Ron Unz Swings and Misses Regarding H-1B

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?

 

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23 thoughts on “Ron Unz Swings and Misses Regarding H-1B

  1. An auction system also requires a limited supply of visas. I might be necessary to control petitions from government labs, universities, and educational employers, which are not subject to the cap(s).

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  2. As a conservative Republican, I too instinctively reach for market-based solutions–when I think that an efficient market actually exists.

    Where I often differ from Libertarians is that I think efficient markets do not always exist where they do. For example, Libertarians who claim that monopolies are not a problem in a free market system is one area of difference.

    In the case of H1Bs, it is an obvious lie that the US has a tech skill shortage: 50% of our tech grads are out of the field within, what is it, < 10 years after college? In a true free (but closed to immigration) labor market, if you have that huge a hemmorage of talent but the jobs are really needed, employers would have to respond by raising wages. Only in an open to the world so we can explot desperate foreigners labor market would tech wages be flat (which they have been).

    What remaining moral defense is there, therefor, for a allowing H1Bs to wrk in America?

    The sole reason that I am aware of is that some of those foreign workers really are sharp people who would really advance our economy if we had them work here. In other words, we would benefit from allowing geniuses to work here.

    So lets call the bluff of tech billionaires: you say that you need to hire those foreign geniuses? Fine: we'll allow you to hire all of them that you want, under but one condition: that you pay them for their genius.

    My H1B reform proposals:

    –salary:
    –must receive a base salary that is at least the maximum of
    a) the 99% wage percentile in their field for their experience level
    b) $150,000 / year

    –H1B fee:
    –must be something high, like $20,000 / year
    –must be paid for in multi year increments (e.g 2 or more years, all up front)
    –must be 100% paid for by their hirer at the time the fee is due

    –contract (job mobility, non compete, etc)
    –there can be no job contract which says that the H1B owes any money for any reason back their employer if they leave
    –e.g. the employer cannot demand compensation for the H1B fee, moving expenses, etc
    –if the employer really is paying the H1B their genius level fair wage, then they will not be leaving the firm
    –only employers who are exploiting their H1Bs need worry
    –there can be no job contract with a non compete clause
    –the H1B can leave any time and work for any other employer who pays them better
    –in fact, this should be offered to all American workers too: this would be the best way to prevent employer abuse of America's own professional class

    I claim that the above would all constitute a simple market based approach that would eliminate every abuse while still allowing industry to hire all the true geniuses that they need.

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    • “Libertarians who claim that monopolies are not a problem in a free market system is one area of difference.”

      Monopolies would not be a problem in a libertarian free market where initiation of force and fraud are discouraged. But we don’t have free markets. We do have government-enforced oligopolies and local monopolies.

      Without any hope of agreement on objective definition of “best” or “brightest” or most “innovative” or even “qualified”, a visa auction is about the best option. As an OP correctly pointed out, it still requires reasonable limits on numbers of guest-work visas (F, J, H, and L)… say 50K F visas, 5K cultural exchange visas (without permission to work), 1K H-1B and 1K L visas per year. There should also be reasonable terms on the visas– I don’t consider 3 years to be “temporary”, but 3-4 months for an OPT, 1-3 months for cultural exchange, and 3-10 months for guest-work seem reasonable for such special purposes and “temporary shortages”.

      But then what are the auction participants bidding? If they’re bidding on how much in fees to give to DHS and DoS, then there has to be a reasonable minimum bid requirement to cover the costs of rubber-stamp replacement, costs of sending teams of trained background investigators around the world to interview applicants, family members, co-workers, employers, managers, class-mates, teachers/professors, neighbors.

      But the total compensation (wage + all benefits) to the guest-worker should also be factored into setting a mostly refundable bond — refundable when the person becomes a citizen or leaves USA — which should also be part of the bid package.

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  3. Since H-1B workers bounce between employers, this option would not necessarily solve the problem.

    Workers self report not intending to work for the sponsor but using the “job” as a place holder while they find a “real” job. since the employer will not be paying the worker long term, he can offer anything.. Unless there is the requirement that the salaries for all subsequent jobs meet or exceed the salary on the initial filing, the “highest salary” option would not work.

    They self report not planning to appear for work on the visa/I-94 start date, but postpone until a later date. The date may be years later so that there are many potential workers who went through the selection process with years remaining. At least some of these are pregnant women or those planning to stay home until their children are older but want the work option available. Other countries give guest workers a limited window in which to report for work and use their approval.

    We should be making a list of ways the H-1B process and OPT/CPT is being scammed.

