Wages falling, but Congress wants more guest workers

By Leo Hohmann


A repeated claim made by CEOs in the technology industries is they cannot find American workers to staff their companies and thus need to have access to an expanded pool of foreign guest workers.

The I-Squared bill in the U.S. Senate would do exactly that, more than tripling the potential field of skilled guest workers allowed into the country on H1-B visas.

The CEOs of Microsoft, Oracle, Apple, Yahoo and Google have gone on record in support of the legislation, shunting aside claims of abuse of existing H1-B laws by Disney and others.

Sen. Jeff Sessions, R-Ala., heard testimony Wednesday before his subcommittee on immigration and the national interest that debunked the claim that these companies suffer from a “labor shortage” in the United States.

Steven Camarota, a Ph.D and director of research for the Center for Immigration Studies, said there is no government data to back up the claim of a labor shortage in the tech industry – or almost any other industry.

Read transcript of Camarota’s entire testimony before the Judiciary Committee’s subcommittee on immigration and the national interest.

He said, in the year 2000, three-fourths of Americans of working age were employed, but in 2015 only two-thirds were employed.

He informed the Senate panel that real wages have been static for 15 years running. During that time, native-born Americans have accounted for two-thirds of the growth in the working-age population while a majority of the employment gains have gone to immigrants.

Students are graduating with STEM degrees and not finding jobs in STEM-related fields.

“Real wages for STEM workers nationally – that’s science, technology, engineering, and math – real wages for bus boys and maids, all show the same trend,” he said.

“And at the bottom in some ways people are actually making less than they used to,” he added. “And if you look at the kinds of people who do those jobs, say people who have only a high school education, or less than a high school education, the fraction holding a job is even worse … sometimes only half are working.”

And it’s even worse for minorities and young people, he said.

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“My only point is that all the government data suggests, whether it’s stem or whether it’s high school dropouts, … no evidence of a labor shortage. The only evidence we have are testimonials, from owners of businesses. So at least, maybe one thing to do when a chicken plant says, ‘Gosh, you know we can’t find anybody,’ try to see how much they’ve raised wages. If they haven’t raised their wages in 10 years, or they just did it to keep up with inflation, that may suggest that, yeah, they just want to pay really low wages. That’s very different than I can’t find anybody. It’s I can’t find anybody given the way I want to treat workers. I can’t find anybody given what I want to pay.”

CIS tech wages graph

The H1-B visa is currently capped at 65,000 per year. The I-Squared bill, co-sponsored by Sens. Marco Rubio, R-Fla., Mike Lee, R-Utah, John McCain, R-Ariz., and Jeff Flake, R-Ariz., and four other Republicans along with four Democrats, would increase that cap to 195,000 while also allowing the visa holders to bring their family members to the U.S. on work permits.

The actual number of H1-B visas issued under I-Squared could be closer to 300,000 when including nonprofit entities taking advantage of the legislation.

See all the sponsors of the I-Squared bill in the U.S. Senate.

The legislation has a companion bill in the House called the SKILLS Visa Act.

‘Just another redistribution program’

Also testifying Wednesday was Harvard economist George Borjas. He said immigration has become “just another government redistribution program.”

“If we look at the impact of immigration over the last few decades in the U.S., one rough rule of thumb that comes out is that when you increase supply of workers in a particular group by around 10 percent, the wage of that group will go down by 3 percent, which is not a trivial number,” Borjas said.

He added:

“And that’s true whether we look at a particular city – for example, Miami after Mariel where the impact is actually greater – or just follow skill groups over the last 50 years, the fact is that the groups that receive the most immigrants will tend to do slightly worse off after that by about 3 percent for every 10 percent increase in supply. Now what that would imply in terms of the net gain, is that the net gain to the U.S. economy is only around $50 billion a year, and that is a number that comes straightforwardly out of the laws of supply and demand. And one of the lessons from that model that’s actually very difficult to manipulate the model in a way that would make that number much bigger. So, we have a fifty billion dollar gain on net that accrues to natives and a huge redistribution [of wealth] from the people who compete with immigrants to the people who use immigrants of around half a trillion dollars a year.”

Guest-worker bill unlikely to pass in election year

With all of the debate among presidential candidates about guest workers being used by Disney and others to replace Americans, the bills have stalled. But they are likely to come up again next year, after the election.

The visa, which is good for six years, has been used heavily not only by Disney. Southern California Edison, Cargill, Harley Davidson, Deloitte, Northeast Utilities and other corporate giants have used the H1-B to replace American tech workers with foreigners who will work for about one-third lower salaries.

Disney even forced its American IT workers to train their replacements or risk losing their severance packages.

The I-Squared bill has the backing of the U.S. Chamber of Commerce, the Business Software Alliance and heavyweight execs from Oracle, Microsoft, Apple, Yahoo and Google, among others.

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