The New Republic

From the article: "For years, liberals said that the best way to reduce illegal immigration was to help the countries being fled to flourish economically. Now it’s starting to look as though they were right." Odd. I don't remember hearing this. And if you look at liberals' shining cities where they practice their best lib practices, they are, frankly an absolute wreck in most every figure of merit you might conceive. It has been the right that constantly beats the drum that economic prosperity is the cure to all that ails. From terrorism to equality to poverty. The lib recipe involves muted growth, lots of dependency, and a non-functioning ever growing government doling out favors to the chosen elite. That said, we are fools to accept the least skilled to fill our immigration quotas. Our immigration should target the smartest and brightest in the world long before we consider bringing in an unskilled worker. If we need to pay citizens $20/hour to pick lettuce, then so be it. That will raise the price paid to do minimum wage jobs and raise lower-end wages across the board.

- seattleeng

May 3, 2012 at 3:08am

More to the point, Tim, it would be opportune for you to find out whether the immigration trickle changes US growth models for the medium term. We have unofficially been relying on rejuvenation via immigration to boost economic and population growth. Perhaps this is the kind of development that motivates immigration reform now more than ever.

- chaitless

May 3, 2012 at 3:42am

"Odd. I don't remember hearing this." Guess you read your "liberal" news in the wrong places, as what Tim says "liberals" have been saying is exactly what they've been saying for a very long time. I was reading that economic improvement (rather than stepped up enforcement) was the bet solution to illegal Mexican immigration over a decade ago, over in Australia (reading US authors). Here is the first two links from a boatload from a cursory search (2008) http://prospect.org/article/what-really-do-about-immigration "And if you look at liberals' shining cities where they practice their best lib practices, they are, frankly an absolute wreck in most every figure of merit you might conceive." Such as? Broad generalizations are nice and all, but hardly descriptive. Let me guess though - you're going to say "California"?

- Nari224

May 3, 2012 at 6:14am

One of the reasons there wasn't such a giant sucking sound south of the border is that the drain moved across the pacific. Mexico is an interesting case study when comparing what more laissez faire economists predict with reality. Mexico largely did everything it was "supposed" to, but then China came on the scene and undercut them as a destination for US outsourcing. Having just given up their ability to wangle out a competitive advantage or protect some of their own industries, the result is well known.

- Nari224

May 3, 2012 at 6:19am

The crisis of too many undocumented Mexican immigrants has turned into a crisis of too few undocumented Mexican immigrants; who's going to wash the dishes, tend to the yard, and serve as hod carriers. Maybe we can now focus our attention on a real immigrant crisis: too many Indian and Pakistani small grocery store owners. I mean, what's Ike Godsey gonna do? And what about all those foreign born doctors? Are we certain they actually attended real medical schools and learned their skills on real cadavers instead of dead cats and dogs. Somebody should do something!

- rayward

May 3, 2012 at 8:11am

"When we talk about immigration, we are talking often about Mexico, because it accounts for the largest proportion (30 percent) of America’s 40 million immigrants. (China places a distant second with 5 percent.)" I would also suggest that those bitching about immigration are talking about Mexico because those particular immigrants tend to be somewhat darker hued that, say, immigrants from Canada and Western Europe, and they don't even have the common courtesy of having spoken English from birth. If you doubt this, check out the comment from the politico's wife in North Carolina, who in a true stroke of meme-combining genius stated that their Protection for Marriage amendment was ultimately aimed at ensuring the survival of the white race, who appears to be in danger of dying out. Give us your poor, your tired, your white anglo saxon heterosexuals yearning to breathe free...

- Tristan

May 3, 2012 at 8:52am

@Seattle: "Odd. I don't remember hearing this" Might have something to do with you being trained like a organ grinding monkey to repeat the reicht-wing talking point that "liberal=socialist commie". Seriously, the lack of independant thought you people display is breathtaking. All of you really do get the lion's share of your worldview from Limbaugh and Hannity, don't you? And when facts begin to intrude, when the countries practicing austerity suddently begin to - gasp! - experience exactly the opposite economic predictions, when our liberal values practiced here and elsewhere show real and substantial positive results in the lives of millions, what goes on in your head? I can only imagine. Find a way to harness the cognitive dissonance in the brains of conservatives and the world would have a new energy source.

- Tristan

May 3, 2012 at 8:58am

Is immigration a cloak for racism?

- rosenhw

May 3, 2012 at 10:00am

seattle, that is a lie and you know it. you and I have had this conversation in the past and you know damn well I went to Mexico to work to help improve the educational level thereby increasing the chances of Mexicans remaining there. I know my own personal experience is limited but I know many, many Mexicans who go to the states for a few years, save up enough money, and return with enough to buy a nice house, a car, etc. Moving cash is a hell of a lot easier now than 20 years ago. I am on my sabbatical and am back in the states but I still get my pay direct deposited in my Mexican account and use the ATM to get the money. It is just as easy to do it in reverse. The craziest thing is I would prefer to stay in Mexico, my health care is 100% covered but since I came back here have been bleeding money trying to meet my deductible for my Aetna account, this on top of already paying 600 a month. Maybe a lot of Mexicans think to hell with it as well. To be honest I would prefer that we get rid of most barriers to migration for Mexicans, the way it pretty much is for Canadians. Outside of the frontera zone most of Mexico is safe, and in my state of Oaxaca very much so.

