That was an interesting piece for me to read. Gave me a much needed perspective on some aspects of the Trump admin I haven't considered could be positive. Actively trying to remove any partisan blinders as I dive deeper into finance so I can analyze everything from a more rational perspective.
I entered the U.S. on an H-1B visa over twenty years ago, and even then, I found the system to be outdated and bafflingly complex. But the recent, haphazard changes made during the COVID-19 era have created a disastrous scenario that serves no one.
The argument for immediately rolling back those changes and raising the application price is not just sound—it's the only sensible path forward. This move would finally bring sanity and long-overdue rationality to a process that currently feels like a lottery. Crucially, it establishes a fairer playing field for both American workers and the incoming talent we need. Thank you, Michael, for such a well-written piece - yet again!
Hi Michael, been a long time fan of yours following your market analysis across different podcasts. So it was interesting to see your thoughts on H1-B visa, which is close to me and something I am currently on.
I want to leave my thoughts on the piece -
- American families don’t spend $120k on state universities. That number runs far lower at $30k-$50k. After scholarships, internships, on campus work, end student debt turns out much lower (taking average or median). It doesn’t remove the fact that education is expensive, so I am with you in theory only.
- By arguing based solely on your logic, American students also have the optionality to study abroad for much cheaper. That is not going to happen, which is what makes me think that a purely economical argument will always miss broader considerations.
- The $10 fee for H1 was introduced in 2019 (not 2021) under Trump admin. It is literally one google search away, but how we let our biases guide us!
- I do agree and follow your logic that the $10 fee distorted the incentive systems and more frivolous applications started flooding in. Though, this should be reverted. I don’t see how a $100k fee helps.
- With ~80k yearly visa issuance and the fact that you say workers share small apartments - is counter to the argument that would drive housing costs. That is too small of a number to make a dent in any housing market in big metros.
- It is wild that you compare $120k (one-time, exaggerated) costs that American student has to pay to $10 ($12.5k-$75k by your own estimate, paid every 3 years) that an immigrant has to pay.
- “visas shift to the most valued roles rather than the cheapest labor” - current system is a lottery at best, it definitely doesn't favor the cheapest labor.
- “they add little to the U.S. economy as residual wages beyond subsistence are typically repatriated” - man you have a huge bias here! Hurts to read something like this.
- Throughout the article, you keep mentioning the $10 fee, when earlier you have deduced that the new system costs employers $12.5k-$75k. I understand the $10 number is emotionally charged, but I didn’t expect you to write like that.
I give up half way because it gets incoherent and shoots in multiple directions. If you used AI to do your research, I’d argue you need proof readers.
Jay, appreciate the detailed response from a position of knowledge.
However, you make a number of errors:
1) The $10 fee rule was officially effective December 2019, but the electronic registration + fee process didn’t kick in until the FY2021 H-1B cap season. That means the first possible cohort managed under these rules would have begun work in Oct 2020. I am happy to edit out the “under the Biden Administration” although I’d note that’s an accurate characterization of where we’ve seen the changes manifest. My objective was not to politicize the policy and your point that it was a Trump 1 policy is absolutely valid.
2) you suggest I intentionally politicized it with the objective of scoring political points. Nothing could be further from the truth and I would have hoped you give me the grace of pointing out the error without the assumption it was nefarious.
3) you are incorrect in assuming I emphasize the $10 for the same reason. There is a huge difference between $10 entry fee, easily abandoned, and an upfront investment of thousands.
Thanks for taking the time to respond! I respect your take both here or in all areas finance. I will just leave it at a note that I am grateful to be here in US, but if the admin decides it is in the best interest of citizens to severely restrict my visa program, then I will respect that decision also.
My alma mater (a large private school) now has tuition+fees for $75K/yr undergrad and a total estimated cost of $99K/yr. With ~8% annual increases, that's just roughly $200K for the state school and $500K/undergrad for a private college.
I live in the rust belt area and have two kids in college in rust belt colleges and Mike's numbers are spot on for what I will be paying over 4 years for each. Lower than LA, CA but still within Mike's numbers. Yes, they are also state universities.
$80-100k for 4 years of in-state tuition, fees, and living expenses would have been a fair estimate 15 years ago, when I started university. Texas, not Cali.
Scholarships are borne still by the economy as a whole (i.e. the American economy), thus it actually makes sense to tally it into the whole cost for making an American worker. Since that money still comes from either a wealthy American or taxes. I don't think a number should be placed, but I am with mike that a reverse dutch auction will give the IRS much more than 100k per VISA and will likely be much better for the average US job entrant and the dismissal of a lottery type system will ensure that the very best is the one taken at market price.