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    • As to making a list of scams, I strongly disagree. As I’ve often noted, I am opposed to anything that is aimed at clamping down on the Infosyses, because it would not result in Americans having access to more jobs. Indeed, most of the proposals to punish the Infosyses actually reward the mainstream firms. If such proposals were to be enacted, the mainstream firms would take up the slack.

      I may be the only one in the H-1B critic world who understands this. 🙂

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      • Even mainstream firms collaborate in the abuses. There are reports that some will not file for a first time H-1B requiring going through the lottery when that is required but will transfer an existing one. Since a transfer does not require a new stamping, there is even less scrutiny of legitimacy of the employer, employee and position. This encourages guest worker hopefuls sign on with the intent of doing a true job search once they enter and are “employed”; the “how do I get out of my employment contract” is a frequent question.

        I am an advocate of requiring an employee to report for work within a short time (like a month) of the start date for which the petition was approved. I also advocate the automatic revocation of an approval when the sponsored employee does not present him/herself for work by the required date. I would also require that the H-1B worker perform the job for which he/she was supposedly hired for longer than a token amount and that he/she be required to comply with the terms of their contract. Guest workers – especially those on OPT/CPT – should not receive services that are not provided to all workers in the same category. Rules requiring mentoring and training of OPT workers must apply to all new hires.

        The companies need to be banned more often for the filing of petitions for positions that do not actually exist. In addition to the filing fees, I propose requiring the companies to post bonds covering salary, taxes and health insurance for both the employee and his/her family. Guest workers – and international students – should not be permitted to receive federal insurance subsidies or welfare benefits.

        Guest workers also deserve protection for dishonest “employers”. International students deserve protection from the diploma mills that have sprung up to take advantage of the desire for students to come to the US as a prelude to getting a job. Reports indicate that students trying to use these suspect masters degree to qualify for the additions 20K H-1Bs are suffering (rightly so) with non-approvals and revocations. Some were looking for an easy degree, but others were simply uninformed about education standards in the US

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          • It may be one of the peripheral issues that will create the outrage needed to bring about change. People may be able to identify with a concrete but minor example directly affecting them or their families when they are unable to grasp the big picture presented in a formal analysis with statistics, graphs and $20 words.

            I find it useful to translate the effect from a proposal to raise tuition at the university to the weekly poverty level food budget or the average wage in the state. So when they say it is “only” x. it is really n weeks of meal money for a low or middle income student.

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  4. > 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.

    Agreed. Being the most direct solution, that’s the one that would be most likely to succeed. There’s no way to know if an auction system would help avoid low salaries for H-1B workers which in turn put downward pressure on native salaries and employment. There’s just too many moving parts. Giving the priority to the highest salary, however, would do that directly.

    By the way, I’m curious to know if you or anyone else has an opinion on Ro Khanna’s stance on H-1B. At http://www.breitbart.com/california/2016/02/01/2910338/ , he states the following:

    > I think the problem with that is, we have to focus on developing our talent in STEM jobs here. And my concern with the H-1B program is it’s often abused. People come here and they’re paid below market wages and there’s all this leverage with employers and that’s depriving Americans of jobs and that’s depriving Americans of fair market value. And so I’d much rather not rely on a bandaid of H-1B visas to solve our tech crunch, but we have to provide more funding and training in community colleges and colleges and high schools here so we’re graduating computer scientists and technology leaders. And so that we are creating these opportunities for people in this country.

    However, he does distance himself from Sen. Jeff Sessions because he says that he (Ro) does support comprehensive immigration. Also, on his web site at http://www.rokhanna.com/issues/fighting-immigration-reform , he makes no mention of H-1B visas and repeats the misleading statement that immigrants have founded 40% of the companies in the tech sector that were financed by venture capital and then went public in the United States. Actually, I believe that it’s 40% of FORTUNE 500 COMPANIES that were founded OR CO-FOUNDED by immigrants OR THEIR CHILDREN. Hence, I’m interested to know if Ro has proposed any solutions to H-1B abuse and what those solutions are.

    I’m also curious about his opponent, incumbent Mike Honda. To my knowledge, he is very pro-H-1B. The bottom of the Immigration Issues page on his web site at http://mikehonda.com/issues/immigration/ states:

    > He is committed to securing a pathway to citizenship of undocumented Americans, preserving our family-based immigration system, increasing the cap on H1-B visas for American companies so that they can hire the talent they need to succeed, and ensuring fair and humane border security and enforcement methods.