- blackton

May 3, 2012 at 10:48am

tristan. "Give us your poor, your tired, your white anglo saxon heterosexuals yearning to breathe free..." Not quite. ..... "yearning to rapidly reproduce".... A 2.0 fertility rate wont do enough to solve the anglo saxon minority problem.

- drofnats1

May 3, 2012 at 11:22am

seattle says: "That said, we are fools to accept the least skilled to fill our immigration quotas. Our immigration should target the smartest and brightest in the world long before we consider bringing in an unskilled worker. If we need to pay citizens $20/hour to pick lettuce, then so be it. That will raise the price paid to do minimum wage jobs and raise lower-end wages across the board." Tell that to the capitalists for whom cheap labor is the Holy Grail. We have the ability, if we chose to do it, to end almost all illegal immigration by using the banking system to make it virtually impossible to employ undocumented immigrants. No need for high security fences and such. We don't do it, and instead engage in all of this "immigration theater" along the Mexican border so the the politicians can have the best of both worlds -- appearing to be concerned about illegal immigration for the consumption of the masses while not actually doing anything about it so that employers can have that cheap labor. No one should believe that the inflow of cheap labor does not bear on the fact that the bottom 50% of the income spectrum has seen its income share erode dramatically in the last 30 years. The competition from labor inflows AND imports is a double whammy. The law of supply and demand says that when the supply of labor at the low end, in both forms, goes up sharply, the price, the wage rate, will go down. And so it has been. As for targeting the "best and brightest," I attended last year a lecture by a Berkeley labor economist of considerable reputation who said that the differential paid to engineers for higher degrees is no longer enough to justify the expense of that education. Of course, we can take up the slack by importing engineers from abroad. The net effect is to depress the wages of engineers. How exactly is this good for the US economy? Sure, it would cost more to train and pay American engineers. But aren't good jobs at good wages what we are supposed to want for our people? For the libertarians, it of course suffices that the GDP is large even if, by suppressing the value of labor, the overwhelming share of gains is garnered by the top 1/10 of 1%. They consider this progress, and even believe that this state of affairs reflects the economic contribution of the wealthiest rather than the manipulation of policy in their own favor. For a libertarian, policy is also for sale in the market Nothing like the extremism.

- roidubouloi

May 3, 2012 at 11:35am

I applaud you Roid. You knocked it out of the park.

- tmmats

May 3, 2012 at 11:40am

Or, look at it this way: If you want to go down to your local restaurant and have an entree for $12.99, then there will be illegal immigration. If you want an end to it you have to also want proper wages for catering workers, and then you must be willing to pay $18.99 or simply go out to eat less often. What is the height of hypocrisy is stuffing your face with your $12.99 entree and calling the waitress for another drink as you fulminate about "illegal immigration."

- ironyroad

May 3, 2012 at 12:13pm

Roid is basically on target. Just be sure to include "virtually all American suburbanites" in your definition of "capitalists." The overall level of hypocrisy that we tolerate in this public discussion is repulsive. During my lengthy exile in the sunbelt (7 years in suburban Dallas and Denver), I met precisely no one who hired legal residents of the US to do their lawn work, and precious few who hired legal residents for their outsourced child care. "You can't get help like that around here..." was the mantra, always shorn of the other half of the sentence "...at the puny wages I'm willing to pay." Yet it's precisely these enclaves of preudo-conservatism where the howls about illegal immigration are loudest. But remember the Dems are almost equally guilty. Remember how hard Bill Clinton had to look to find a female Attorney General who wasn't hiring illegal child care help? Remember how the only way he could do it was to hire a woman with no kids? Some day, I'd like to see some figures on how much food-price inflation we have avoided in the US by making agricultural labor a foreigners-only occupation. Even here in upstate NY, you will find that dairy farm help is overwhelmingly Hispanic, even more so in the fruit growing businesses. What would I be paying for apples if these people were paid decently? Jimmy Carter used to say that he wanted to give Americans the government we deserve. Unfortunately, we are all now approaching that point.

