India Uncut

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Friday, August 26, 2005

Busting H-1B myths

The Wall Street Journal speaks out against a cap on H-1B visas, and in favour of letting market forces decide. It writes:
Contrary to the assertions of many opponents of immigration, from Capitol Hill to CNN, the size of our foreign workforce is mainly determined by supply and demand, not Benedict Arnold CEOs or a corporate quest for "cheap" labor. As the nearby table shows, since the H-1B quota was first enacted in 1992 there have been several years amid a soft economy in which it hasn't been filled. When U.S. companies can find domestic workers to fill jobs, they prefer to hire them.

And let's not forget that these immigrant professionals create jobs, as the founders of Intel, Google, Sun Microsystems, Oracle, Computer Associates, Yahoo and numerous other successful ventures can attest. The Public Policy Institute of California did a survey of immigrants to Silicon Valley in 2002 and found that 52% of "foreign-born scientists and engineers have been involved in founding or running a start-up company either full-time or part-time."

Moreover, the notion that Indian software writers are being hired by Microsoft at bargain-basement costs and driving down the wages of Americans is also refuted by the evidence. A Federal Reserve Bank of Atlanta study conducted in 2003 found no negative impact on U.S. wages. Government fees and related expenses for hiring foreign nationals can exceed $6,000, and additional fees accrue if and when the H-1B status is renewed after three years. The law also requires companies to pay visa holders prevailing wages and benefits, and it forbids hiring them to replace striking Americans.

A central irony here is that opponents of lifting the H-1B cap also tend to be the biggest critics of outsourcing, which is fueled by the arbitrary cap.
I am, of course, in favour of completely free movement of goods and labour across the world. But that is an ideal, and politics comes in the way of any ideal being achieved.

Cross-posted on The Indian Economy Blog.
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