The Current Labor Shortage

[billroper]

Yesterday's post on immigration actually triggered more response than I thought that it would. And the discussion that followed moves me to ask a question about the two statements below:

1) Illegal immigrants fill jobs that Americans aren't willing to do.

2) The H-1B visa program allows industry to recruit technical workers, because there is a shortage of them in the U.S.

Now, I know that there are apparently qualified technical workers among my friends who've found it difficult to get a job following the dotcom bust, at the same time that industry is arguing that they need more H-1B workers. And I -- and others -- have wondered if it's simply a case of industry wanting more workers who will accept substandard wages and who dare not complain lest they be sent back to their home country.

If I have the strong suspicion that statement 2 is a crock, why should I believe something different about statement 1?

So what do you think? Is either statement true?

Comments

[filkertom.livejournal.com]

My own suspicion is that the second half of statement 2 is the crock. The biggest problem I have had over the past several years with economists, corporations, industry, and the like, is that they only seem to care about bottom-line profit, which is the stupidest and most facile way to measure business success.

I keep thinking about all the "gains in productivity" over the past few years, which were mostly "gained" by reducing the size of the labor force and making those who remained do more work for longer hours... which they did, because they didn't want to lose their jobs and benefits. I keep thinking about Delphi, which made a deal with its workers which it is now trying to back out of because it can't keep up with low prices offered by foreign companies that work the crap out of their employees for one-tenth the pay. I keep thinking of CEO golden parachutes and oil company profits and tax cuts for the top 1%.

Mostly, I keep thinking that it's perfectly okay to get rich, but it really sucks to do so on poor people's backs. Everybody does better when everybody does better. And the current profit uber alles mindset can't even fathom that.

(Re: statement 1 -- did you ever hear a routine by Jimmy Tingle (http://www.jimmytingle.com/)? The gist of it is, "These people would make very good Americans. Think about it -- they run a Triathalon in the dark: Climb the fence, swim the river, dodge the cops... just to pick lettuce. But people say, 'They're taking our jobs.' They're not taking our jobs -- they're doing our jobs. I mean, how many Americans want to get a job picking lettuce? 'I've never been happy here on Wall Street. All these years, I've had this burning desire to go to my first love: migrant work! Get down on my hands and knees, pick a little lettuce. My wife could clean bathrooms in hotel rooms, making six, seven dollars a week!'... If it were ten thousand Scandinavian women with their tubes tied, the Senate would be down at the Statue of Liberty in the morning.")

[billroper]

Actually, Tom, I agree that most Americans probably don't want a seasonal job as a migrant farmworker. And I would really like to avoid having to take a job cleaning bathrooms. So would most of my friends.

But is there no one among the seven million unemployed in the U.S. who would want that job if it paid the kinds of wages and benefits that it would have to pay if you didn't have an oppressable workforce ready to take the position? Are there enough people who would take those jobs that they'd actually get done?

As far as the situation with the auto industry goes, boy, that's complex. Very complex.

[filkertom.livejournal.com]

These days, I'm pretty sure there are people who would work the fields, hotels, etc., if they could get a decent wage from it. Heck, just last month John McCain put his foot in his mouth about it (http://www.msnbc.msn.com/id/12155322/from/RSS/).

Understand something, Bill -- I'm not necessarily disagreeing with you here. I blame the business owners, the CEOs, the managers, whoever, who hire those workers at below-average wages. I don't pretend to know how to reform immigration, but I'm pretty sure the first step is to penalize those who are in charge of the actual hiring -- the ones who don't want to pay good wages to their fellow citizens, and who take advantage of those so desperate that they flee their own country looking for something better.

[billroper]

And I agree with you about that. If you want to stop (or slow) illegal immigration, there need to be serious consequences for hiring people who are here illegally.

[filkertom.livejournal.com]

And, boy, you ain't a-kiddin' about the auto industry situation being very complex. Although I think Ford and GM are possibly finding their way back to the simplicity of: Produce cars people want to buy. Which may not help much, but can't hurt.

[fireskin.livejournal.com]

One of the things I read recently spoke of how the Mexican laborers had taken a lot of the black laborers jobs in rebuilding New Orleans and that the black laborers were upset. Not sure how reliable the reporting is, but.... it would indicate that there are indeed legal Americans who are put out of work by the illegal Americans.