- gwcross

May 3, 2012 at 1:55pm

Roid writes: "Tell that to the capitalists for whom cheap labor is the Holy Grail. We have the ability, if we chose to do it, to end almost all illegal immigration by using the banking system to make it virtually impossible to employ undocumented immigrants." I am not aware of capitalist (which I assume you use to mean a mid- to large business) that wants to keep illegal immigration. The penalties are very, very stiff. A farmer here in Seattle was just fined $1M for employing illegals on his organic herb farm (hint: based on the story and the product, I'll bet he was an Obama supporter, but that's just a guess). If everyone was using legal labor, then the prices would quickly stabilize for all employers. I can see mom and pop organizations still wanting to save a buck here and there, as was the farmer. But mid- to large-size employers? No way. Roid writes: "As for targeting the "best and brightest," I attended last year a lecture by a Berkeley labor economist of considerable reputation who said that the differential paid to engineers for higher degrees is no longer enough to justify the expense of that education. Of course, we can take up the slack by importing engineers from abroad. The net effect is to depress the wages of engineers. How exactly is this good for the US economy?" The market for engineers is already well cross-pollinated with global actors. Most meetings at Microsoft, Google, Facebook, Qualcomm, etc, half are foreign born. This is the norm. And this is a big change from 15 years ago. And yet salaries are higher than ever, with Google and Microsoft handing out huge raises TO EVERYONE during this downturn. It boggles the mind. In other words, engineering has swallowed more foreign citizens than ever before, and they are paying more than ever. A kid right out of school can start at $100K. An engineer managing 20 people is looking at $300K (salary + stock + bonus). Manage a team of 100 engineers, and you are approaching $1M/year. It is freaking insane. And the competition through the downturn remains fierce. We have a long way to go before an engineering degree isn't worth it. If you go to a state school, you can borrow your entire education ($80K) and you'll readily earn that your first year of working. Roid writs: "For the libertarians, it of course suffices that the GDP is large even if, by suppressing the value of labor, the overwhelming share of gains is garnered by the top 1/10 of 1%" Well, yes, the gains will go to those that create them. Why on earth should you partake in Facebook's wealth creation out of thin air if you had nothing to do with it? Do you believe you are entitled to any of Facebook's wealthy they have created? Irony writes: " If you want to go down to your local restaurant and have an entree for $12.99, then there will be illegal immigration." Here's a clue about the restaurant biz: Labor typically runs 15-20% of your sales. So, at McDonalds, if a big mac is $3.50, then the labor to produce that is $0.60. So even if you doubled the salary of a McDonald's worker, then the cost of a bigmac might rise to $4.10. McDonald's probably doesn't hire illegal workers, as the risk is too high. So, what would really happen is the mom-and-pop restaurant that DOES hire illegal workers would have their labor cost rise 5-10%, from perhaps 10% to 20% of sales. Again, it doesn't increase the cost too much of that entree you want. But it does make sure everything is fair. Nari writes: "I was reading that economic improvement (rather than stepped up enforcement) was the bet solution to illegal Mexican immigration over a decade ago, over in Australia (reading US authors)" Revisionist much? Remember republican-led NAFTA?

- seattleeng

May 3, 2012 at 1:59pm

"Our immigration should target the smartest and brightest in the world long before we consider bringing in an unskilled worker. If we need to pay citizens $20/hour to pick lettuce, then so be it. That will raise the price paid to do minimum wage jobs and raise lower-end wages across the board" Gee Seattle, I never, in a million years would expect you to become a shill for one of those "fair wages" liberal groups I hear about with their talk of paying someone more than a few dollars a day to pick lettuce, broccoli, spinach and strawberries in the fields of the central valley of California. Next thing you know, we'll see a caravan of under-employed, tattooed sporting, iphone using, engineering graduates having to become itinerate farm hands because you've 'insourced" jobgs so that they're now competing against those Indian and Asian engineers that Boeing, Google and Microsoft hire because those green-card carrying immigrants will do the job for half the pay and twice the hours.

- singlspeed

May 3, 2012 at 2:25pm

"Here's a clue about the restaurant biz: Labor typically runs 15-20% of your sales. So, at McDonalds, if a big mac is $3.50, then the labor to produce that is $0.60. So even if you doubled the salary of a McDonald's worker, then the cost of a bigmac might rise to $4.10. McDonald's probably doesn't hire illegal workers, as the risk is too high. So, what would really happen is the mom-and-pop restaurant that DOES hire illegal workers would have their labor cost rise 5-10%, from perhaps 10% to 20% of sales. Again, it doesn't increase the cost too much of that entree you want. But it does make sure everything is fair." Which is kind of a long way of saying "Basically, I agree."

- ironyroad

May 3, 2012 at 2:53pm

As usual, seattle, you just invent facts out of thin air to support your ideology. Who am I gonna believe, the Berkeley labor economist whose career is spent studying this issues or you, pulling out of your ass claims about what engineers get paid. The gains do not go to "the people who created them." This is pure ideological fantasy. There are huge discrepancies even in a best case. As usual with libertarian fantasy economics, markets, the law of supply and demand, are only the best of all possible worlds when they are producing profits for capital. Ordinary microeconomics says that if you expand the pool of labor, you decrease the wage rate. So, if we stop expanding the pool of labor with trade deficits, wages go up and Facebook's profits go down. Whose gains are they now? Labor, right? But, no. In this case, you will suddenly conclude that the market should not be allowed to dictate the outcome, we should adopt policies that depress wages and increase profits. Free-market my ass. Libertarianism is crony capitalism larded with a veneer of pseudo-intellectual Randian nonsense. _______________________ seattle says: I am not aware of capitalist (which I assume you use to mean a mid- to large business) that wants to keep illegal immigration. gwcross says: During my lengthy exile in the sunbelt (7 years in suburban Dallas and Denver), I met precisely no one who hired legal residents of the US to do their lawn work, and precious few who hired legal residents for their outsourced child care. Gee guys, the way markets work, it doesn't matter. Illegal immigrant labor would not be here unless illegal immigrant labor is working -- somewhere, even if you don't happen to know where. That means more workers for the number of jobs available and pulls down wages even for people who have never seen an illegal immigrant in their whole lives. If the extra pool of labor were not here, the labor market would be tighter and wages generally would be higher. Supply and demand, you know. Of course, as you move up the salary scale, the impact becomes attenuated. The income of plastic surgeons is not much affected by what happens in the labor pool in which immigrants compete. But there are plenty of people whose income is affected. Of course, if we didn't have this "reserve army of labor," as Marx called it, we would be paying more for lettuce and apples. We would have to pay enough in the domestic labor market to get these things to the table or decide we didn't want them. That is as it should be. If people are to earn a decent living, then the things they produce have to cost enough to cover the cost of that decent living. Business doesn't need to hire illegal immigrant labor to benefit from the impact on the labor market. That's why we never adopt effective enforcement against employers. Using the banking system, we could make it impossible to pay those who cannot legally be employed here, unless they were paid in cash, and it is easy enough to make paying cash for labor illegal. You can claim not to know the true immigration status of a laborer. You cannot claim not to know whether you paid that laborer in cash.

