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« Mazel Tov | Main | Resurrection »

Auction H-1B Visas

The limit for H-1B visas is 65,000 this year and next down from 195,000 in 2001-2003 according to US Citizenship and Immigration Services. Since foreign technical service personnel are literally worth their weight in gold, this is detrimental to the US economy. The London fix on gold (according to WSJ--subscription required) was $418.25 per troy ounce Friday. Each troy ounce is 31.1 grams or so. The average weight of a US adult is 177.3 lbs according to CDC. That much gold can be bought for $1.08 million. A technical services worker costs about $47,000/year according to the Federal Reserve of St. Louis. If the relative prices stay the same, 23 years of work will net $1.08 million. Technical services are likely to become more valuable compared to gold over time.

In the New York Times today, John Tierney talks about Julian Simon's research showing that war has become less lethal over the years as a leading cause of death and the trend has continued. Simon was also a big believer in the value of human capital as am I.

His argument in The Ultimate Resource 2 showed that while more births cost more at first (not counting the joy of parenthood), they resulted in more economic growth when they grew up. There is no delay associated with H-1B visas. The import of human capital will immediately speed US growth. These people were already raised overseas and represent a pure boon to the US economy.

There are individual losers, of course. US technical service workers earn less if people are imported from overseas. But protectionism always results in lower aggregate GDP than free trade. There ought to be a way to compensate US technical service workers for the wage loss they will suffer while still allowing the increase in foreign workers and have a win-win or at least a win/small loss.

My proposal is to have US citizens classify themselves into categories according to proof of training. Then the citizens can get some cash from the proceeds of an H-1 B visa auction if people are being imported in their classification. I also propose that the application process be a short form and that the only reason to reject a form would be the auction price and falsification. That is, any reason to immigrate would be fine as long as the auction price was right. The penalty for falsification would only be to make sure the auction proceeds went to the right people.

I would prefer that they just open the floodgates to a million or more immigrants per year with no evidence of need required. Just set the price so that the benefit of the marginal immigrant exceeds the cost. If Simon did the analysis, we would probably end up subsidizing immigration instead of discouraging it. We should continue to refine our tax code, regulations and improve our environment so the US is the most excellent place to live.

Posted by Sam Dinkin at May 28, 2005 05:53 AM
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Well, as a 50 year old who has returned to school, and will graduate with an A.S. next month, I can only say I'd like my shot at that 47 Grand. Hard work and loyalty alone today seem to just keep one mired at the bottom of the pay ladder. I don't know the full answers, but flooding the job market with imported workers sounds like a recipe for several different kinds of disaster......

Posted by Stewart at May 28, 2005 09:58 AM

I agree with you about the value of human capital and your comments about increasing immigration. But categorizing American workers by proof of *training* isn't especially useful, at least not in my field. I'm a computer programmer, specifically a .NET C# web developer. I have various proofs of training on my resume (a bunch of Microsoft certifications) but I've learned that most companies ignore them. Certifications, and even college degrees, mean little compared to experience. If you've got actual work experience in the field in question, you've got the job.

Posted by Kelly Parks at May 28, 2005 11:18 AM

"we would probably end up subsidizing immigration instead of discouraging it."

Hmm...I thought subsidizing immigration was the current U.S. status quo. At least it is when you consider all immigration, both legal and illegal, and all the related costs and benefits.

Posted by Brad at May 28, 2005 04:30 PM

What you are really talking about is surviving the extremely dysfunctional education system in the US by importing people well trained by less "enlightened" systems. It would be much much better to fix the US system and provide our own technical workers than continue to import them. Perhaps we could export the remains of the NEA to other "less fortunate" countries and double our advantage.

Posted by K at May 28, 2005 06:11 PM

K: Since the import price is zero after you consider the value of the work immigrants do, any export of persons is probably a bad idea.

Stewart: If we do self-reporting of job category, everyone will report they are in the category that has the most immigrants. Certification of training is terrible, but there is not really any other verifiable method that I am aware of.

Brad: The big money is in immigrants that want legitimacy. There we are not subsidizing. We are paying a lot to keep people out. A dead weight loss associated with poor controls is not the same as a subsidy. An example of a subsidy would be a check or a tax rebate to each employer of an immigrant.

Posted by Sam Dinkin at May 29, 2005 07:29 PM

I would prefer not to get into this, but now you've got me mad.

The cost of out of control immigration into this country is not just a matter of dollars and cents. I've personally experienced an academic "mafia" associated with a particular immigrant ethnic group. They had a clic of professors who dominated this particular department and imported their own pals from abroad by taking support from native students and giving it to "better scholars" from abroad. In principle, I have no objection to this, but in this case it was carried out so well that it resulted in several classes where I was the sole native in a graduate science class of 20, including the professor. What was the cost to those native students who got screwed? Who produced far less income in their lifetimes? I might also mention, that when I was going through college, that it was considered unethical to work in groups. The point was to learn the material, not get high grades. Most of the immigrant clics did it anyway, and subsequently had an artifically boosted GPA. Due to this I almost didn't make it into grad school, until my extremely high GRE scores were taken into account. I wonder how many natives were screwed by this into not even trying to go to grad school?

The US owes a great debt to many people who are immigrants, but this immigration mania has got to stop.

Posted by Zippy at May 29, 2005 10:25 PM

Zippy: Wow. I cannot possibly imagine your pain. It is no fun to be a graduate student and I would not have the credentials to tell you that your experience is not typical without getting a graduate student stipend.

I would point out to you that your vitriol would apply to every product we import from overseas. "This foreign car mania has got to stop." While there are individual losers, free trade helps all on average and there are hundreds of millions of winners.

We are smart. We can switch jobs to higher paying ones if we lose our current ones. I am suggesting augmenting unemployment insurance with a cash payment if someone immigrates in your field. If immigration is restricted enough, the cash payments would exceed the market price reduction from the extra competition.

Gentlemen, start your mania.

Posted by Sam Dinkin at May 30, 2005 10:44 AM

"We are smart. We can switch jobs to higher paying ones if we lose our current ones."

Right you are, Sam. All those native ASIC designers can just switch over to being neurosurgeons.

Posted by Zippy at May 31, 2005 01:13 AM

BLS says that people born between 1957 and 1964 held an average of ten different jobs between 18 and 38. I started out as a consultant, then a researcher, then a software designer. There is inevitable ebb and flow of the value of specialized human capital. Protectionism may help the few buffer the storms, but it is at the expense of the many.

Posted by Sam Dinkin at May 31, 2005 07:14 AM

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