[minnehaha.livejournal.com]

Companies are pretty much required to make as much money for their shareholders as possible, or else the stockholders can and will sue. Dodge v. Ford Motor Company. Keeping wages as low as possible is a way to increase profits.

Everybody is paid the lowest wage their employer believes they will accept.

K. [who agrees that everybody does better when everybody does better]

[daisy-knotwise.livejournal.com]

I recall a number of years ago when a group of shareholders brought suit against Commonwealth Edison because their dividends were reduced because of a mild winter. Usage was down so earnings were down. I believe they settled out of court.

GHR

[alymid.livejournal.com]

I am not sure that I think that either is totally true, neither do I believe that they are completely false.

elaboration
1. I think that they way our country currently functions - there are jobs that get done by illegal immigrants (or new legal immigrants) that the people who are doing the hiring are less likely to pay a fair wage for. House cleaning, menial labor etc. I think our current economy and our countries debased prices relfect that access to a cheap - under the table workforce. I think that with less access to that work force, some will do without and some will pay more to hire who will do the work, which would result in higher prices. I know that my mother has hired "maids" for years; they are always some woman who is a new immigrant, who barely speaks english, frequently eastern eurpoean and sometimes hispanic. I know that she can only afford so much, but I also know that many people in her neighboorhood would just pay more. My boss hires 3 guys from the factory next door to do odd jobs that include maintenance and manual labor - none of them speak english, and I think he pays them cash under the table.


on statement 2) I pretty much agree with yours and other assessments of power leveraging in the work place.

[smallship1.livejournal.com]

I suspect that there are a lot of jobs that most of us (meaning the people who are reading this) are very glad we don't have to do. I know there are lots of jobs I would very much rather not do. This is in me a fault and a weakness, because they need doing, and if I'm not willing to do them I have no moral right to expect anyone else to. (Which is why, when civilisation crumbles and some of my friends are getting their survivalist ya-ya's out, I shall be quietly making my own arrangements to depart before I become a burden on the new world order.)

Penalising the bosses is the morally right thing to do, but there had better be some alternative arrangements in place to get the work done, because they'll have lots and lots of evidence ready to show that if they were to pay fair wages to all their workers the business would go under, and if they're forced they'll just chuck it in, lay everyone off and retire. It would be kind of like penalising car drivers with higher road tax, congestion charges and swingeing petrol tax hikes, without doing anything to improve the public transport infrastructure...hang on a minute...

[tigertoy.livejournal.com]

I don't think there is a shortage of potential tech workers overall, but I believe there probably is a shortage of entry-level tech workers. Between managers that leave a position open rather than hire someone who is "overqualified", the low quality of our education system (turning out too few technical graduates who know too little), and experienced workers who expect their real (inflation adjusted) wages to increase over their working life whether their job usefulness does or not, I suspect it really is hard to hire tech workers who are worth the trouble and cost. It doesn't help that the tech industry seems to be absolutely crammed with people who hand out a resume that suggests they know a lot more than they do, and hiring decision makers who don't have any idea what the job requires. I suspect that organizations that judge job applicants based on the buzzword count in their resumes have experience that H1-B workers are better workers than Americans because their own systems insulate them from the American workers they actually want.

Like any other complex question, there is some truth on both sides. Some businesses could not continue without their cheap immigrant labor; some businesses would just have to accept a lower profit margin.

[madfilkentist]

Statement 1 is meaningless without context. There are certain jobs most Americans won't consider, because they have better alternatives. Most people in adequate health would prefer strenuous jobs to starvation, but that's not the choice they face.

For people from other countries, a strenuous job in the US may look very attractive compared to the alternatives. Their choices are limited because they have to keep a low profile, and (if they're here illegally) have to deal with employers who factor the risk of illegal dealing into their costs.

One might conclude from this that the optimal strategy for politicians who want to maintain a supply of cheap labor is to make it illegal, but not excessively risky, for people to come into the US and work.

[(Anonymous)]

One might conclude from this that the optimal strategy for politicians who want to maintain a supply of cheap labor is to make it illegal, but not excessively risky, for people to come into the US and work.

That was the status quo before this year's big deal (wedge issue) in Congress. Probability of real change, once the Repubs stop howling at the moon: slim to none.

H1-B workers are quite the interesting lot. They've been called modern-day indentures, an analogy that works on many, many levels.

[backrubbear.livejournal.com]

One might conclude from this that the optimal strategy for politicians who want to maintain a supply of cheap labor is to make it illegal, but not excessively risky, for people to come into the US and work.