- roidubouloi

May 3, 2012 at 4:22pm

By the way, the claim is often made that illegal immigrants only do the work that Americans won't do. For one, it is quite clear that in parts of the country where there are not pools of illegal immigrant labor, Americans do in fact do those jobs. For another, what is unspoken is that Americans won't do those jobs at the low wages that employers pay to illegal immigrants. Without that labor pool, they would have to pay a high enough wage to induce Americans to do those jobs. Comes down to the same thing: Expanding the labor pool with illegal immigrants suppresses wages, and business wants it that way. The border stuff is nothing but a dog and pony show to make it appear that we are doing something when the real way to do something effective is through the payment system.

- roidubouloi

May 3, 2012 at 4:27pm

Seattle: "Nari writes: "I was reading that economic improvement (rather than stepped up enforcement) was the bet solution to illegal Mexican immigration over a decade ago, over in Australia (reading US authors)" Revisionist much? Remember republican-led NAFTA?"" Let's ignore that the Democrats aren't actually a "liberal" party but rather a centre-right one, but yes, I do recall a GOP led NAFTA. Seriously, this isn't hard to look up Started in 1992. The president at the time (no a Democrat) was rushing to get it finished after he lost the election in 94. The incoming democrat added some protectionist provisions and adherence to US environmental rules. It was passed by (from Wiki)... "The agreement's supporters included 132 Republicans and 102 Democrats. NAFTA passed the Senate 61-38. Senate supporters were 34 Republicans and 27 Democrats." If you're going to make offhand sarcastic comments, it might help to embed them somewhat in the historical record. And this is of course assuming that a number of democrats didn't believe that NAFTA wouldn't achieve just what we're talking about - reducing the stress illegal immigrants place on social services by improving the Mexican economy (albeit by shipping some US jobs there).

- Nari224

May 3, 2012 at 5:15pm

singlespeed writes: "green-card carrying immigrants will do the job for half the pay and twice the hours." You dont' get it. If you can create value for your employer, you will be well paid. Period. A typical engineer at Microsoft generates $1M for the company. If there is someone that will do the job for less and is a top developer it doesn't matter because Microsoft needs them both. And they will hire them both with a good salary to keep them both happy. When you generate lots of money for your company, there is not an adversarial worker/boss arrangement. Your boss instead spends his days trying to make sure you won't quit. That is why you get free rides to work, free dinner, beautiful work facilities, etc. It is all because the person crates a lot of value for the company and the company responds by giving that person lots of money. If they didn't, the employee would leave and go someplace else. Facebook is the perfect example here. They created billions and billions of value from nothing. They added huge riches to the 1%. Now, how much of this do you feel you are entitled to?

- seattleeng

May 3, 2012 at 7:24pm

Roid writes: "Who am I gonna believe, the Berkeley labor economist whose career is spent studying this issues or you, pulling out of your ass claims about what engineers get paid." Pulling them out of my ass? I worked there for nearly a decade. And the salaries are published and well known. The Seattle Times had big expose on them about 5 years ago. Roid writes: "Ordinary microeconomics says that if you expand the pool of labor, you decrease the wage rate" Only if demand is less than or equal to supply. As long as demand exceeds supply, then the price will stay high, even increase. And for the last 10-20 years, we've seen engineering salaries sharply rising along with the the number of engineers sharply rising too. Which means demand is exceeding supply. Which is exactly what Google CEO, Qualcomm CEO and Microsoft Gates tells anyone that will listen: We do not have enough qualified engineers. We need more. Roid writes: "The gains do not go to "the people who created them." This is pure ideological fantasy. There are huge discrepancies even in a best case." Microsoft has created more than 12,000 millionaires according to wiki. Believe it. And then think about Facebook Apple Google Qualcomm et al. These companies will not attract smart folks if they aren't handing out the rewards. You really have no clue how much money is in west coast engineering. It simply boggles the mind.