Mike, I really appreciate the way that you use deep, thought-provoking analysis to highlight the societal impacts and the human experience we are sharing. Thank you!
Thanks for writing this analysis and making it public. This aligns pretty much exactly with my intuition on the subject. It’s kind of amazing that you’re the only one I’ve seen willing (or able) to write what should be pretty obvious to anyone with a modicum of familiarity with basic economics. The lack of critical thinking amongst the commentariat has reached epidemic proportions
Fantastic, thoughtful piece Mike! I had no idea that there was a rule change in 2021 which allowed for wage arbitrage. The $100K may actually be a benefit to employers and employees if it makes the visa progress much faster (vs the historic $50K lawyers fees that I've heard anecdotally and long lengths of time).
As someone in healthcare, I don't think it affects hospitals. Neurosurgeons and the practicing physicians in the USA need to go through residency training (generally ACGME accredited) in the USA to practice. Residency programs almost always select from med students who graduated from the USA (e.g. not the Caribbean).
Aaahhh, the penny has just dropped. All those profiles in that dating website I'm on are phantom profiles. I feel much better about myself now. On a serious note, I cannot remember if it was you Michael or Danielle who was saying this, or maybe I misunderstood what was being said, but say I claim unemployment benefits and my 26 weeks are up, am I now not counted in the official continuing unemployment claims?
as always deeply thoughtful but in a wrong direction imo. instead of admitting that basic education in computer science doesn't worth 300k we artificially putting tariffs on foreign labor to make it look like it does. instead of admitting the EV car can be profitably produced and sold for 15k (BYD) we put the wall and pretend that cheapest we can get is 35k. i understand we can't just say "sorry guys, your 300k diploma worth nothing now because we got Arjun for 10$ visa and 60k salary here doing the same thing". but intellectually honest analysis telling us exactly this. we build guardrails to pretend everything worth what it worth in inflated prices and then when the dust settles and we need to actually produce shit on competitive level we discover that China outproducing us in a major way for all war time means. lets pretend that building a drone is 100k and not 1k because we got 300k student debt of an American drone engineer. good luck with that. everything becomes clear when you measure it in not constantly inflationary currency, but yes, i forgot, Bitcoin is scam because its not elastic in supply. prices fall to the marginal cost of production, always. trying to artificially keep them high will only make inflation of the money supply growing at faster pace.
GDP growth = employee growth + productivity growth. H1-B visas do both. The top few percent of China & India's 2.8 billion population provides a lot more smart and driven people than the top few percent of US's 340 million. H1-B's create sufficient mass for clusters of genius to innovate and execute. They are what has enabled the US to lead the Western world in innovation and growth. They will be more important in a world of falling birth rates. Welcome them.
I'm all for a better method of visa distribution, but dramatically raising price generally lowers demand and quantity. If we're worried about the cost of college, then subsidize it much more, like it was when I was a teenager. If we're worried about rent, then build more housing.
Kent, it’s disappointing I failed to convince you otherwise. I believe the evidence is pretty clear that by turning the H1-B into a random lottery rather than a high probability recruitment tool, we have done the opposite of attract “talent.”
I agree that the lottery is a bad selection tool. I've never heard anyone defend it. We must do something! $100k fee is something, just not the right thing. The first thing I would cut on H1-B's are contractor employers. They are middlemen taking the profit and passing little on to the employee, who they keep on short and dependent leashes.
I've found that former H1-B immigrants are now advocates of reducing H1-B's. Why? Because they don't want job competition for their children, which they are guiding through elite colleges. I think this is a common concern among parents.
I also think the nature of H1-B's is already changing. IT employee count has been shrinking for years. AI, but I suspect also due to earlier overhiring, and that a lot of code has already been written (job security in pointless changes to menus and icons in GUI). I also can't see regulators continuing to require the massive model building in banks, and that's a lot of H1-B's. The government has also slashed health research, another big source of H1-B demand.
Many H1-B's originally come to the US on a student visa for graduate school. If they don't think they can get jobs (yes, they have an immigration tendency), then it is going to hit US colleges hard. That will have a ripple effect.
So many of your points are valid, but I'm still struggling to get you to see the overarching thread. Your suggestion is to ban a CLASS of workers based on your view. That is simply more central planning. The beauty of capitalism, as I tried to make clear, is that self-organizing decisions WHEN GIVEN PROPER INCENTIVES is far more economically efficient.