Another component of this is that you can outright dump illegals from their jobs when you can't pay them. Completely aside from wage considerations, they are disposable people.

[drawshad.livejournal.com]

1. Likely. But I think that number would go down if the jobs in question were willing to pay fair wages. They'd be more willing to do that if consumers wouldn't complain about price hikes.

2. I don't think there's a shortage of technical workers. Many of my friends in my graduating class in college didn't find jobs. We had the same education and I was hirable and so were most of them. I know for a fact that at my last client I billed out at $89/hour, full-time employees were estimated to bill out at $69 and they hired an Indian guy who billed at $45. This was a much higher salary than he would have expected staying in his home country and it helped the bottom line of our project. His abilities weren't as much of a consideration (he managed to screw up just about everything he laid his hands on). He was frustrated because he knew he was making peanuts in comparison to the rest of us, but couldn't leave his contracting firm because they were sponsoring him for his residency. If he left, he'd have to start all over with working towards the residency or go back to India. Neither option was acceptable to him.

Take that information for what you will.

[bedlamhouse]

I think both statements leave out an important phrase - "for the price Americans are willing to pay".

Note that I say Americans rather than blaming it all on faceless corporate evil nasty capitalist pigdogs.

The fact is Americans don't like paying high prices, don't want to pay the price for vegetables that we'd have to pay if American Union wages were paid, and don't want to pay for tech workers who make more than an H-1B worker is willing to take.

In a lot of cases it's not a matter of greedy stockholders making huge and unconscionable profits, it's a matter of staying in business at all against Chilean produce and Indian/Chinese tech firms.

Which is why it isn't just about the labor part of the economy. IF we enforce businesses having to hire legal immigrants at the wages that would then prevail (much lower supply of willing workers drives wage up to where worker supply is found), do we lose entire business and the rest of the jobs associated with them to overseas competitors? If we shut down H-1B will companies just move operations to the Phillipines or Costa Rica because no one wants to pay enough for the product to keep the support guy at more than US minimum wage?

[billroper]

Companies are already sending these jobs overseas. I doubt that tightening up on H-1B would make it worse.

But I could easily be wrong.

[drsulak.livejournal.com]

>If I have the strong suspicion that statement 2 is a crock, why should I believe something different about statement 1?

No different, except:
- H1B visa program can be abused to specifically not hire Americans that would be willing to fill the job.

>Is either statement true?
As #1 is stated, that is true. The reasons *why* are much more complex.
#2 is false, because there is *not* a shortage of technical workers.

>If I have the strong suspicion that statement 2 is a crock, why should I believe something different about statement 1?

If I were an game-theory driven executive not hampered by ethics, I could:
- Hire H1B workers at the bottom of the corporate-approved salary range.
... American resumes needs not be considered, because even if hired at the same wage, they are still more expensive.
- Use them to cycle out my more expensive labor.
... H1B workers are more likely to be single (health insurance is less)
... H1B workers will not have any long-term costs (retirement, 401K matches, etc)
... H1B workers will not make any unemployment claims against me

As a game-theory driven manager not hampered by ethics, I could:
- Get them to work extra long hours (60+ hours).
... Bonus hours, since they are likely to work during holidays and not demand alternate days off.
... I can mention how performance reviews are coming up, and how I *know* they want to be a team player, if they hesitate when I ask them to work a 4th 16 day in a row...

And finally, the H1B visa program sets up a self-fulfilling feedback cycle that does result in the lack of qualified technical workers at all levels.

#1 does not result in lack of technical leaders, business leaders, and the ability to pursue better jobs and opportunities.

And this doesn't even cover what I can do under the "Training" visa program.

[poltr1]

From 1) and 2), I propose:

3) Legal (H1-B) immigrants fill jobs that Americans aren't trained to do.

These statements may have been true in 1999, but with the dot-com bubble burst of '01, they're not so true anymore. Companies are offshoring work because it's cheaper for the company. That's the down side of globalization.

Meanwhile, folks like me can't get work because I'm no longer qualified. Or so I'm told. (See my LJ for details.)

And I -- and others -- have wondered if it's simply a case of industry wanting more workers who will accept substandard wages...

That's it in a nutshell, regardles of where the workers are located.

[pheltzer.livejournal.com]

I think statement #1 doesn't go far enough... in my mind that should read as:

Illegal immigrants fill jobs that Americans aren't willing to do at the wages offered.