- seattleeng

May 3, 2012 at 7:41pm

I suppose all the smart folks will pick lettuce if they cannot be millionaires. Nothing wrong with their becoming millionaires, but then they should expect to pay a really big chunk to the commonweal that made their gains possible -- they did not do it alone -- and at a much higher rate than those at the bottom who have not benefited nearly so handsomely. We should not eliminate the gains, but we should tax them progressively to maintain the engine that creates opportunity. Not complicated. No, demand is not higher than supply and supply is not higher than demand when markets clear. At a given demand, if the supply goes up, the price goes down. That includes labor. The notion that demand expands with supply is garbage economics, a version of Say's law, which just doesn't hold up. Beyond entry level engineers, we are not paying a high enough differential to make it worthwhile for domestic engineers to get advanced degrees. The shortfall is being filled with foreign engineers. The ability to do that rather than see the price of more senior engineers go up is exactly what keeps their salaries too low to justify the additional education. If we didn't import engineers, the price would go up. You can huff and puff all you want, seattle, about what you think you know, but it is just anecdotal nonsense. I do take the study by the Berkeley labor economist as much more reliable than what you believe, and for very good reason.

- roidubouloi

May 3, 2012 at 10:19pm

Roid writes: "Nothing wrong with their becoming millionaires, but then they should expect to pay a really big chunk to the commonweal that made their gains possible -- they did not do it alone -- and at a much higher rate than those at the bottom who have not benefited nearly so handsomely" If they did not do it alone, then how come everyone cannot do it with a little help from the gov? Note, these folks would excel in ANY environment you place them in. The top 1% of earners are really the top 1% of performers. It just so happens that the world is willing to pay the top 1% of performers a top salary. And why should this be any surprise? Now, the next question is why should someone that values work and performance over everything else be forced to subsidize someone who values leisure over everything else? I know to you there is an imaginary government force that allowed them to succeed. But this is nothing more than a shakedown. Protection money that must be paid to make sure the shop doesn't burn down. it's a racket and you know it. Roid writes: "he notion that demand expands with supply is garbage economics, a version of Say's law, which just doesn't hold up." I said that demand far exceeds supply, and demand continues to grow. Maybe not at the same rate as supply. But for the last 20 years at least, prices have climbed at an astounding rate. How could supply exceed demand for this to be true? Think about this: Why are Google et al paying such amazing salaries to engineers if there is a surplus of engineers? It makes absolutely no sense. But of course, ignore that which you can touch and instead listen to the man in the ivory tower. Roid writes: "Beyond entry level engineers, we are not paying a high enough differential to make it worthwhile for domestic engineers to get advanced degrees. " The industry doesn't really value an advanced degree. Most companies would rather get them while they are young and squeeze 10 years of 80 hour weeks out of them. An advanced degree doesn't bring much to the game here. Universities are quite a ways behind the industry state of the art, simply because the investment needed to do state of the art is so high. State of the art silicon must be made a $2B fab, and state of the art silicon designs are done by 2000 engineers. it's a coordination challenge more than anything else. Some companies know very well how to ship these massive projects. And that is really the engineering prowess large companies bring to the table: Execution. Roid writes: "The shortfall is being filled with foreign engineers. The ability to do that rather than see the price of more senior engineers go up is exactly what keeps their salaries too low to justify the additional education. If we didn't import engineers, the price would go up. You can huff and puff all you want, seattle, about what you think you know, but it is just anecdotal nonsense. I do take the study by the Berkeley labor economist as much more reliable than what you believe, and for very good reason. Believe what you wish. But you dont' seem able to explain how all these companies pay their engineers, and especially technical managers (which are engineers that can manage large teams) so much. There are mediocre engineers that aren't paid well, no question. But their problem is mediocrity, not the influx of foreign engineers. The H1B engineers aren't interested in living in Kentucky and working on boring projects. They are here to work at a company with a big name doing big things. You didn't tell me why you deserve a chunk of facebook. I'd be interested to hear that.

- seattleeng

May 4, 2012 at 12:19am

"If they did not do it alone, then how come everyone cannot do it with a little help from the gov?" Same reason not everyone can win the lottery. Why the H1B engineers come and what they want to do here is of no importance. The question is why we don't allow the price of engineers to rise to the point that domestic supply meets the domestic demand. You say, how could supply exceed demand? The fact is that demand exceeds supply, but rather than allow the US labor force to get the benefit of that, we allow industry to import labor. This is not "producing value." It is buying a policy outcome that puts more money in the pockets of capital and less money in the pockets of labor. Your notions about A being forced to subsidize B are pure invention. It can just as easily be argued that B subsidizes A. You assume that A is subsidizing B because you take whatever the market allocates to be a "true" allocation of value, unless that is the market allocates in a manner you don't like, say by letting the price of engineers rise further, in which case it suddenly isn't the true value. In other words, you like a particular outcome for ideological reasons and routinely claim, falsely, that this is the outcome determined by some impersonal omniscient agent, the market. Nonsense to both.