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    • Honda takes the standard Democratic Party point of view on H-1B, immigration and basically everything else. I don’t think he has given much thought to any issue.
      Interestingly, when he was in the state legislature, he was rather negative on some aspects of immigration, notably the common practice of earlier immigrants later sponsoring their parents and other family members for immigration, with the intention that the sponsorees would eventually go on welfare. He would never say such a thing today.
      I once participated in a conference call with Honda’s staff on H-1B. One of them praised me for emphasizing that my use of the word “American” should not be construed to mean just “native,” with the staffer’s implication being that he considered critics of H-1B to be anti-Asian whites. I found that staffer’s attitude to be highly offensive.
      When Honda first ran for the House, he was financed largely by a group of well-off Asian-American CEOs and executives in Silicon Valley, some of whom are personal friends of mine. I have the impression that many in that same group are now backing Khanna. Pretty disgusting either way.
      But that doesn’t mean that I like Khanna, which I don’t. Your quote of him above is basically saying “Intels yes, Infosyses no,” which I hope most reader know that the vigorously object to. And I don’t like Khanna’s nastiness in his criticism of Honda.

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  5. The best thing to do is to allocate the visas to the highest of the four salary tier levels. If any visas are left over then keep moving on to the next lower salary tier level until all of the visas are used up. A lottery will be used if demand exceeds supply at a given tier level.

    This will automatically take into account different salaries for different jobs (nurse, programmer, CAD operator, chemist, etc). Also this will factor in market based salaries (Silicon Valley, Boise, Austin, etc).

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    • Tier levels will be abused.

      Demand and supply as defined how? Applicants? Job ads placed in some inaccessible or obscure forum? Do ads for real jobs ads count the same as part-time and temp/contingent/bodyshop/contract/consulting gigs? Or, another way, do real long-term full-time career positions developing commercial hardware/software products count the same as temporary “projects” doing house geek work (CRM, accounting, personnel data-base tweaks…) in non-STEM firms (managerial & professional services, technical services…)?

      Why not, if you don’t pass the background investigation, you’re out. Of those left, the top 1K bids (per year, broken down into auctions of 83 per month) that post their bonds on time win; the rest are “not qualified”… maybe some subsequent month, year, decade when they find an employer/sponsor who values them more highly.

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    • The thing about this and any salary based “solution” is that it assumes a limited supply of visas when the debate is already about expanding the limit of visas.

      If we use a salary based allocation, the lobbyists will just lobby to expand the number of visas so that their clients below market wage applications are accepted. ie a $60,000/tier 1 application may not be accepted at 65,000 visas, but it will be accepted at 300k visas. We will be right back at square one of H1-B sponsors under cutting American workers.

      Never mind the loophole of creating satellite offices in “partnership” with exempt institutions (universities) and under paying that way…

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      • @Dan..

        Add to that list ‘collusion’ – All the current players can collude to not go two pennies beyond what the ‘min’ salary level is, even with no increase in quota.

        And everyone is conveniently forgetting the less spoken/much utilized (abused?) L-1 – No DOL numbers, no ‘minimum’ wage levels and so on. Leave the media, I’d bet very few folks on this forum are aware of it. All day I see PERM/DOL numbers being crunched left, right and center. IMO L-1 is a bigger monster than H-1.

        L-1 abuse is two pronged:

        1) L-1B – No annual limits/no wage restrictions
        2) L-1A – Its “Staple a greencard” (via EB1-C), even to this day, with the most populous nations – Go figure!

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  6. Let’s keep in mind that companies bring in these H1B foreign workers because they are:
    1. cheap
    2. young
    3. subservient

    So, solutions or fixes to the H1B program based solely on price are not going to work since companies would probably pay a premium (a higher salary) to get #2 and 3.

    The best idea is what Trump himself suggested: to put the H1B program on hold for 1-2 years.

    With no shortage, American IT workers and STEM grads will fill the void. There are 100-125K H1B visas approved each year. I’m sure there are more than enough of us to step up to fill these jobs.

    And contrary to pundits and ‘analysts’ in the media saying that labor costs would skyrocket and businesses (and the stock market) would be negatively affected, I think that labor cost change would be insignificant and productivity and GDP would actually rise.

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    • @TechPro,
      >>> 3. subservient

      I believe the word you are looking for is ‘indentured’ and not ‘subservient’.

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  7. One simple solution to put an end to the “benching” and no shows, regardless of the employer is to force all employers to send an electronic paystub to DOL with the LCA number on it so that we could create a “ledger” and write a program to show us any gaps in pay.

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  8. Ron Unz a libertarian? His hobby horse is raising the minimum wage, a not even remotely libertarian cause (unlike e.g. Basic Income). And the word “libertarian” appears nowhere on his Wikipedia page. He’s better described as a paleoconservative.

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