As for statement #2... I'm with you it's an out and out crock. Although now that I think about it you could attach the same rider and have it read:

The H-1B visa program allows industry to recruit technical workers, because there is a shortage of them in the U.S. willing to work for the wages offered.

Sadly it all comes down to the bottom line and making profit for shareholders. Companies and businesses will cut every dime they can from their operating expenses until there is a backlash. Look at outsourcing. I know many companies have outsourced call center jobs to save a few bucks. Turned out they were losing money because they were losing customers because of the experience. Once the math was figured out... the jobs started coming back.

In these kind of situations I've become a strong believer in that a company will get what they pay for. I believe that an employee will work only so hard if they feel they're being paid a fair value. Once you cross below that threshold quality diminishes and the savings in salary end up as losses elsewhere in the business model.

So what do you think? Is either statement true?
I think they're both true... to a point. But if we're talking a black and white arena with no room for grey... if I have to add clauses to the statements to make them what I believe is valid then no they're not true at all.

[billroper]

I think we agree. :)

And that's in italics, because I think you still have an escaping tag...

[folkmew.livejournal.com]

Yes, I agree with your restatement of 1.

[rmeidaking.livejournal.com]

'They' leave off a phrase: 'for minimum wage.'

Americans pretty much won't work in lots of job categories for minimum wage; undocumented aliens will. Heck, 15 years ago when I was in DC, it was pretty clear that the fast food vendors were undocumented aliens, and at that time, anyone who could file reliably could get a job for $10 an hour, so the $5 an hour jobs were unfilled. Likewise, the high tech companies want qualified workers who will work for low wages. Yep, there's a talent shortage - at meaningful wages.

This problem has been around since the formation of the first skilled-workers guild, which was sometime in pre-historic times, since guilds were already established in Ancient Greece and Ancient Egypt. People who are good at what they do tend to cost more than employers want to pay. Employers and workers chase each other around the planet, constantly negotiating the relationship between wages earned and work done. In fact, in every hiring negotiation, the employer is trying to get a good employee for the least amount possible, while the employee is trying to get the most compensation for the work s/he is capable of doing.

I have mixed views on the whole situation, being a fairly expensive person to hire, yet wanting to hire people to work for me (teachers for my kids, gardeners, house cleaners, etc.) and pay them significantly less than I earn. Yet why should they earn significantly less than me? Is that fair? I don't know.

[backrubbear.livejournal.com]

They' leave off a phrase: 'for minimum wage.'

I don't know how many illegals are actually getting paid even minimum wage. If they are, they're probably not either paying their end of taxes or the employer paying the employer's end.

If the above is true and the illegals are given amnesty, do you think the employers who are getting away with below-minimum wages and no taxes will still want to pay them?

Maybe yes, maybe no.

[weirdsister.livejournal.com]

Personally, I think it's a crock. I have done some of those so-called jobs that American's aren't willing to do, and for less wages than they pay illegals. From age 12 to age 16 I spent my summers working in my uncle's bean and beet fields. I busted my butt, and I bought all my own school clothes. I was glad to have the job. I've cleaned bathrooms. I've shoveled manure. It taught me the value of a good education and gave me incentive to achieve.

IMHO, we need to force our teenagers and college aged children off of their lazy, pampered, playstation playing, cartoon network, whining, deadbeat asses and make them work these jobs that Americans supposedly do not want, so that they will see the value in the jobs that Americans DO want. And you know what? I'm still not above doing those jobs. If I was in a position where I had to do one or more of those jobs to keep food on the table, I'd rise to the occasion. There is no shame in honest work.

And I agree that statement #2 is just plain suspicious.

[folkmew.livejournal.com]

I think statement 1 is true and I think you are right that it is a case of industry wanting more workers who will accept substandard wages.

That sort of thing is one reason I am *trying* (but it's hard I admit) to avoid Wal-Mart and other big chains and buy local when I can. I crave the day when our income makes this a bit easier.

Sigh....

[backrubbear.livejournal.com]

have wondered if it's simply a case of industry wanting more workers who will accept substandard wages and who dare not complain lest they be sent back to their home country.

I can speak from experience that this can be the case.

I'm also very familiar with the numbers in these games. If you can get reasonable (low) quality from the cheap labor, it sometimes makes economic sense to hire them. However, most of those numbers make sense only in a short-sighted view. If you're concerned about the long view, which most CEOs aren't, then it's a non-issue.