- roidubouloi

May 4, 2012 at 8:56am

Seattle...Are you paranoid or being facetious when you ask "Now, how much of this do you feel you are entitled to?" You seem to think that anyone who doesn't agree with you 100% is some kind of money-grubbing welfare parasite. Not so. My post was a sarcastic elbow to rib at you becoming a "fair wage" proponent for itinerant farm workers while talking about importing cheaper software engineers. I completely get the "value" that an employee brings to a company. Being one myself I fully understand the value I bring to my firm. But you seem to live in an insular world in which the software engineers at Microsoft or Facebook are the only "value creators" in the world deserving over-compensation. I know plenty of talented engineers and architects that haven't seen meteoric rises in their compensation while simultaneously working on multiple projects with real world budgets with limited staff. Most companies do their best to drive down employee costs and "overhead" costs because it cuts into the bottom line (which you might not be familiar with apparently) and to stay competitive against other professional services firms. You keep referencing Facebook as this great example about creating value out of nothing yet their "value" is based on perceived value. I don't think FB fungineers are working with any type of budget constraints to deliver a project on time and under budget or meet the demands of a particular client. They certainly don't "create" anything other than a platform for people to freely give their information to FB so FB can monetize it for their benefit. In essence they simply sell your personal data and convince the world to give it to them free of charge. Brilliant idea but it's just another platform for data mining in which FB's value is based on the perceived value to other corporations that can utilize that information to sell you crap. What happens if people stop using FB? It's value goes away. There are similar internet 2.0 companies that are overvalued and awash in wads of cash which they spend like no tomorrow but won't be around in 10 years. Groupon? Pinterest? Etsy? Those all created "value" out of nothing too. Look at mySpace that used to employ 2000 engineers, now it's down to 200 and worth about $35m. Remember, we went through this similar internet bubble ten years ago with companies like Lycos, Geocities being worth billions and now they're worth millions or gone. I have a friend who is a software engineer that worked at several start-ups in the late 90s, early 00s and saw plenty of cash being thrown about to hire engineers to "create" stuff that didn't go anywhere and ultimately failed. He rode that for a while and got out of the game and heads the application development department at Ball Aerospace in CO. He's not making millions managing his team but he's not starving either.

- singlspeed

May 4, 2012 at 10:24am

Roid writes: "The question is why we don't allow the price of engineers to rise to the point that domestic supply meets the domestic demand. You say, how could supply exceed demand?" In order for this to happen, kids would have to absolutely kick ass at school. But if kids suck at math, and are proud of it, the chances of them becoming an engineer are pretty slim. Every group of kids I talk to think the job is awesome. I've brought kids to my place of work, we walk around and they see things that boggle the mind. And in the end they say "But this is just too much work, and I'm not really good at math..." The older ones have commented they didn't want to spend all of college studying. And then you have the issue of those that DO graduate with a degree in engineering have yet another hurdle to get over. MS, Google, etc, don't hire 98% of domestic engineers because they aren't good enough. And so they wan to expand the pool of engineers so they can fill their ranks with the best. Singlespeed, I keep referencing facebook because it is typical of most all of the wealth created in this country. It is merely a proxy for any company that has carved a niche for itself from nothing. The wealth was not grabbed from the middle class. The wealth was created, and it is flowing to those that create it. FB is just the most visible. But it happens at Boeing all the way down to a guy that purchased his 5th subway sandwich shop in Aimes, Iowa. In all cases, one must ask: How much of this new wealth is someone who had nothing to do with the creation of the venture (or exposure to the risk) entitled to? If you say "I am entitled to a lot" then I'd ask why? You didn't plan it. You didn't put in the sweat hours. You didn't take the risk. If you say "I am entitled to nothing" then I think we can agree. But then you must accept that the gains the top 1% are seeing in this country come to those that are doing extraordinary things. And as long as people keep doing extraordinary things, they will continue and continue to amass wealthy. If you want a slice, then create some wealth. When people boohoo the top 1% is getting all the money, what they are really complaining about is that that the top 1% is generating more wealth than they are. The top 1% aren't taking it from the middle class, they are creating it out of thin air. Generating wealth is a good thing. It's very, very hard to do. Celebrate it when the wealth generation happens in this country instead of another country.

- seattleeng

May 4, 2012 at 11:01am

Seattle, Where in my post did I say "I am entitled to a lot"? Did I say Microsoft's wealth was snatched from a struggling middle class family in Iowa? No. Did I claim that I deserve a slice of Mark Zuckerberg's billions? No. Stop conflating a criticism of your position as class envy against the 1%. Most great companies start with an initial idea. For example, your other favorite company Apple, creates products that people use and buy. Apple started off with two guys. But it's continuing fortunes lay not in the singular efforts of the charismatic CEO, but in the combined efforts of all of the employees of that company. Sure the CEO gets paid more than the hardware engineer but does that mean the CEO creates more wealth or value than the hardware engineer that actually develops the product? Not necessarily. So I guess if that hardware engineer is working 80 hours a week and he gets a free lunch at the cafeteria and is making 100K a year and works on a product that makes $5M for the company, in all likely hood the engineer isn't going to see a meteoric rise in his value compared to the CEO who had nothing to do with the actual making of the product. To the CEO, that engineer has a particular value to the company in his ability to develop better products that cost less to make per unit. The CEO doesn't value the engineer beyond that. He's a replaceable unit of labor. A high-cost unit of labor, that if he could pay a foreign engineer half or 3/4s the salary for the same amount of hours then he will because at some point the hardware engineer's value plateaus. I think what most people here are saying is that the value of labor tends to be undervalued in relation to the output / value they create for the company. How does one explain that salaries across many sectors have stayed relatively flat? Because demand went down? No. Demand for certain service sectors continues to go up. Productivity goes up while remuneration stays flat or rises slowly because the person at the top continues to look for the lowest labor cost to maximize their profit margin. So when you state, why don't we just pay the farm hand $11/hr and then turn around and say importing cheaper foreign engineers you contradict yourself. You're claiming the person getting paid the outsized salary is worth the value but then claim if we think a person should be paid fairly then it's our money-grubbing envy of the 1% showing through. If I pay an immigrant farm hand $5/hr to pick my strawberries instead of hiring a American farm hand $15/hr to pick my strawberries how is that different than hiring cheaper labor in any sector? It isn't. I'm maximizing my profits by minimizing my cost of business. Yet I'm not out picking the strawberries. They have no value unless i get them to market so I need pickers. I can't create the value by myself from thin air. But if someone asks that I pay them $15/hr, why then they're just being envious of my creating wealth from nothing. They should be lucky to just have a job because I can find another person to work that job for less.

