that simply goes to the government, rather than productive use. I don’t believe they’d even bid $20,000.
And that, of course, is why such legislation would not ever be seriously considered in the first place.
A much better solution, equally market-based, would be to give priority for the visas to the employers offering to pay the foreign worker the highest salary. This approach has been proposed by a number of people.
Moreover, it is something the Obama administration could implement on its own, without Congress. Why haven’t they done so?