[lbo-talk] Increase the labour supply to lower its price...

Mike Ballard swillsqueal at yahoo.com.au
Tue May 29 20:02:49 PDT 2007

Of course, this argument applies to any commodity: pork, beans, unskilled labour....

Mike B) ________________________________

Of Course H1-B Visas are About Lowering Wages

I wonder if the Washington Post would print an article that said that importing

shoes and textiles is not about getting lower priced goods, but rather necessary because of domestic shortages. It would make as much sense as its article [http://www.washingtonpost.com/wp-dyn/content/article/2007/05/24/AR2007052402605.html]

on H1-B visas in today's paper. This is apparently its anti-market edition, where rising prices (in this case workers' wages) can't be counted on to alleviate labor "shortages."

In spite of its best efforts, the article really does not make much of a case that the purpose of H1-B visas is not to lower wages. Take this quote about H1-B workers from Austin Farshi, an executive at a software company:

"They do the same work Americans do, and they earn the same amount. But they have more technical expertise than many Americans coming out of college, and they see working in this field as a prestigious opportunity instead of taking it for

granted. We are getting the best of the best."

Mr. Farshi is saying that he can get Cadillac workers at Chevrolet prices. One can question whether his characterization is accurate, but he is certainly saying that he can get foreign workers through the H1-B program for far less than it would cost him to hire equally productive U.S. workers.

The article also includes the great line that, "contrary to fears that Americans are being displaced, computer and math professions in the United States are at 'virtual full employment,' with jobless rates of 2.4 percent." That 2.4 percent unemployment rate doesn't sound so good when you consider that the unemployment rate for college graduates overall is 1.8 percent. Maybe the techies should have majored in English.

The Post seems determined to try to obscure a relatively simple point. Increasing the supply of skilled workers lowers their wages. This can be explained in exactly the same way as removing tariff barriers on shoes lowers the price of shoes. In both cases there will be benefits to the firms that do the importing/hiring and gains to the economy in the form of lower prices for the goods and services produced. But, it is ridiculous to pretend that the workers who must now compete with lower wage workers do not suffer. That is the way markets work and

the Post should stop killing trees to try to convince people otherwise.

--Dean Baker

An injury to one is an injury to all http://www.iww.org.au/

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