- singlspeed

May 4, 2012 at 12:45pm

The top 1% actually "generate" pretty much nothing. Created out of thin air is pretty accurate. Seattle believes in markets and supply and demand, except when he doesn't. If Google etc. didn't have the option of bringing in foreign engineers, they would have to pay enough to induce American students to gain the necessary skills. There are enough people with the native ability in a country of 300 million. They don't want to have to pay, so they are happy to have a cheaper supply. Unless Facebook is ready to reimburse the country for all of its investments, physical and human, that make its riches possible, the idea that its wealth is purely the product of its corporate effort is objectively absurd. In fact, we used to insist that companies (and their owners) such as Facebook reimburse society. It's called "taxes." Then the right and libertarian wingnuts got ahold of the country and now they peddle the delusion that taxes are taking what Facebook "earned" and giving it to someone else. Never mind that, despite their claims that lowering taxes generates wealth, growth has declined, growth in productivity has declined, and income of half the country at least has been stagnant. Reality has no bearing on the the theology of seattle. If he proclaims that wealth comes from a particular magic fountain, then, by golly, it does.

- roidubouloi

May 4, 2012 at 2:31pm

Even if one accepted the childish idea that markets allocate income according to the output generated by each factor or production (including each individual), there is no a priori reason to accept that a market allocation according to output is more just than a democratic allocation made by the rules of society, including tax laws. Indeed, there is nothing objectionable, except in the mind of a libertarian, about society saying to everyone, "This is our collective sandbox. These are the rules and this is the rent you must pay to play here, all democratically determined, in order to have the opportunity to attempt to generate wealth here. If you play in our sandbox, this is what you will do and this is what you will pay. If you don't care to participate on those terms, you are free to go." Markets, even if they were perfect, are not god. They are one particular social invention of humankind, as are family structures and democratic government. If any of these is to be dominant, logically, government is the superior mechanism as government has the guns and allows, in principle, the broadest and most egalitarian participation. So, if the market outcome and the democratic outcome are in conflict, then the democratic outcome ought to prevail. The problem in this country is that we have bankocracy, government outcomes bought by wealth.

- roidubouloi

May 4, 2012 at 2:59pm

Singlespeed writes: "The CEO doesn't value the engineer beyond that." You really aren't understanding this. Tech CEOs understand they live and die based on their employees. That isn't just a saying. It isn't just a slogan in the lunchroom. They are absolutely screwed if they don't have great engineers. Consider two large companies: TI and Qualcomm. Both have invested billions in developing 3G and 4G silicon that powers your smartphone. One has succeeded wildly, the other has failed wildly. What is the difference? TI coudl never get the 3G product working. Qualcomm made it work faster than anyone else. This was not due to executive decisions (although some did factor in). It is largely due to the fact that one company (Qualcomm) had more aggressive engineers. Yes, they were empowered by smart executives. But absent those employees, Qualcomm is screwed. And there's a reason Qualcomm is loaded with millionaires and TI is not. Make no mistake, TI has really smart engineers. They are just in a different league than QCOM's engineers. QCOM engineeers are really smart and aggressive as hell. Drive through the QCOM parking lot late at night 6 months before new silicon ships and the parking lot is full. Not as full as it used to be :) but still pretty full. Singlespeed writes: "So when you state, why don't we just pay the farm hand $11/hr and then turn around and say importing cheaper foreign engineers you contradict yourself. " But the imported engineers aren't cheaper. They actually carry a premium. That is because the engineer must be sponsored, he must be re-located (with family) from further away, there might be additional tax reporting requirements to the foreign country place upon the company, he might have negotiated a trip home that the company will pay for each year, etc. Tech companies pay the same base salary (within a range) to employ a foreign worker in the US as they do a guy from Denver. Thus, there is no similarity to your farm hand scenario. Imported and home-grown engineers working in the US cost the same.

- seattleeng

May 4, 2012 at 4:51pm

Roid writes: "here are enough people with the native ability in a country of 300 million. They don't want to have to pay, so they are happy to have a cheaper supply." Except the supply they bring in isn't cheaper. Want to try your argument from another angle?

- seattleeng

May 4, 2012 at 4:53pm

Of course the supply they bring in is cheaper, meaning willing to work for less than what the prevailing wage would be without them. Do you understand nothing at all about the market that you claim to revere? Make up some more facts to support your libertarian theology, why dontcha.

