Globalization is wonderful, and does no harm anywhere, that's what we've been told. But a new study, titled "H-1B Visas, Offshoring, and the Wages of US Information Technology Workers" by Prasanna B. Tambe of New York University - Stern School of Business and Lorin M. Hitt of University of Pennsylvania - The Wharton School aims to dispel "the myth that globalization generates no losers," the authors state.
The study's abstract states (emphasis ours):
Our estimates indicate that H-1B admissions at the current levels are associated with a 5-6% drop in wages for computer programmers and systems analysts. Offshoring appears to lower the wages of a slightly broader class of IT workers, including IT managers, by about 3%. These effects are larger for employees exposed to external labor market forces, such as new graduates or job-hoppers.
To the best of our knowledge, the analysis in this paper is the first to provide evidence that H-1B employment and offshoring put downward pressure on the wages of US IT workers in some occupations.
The study's authors said they used public data, including data from a leading (but unnamed) careers site.
A draft of the 32-page paper was posted
last week on the Social Science Research Network.
The report is just the latest; typical of many such studies, look hard and you can find plenty of evidence in either direction on this matter, meaning that some will say offshoring and H1B visas harm U.S. workers, and some will say precisely the opposite.
It is true, however, that the authors refrain from putting a purely negative spin on offshoring and H1B visas, saying:
Although our findings suggest that the negative effects of globalization may be substantial for some workers, it is critical that policy makers weigh these effects carefully against the macro-level economic effects. Offshoring will most likely remain a necessary and important part of the global economy, and there is substantial evidence that H-1B admissions appear to directly improve levels of innovation and entrepreneurship, which in the long term should create new jobs and raise demand for technology workers in other areas.
Here's the thing, though: let's throw on our common-sense hats for a second. Ignoring offshoring, and looking at H1B visa holders, the claim is made by many that H1B visa holders are not paid less than American workers. Rather, they say that the need for H1B visa holders is not because of lower wages, but instead because there are not enough American workers to fill the jobs, mostly in the tech industry.
Additionally, those favoring more H1B visa try to claim these visa holders are the "best and brightest," but a study just last year indicated that was in fact not the case
. In fact, the study said (emphasis ours):
"Most foreign tech workers, particularly those from Asia, are in fact of only average talent. Moreover, they are hired for low-level jobs of limited responsibility, not positions that generate innovation. This is true both overall and in the key tech occupations, and most importantly, in the firms most stridently demanding that Congress admit more foreign workers."
When over six million people are receiving jobless benefits, and let's be careful to note there are many who have fallen out of these numbers because they are either underemployed or have exhausted their benefits, are you telling us you cannot find 65,000 American workers who can do the jobs of H1B visa holders? We now return to our non-common sense world.