- roidubouloi

May 4, 2012 at 6:09pm

No, Roid. Companies have a set pay range for a given engineering level. And you graduate from college and that alone puts you at a certain payscale. If you graduate with a masters, you might start one pay level higher. But generally everyone starts at the same level. And then, when review time comes around, the managers rank everyone from most valuable to least valuable. And then they heap ungodly awards on the most valuable (around 2X salary), and they heap little, if any, on least valuable. Having participated in countless numbers of these stack rankings, I can tell you a person's country of origin never, ever comes up. It's just not part of the pay equation. The entire pay system is very mechanical. If you are at the top of the rank, then the computer spits out awesome awards. The manager can tweak if he wants. But if he tweaks too much, it will be flagged for review. It's all automatic. Engineers are brought to this country because we need more good engineers. Not because we want to pay them less.

- seattleeng

May 5, 2012 at 11:47am

I am not so sure of this. There are laws in place that are meant to put a brake on salary attrition through hiring of non-U.S. citizens, and the Dept of Labor is meant to review the salary before granting the H1-B or similar visa. The company has to show they are paying more or less the going rate for the job. That's the theory, but I have heard from people on these and other boards who claim that companies can game the system and make it cheaper for themselves to hire H1-B visaholders rather than Americans (or even permanent residents).

- ironyroad

May 5, 2012 at 12:53pm

Geez, seattle, even if every single thing you say is true, and even if were not possible to game the system as irony describes, all of it is absolutely and completely irrelevant to the point. If there is a shortage of engineers at a certain level of output, then the price for existing engineers goes up. Markets, remember? Your god. Except that you only believe in markets when they make the wealthy super-wealthy or the poor desperate. The rest of the time you don't believe in markets. If the price goes up, the market eventually clears. Firms then have the number of engineers they want, but at the higher price. Sure they would want more at a lower price, but at the market clearing price, they are satisfied. But then labor does better. By the absurd logic of your economics, engineers are now "more productive" because they command higher pay. If you relieve the shortage by importing labor, the price does not go up. One of the things that happens if price goes up is that it induces more supply, more Americans would find it advantageous to obtain the necessary skills. Thus, the final equilibrium is more American engineers earning higher incomes than the current market-clearing price with imported labor. That means more and better jobs for Americans as. But the price WILL be higher. Business would have fewer engineers at a higher price per engineer. Business wants more labor at a lower price, of course. The solution? The H1-B visa. Whether or not companies can game the system, the notion that the Dept of Labor has even the theoretical ability to police the market-clearing price is complete nonsense, an absurdity, put in place as a fig leaf so that people like you can make the claim that imported labor does not affect price. Increase supply reduces price except in the purely theoretical case of perfectly elastic demand. That is as close to economic truth as one is ever going to get.

- roidubouloi

May 5, 2012 at 2:16pm

"No, Roid. Companies have a set pay range for a given engineering level. And you graduate from college and that alone puts you at a certain payscale." So what? All you then have to do is set the pay level too low to attract enough domestic engineers. Then you tell the Dept of Labor, "I cannot get enough engineers. Save me." If the system were not being manipulated to the advantage of capital, the proper answer, the libertarian answer, the free-market answer, to this plea by business would be, "So, raise the price." Instead, we then fill the shortfall with imported labor.

- roidubouloi

May 5, 2012 at 2:19pm

Roid writes: ""So, raise the price." Instead, we then fill the shortfall with imported labor." But the price is rising. Heavily. Each year. I am 20 years in this industry, and my salary last year is 25X my starting salary back in 1992. Yes, that much. That's an 18% annual increase. Now, that factors in experience and success, but still. irony writes: "but I have heard from people on these and other boards who claim that companies can game the system and make it cheaper for themselves to hire H1-B visaholders rather than Americans (or even permanent residents)." Big companies are not saving money via H1B. Period.

- seattleeng

May 6, 2012 at 12:43pm

Ideally, they shouldn't be. But it is curious that the issue keeps popping up, e.g. -- http://www.informationweek.com/news/201000479 This is from 2007 but the wikipedia entry (surprisingly long) on the H1B has a slew of refs and sources going back more than a decade.

- ironyroad

May 6, 2012 at 3:01pm

Of course they are saving money at the expense of labor. That the price has risen proves exactly nothing. It would rise more if there were no imported engineers. It cannot possibly be any other way. If there were no imported engineers, and even if the increase in price do not induce a single additional engineer into the market or induce employers to provide training to upgrade skills -- that is to say, even if the supply were completely inelastic -- the price would still rise to the point where firms did not want to hire any more engineers at the market price. And they they would not think there was a shortage. If you believe anything at all about the function of markets, then you have to believe that -- a shortage is relieved either by a change in supply or a change in price or both. If the price rose, more domestic engineers would be trained. Or employers would find a way to make other less-skilled hires and organize them efficiently to achieve the same effect. In any case, there would be more money and opportunity flowing to domestic labor. The claim that imported labor has no effect on price is simply absurd. There is no other way to put it.

- roidubouloi

May 6, 2012 at 5:08pm