Is $100K the right level? I explicitly argued "No." But regardless, it does provide a necessary shock to the system to reset it. If we can have reasoned support from both sides, we are more likely to arrive at economically superior policies.
I now suggest to ban a class of workers? I can see they're banned because of their high unemployment rate? No, that's male high school dropouts. By saying that a $100k visa fee is arbitrary, I'm accused of advocating central planning, as if I'm a Marxist.
Look, I'm fine with a carefully designed auction to more efficiently allocate H1-B's. I'm fine reducing the number of visa's in particular fields if there's good evidence that US citizens' wages are depressed in those fields. But if you don't see enough of them in the graduate level courses to begin with, then that tells me that we have a domestic shortage without immigration. Walk into an advanced computer science class and tell me what you see.
The across the board $100k fee is as market-based as the current lottery, which is to say that neither are. It contains no price information. It is the essence of a command economy, dictated in an arbitrary and capricious matter. The $100k fee checked all the political boxes: demand supplication from tech bros, appeal to xenophobic followers, and punish Modi.
Unfortunately I think the equation you posted ignores many important variables. Social discord, safety net costs for un-and under-employed Americans, not to mention relying on a labor source that can be taken from us by a higher bidder in the future.
The libertarians and free-trade-absolutists have convinced themselves that a nation is simply the product of a complex economic equation, but it is not. Look no further than China. The only country to come close to America's economic power, yet two very different nations in character and deed.
Well said. GDP is an outdated, overrated measure of living standards if you ask me. Using GDP growth as an argument to degrade living standards through mass immigration is neither valid or intellectual.
China manages to GDP growth targets. more than any other nation ever. Every governor is supposed to hit the growth target (5% lately). So they build real estate, infrastructure, and now invest in export industries. They direct giant amounts of credit to investments in favored industries, leading to enormous innovation, as well as massive surplus production and waste. But they always hit their GDP targets. By directing so much money to investment to hit GDP targets, they starve their citizenry of income. They also provide poor safety nets and financial repression, which incentivize large domestic savings. China does have beautiful trophy properties and infrastructure, but their own citizens can't afford to buy their production. Which is why they depend on foreign demand.
I wish that China would set provincial goals for growth in real median income, or something like that. Those income growth goals should overshadow their GDP goals until they achieve a sustainable balance in consumption and investment.
Someone should make a list of things that were guaranteed to collapse the American economy that seem to work just fine. Higher rates from the Fed, tariffs, closing the border, and now H1Bs.
Isn't it a remarkable coincidence that whatever-we're-doing-now, even if we started doing it recently, is the only possible way to do it or we risk economic doom?
Thanks Mike. changed my perspective. I love your explorations between facts and emotions. I don't always agree with you but find your missives important for edification. And they are stimulating.
I saw a real strong labor market back in 2005-2007, completed an MBA at USC after the GFC crushed the construction industry, then came out to a world of ghost jobs and endless rejection. It really weighs on you putting all this time and effort into every job application and getting continually rejected.
The labor numbers have been fake and getting worse since 2009, resulting in a damaged adult generation that feels rejected and sees no chance of independence, marriage, and kids.
I’m glad we finally have an administration that actually cares about American workers, and it sounds like this move will really help to push things in the right direction.
I knew the the H-1B program was troubled and being gamed by corporations to undercut American workers. Stories abound of American workers being forced to train the foreign worker who was replaying them in the job, hardly what the program was about. Your piece really helped me understand just how screwed up it really is.
Regarding the BDCs and HY, it makes sense that as the FED lowers rates (as BDC loans are generally floating rate) and the premium between investable and junk compress, that the discount on BDCs would increase. Conversely, lower interest rates have the positive effect of lower defaults in the BDC portfolio. It’s hard to see how the HY credit spreads can get much tighter so it seems that the FED lowering interest rates will be the primary impact on BDCs which again is a double edged Sword. There’s also the possibility that as the FED Lowers rates, inflation will increase there by pushing the HY credit spread up as well as the floating rates.
It seems to me that quality BDCs are a bargain particularly the ones that have already bit the bullet and cut their distribution. I generally like to buy what everyone hates so I’ve been layering in on well run CEFs including your ETF CDX. Your statement, got popcorn, implies that you think things could blow up? If so, what am I missing?
Isn't the problem with this argument of cost of education that foreign workers also pay for their education? This was my situation: I earned a Ph.D. in Europe, paid for it, and came to the US on an H-1B initially. That education in Europe is a lot cheaper is not the foreign worker's problem, but a core issue of the US education system, which makes education unaffordable. Auctioning off visas does not change any of that. In addition, aren't many legitimate H-1B applicants people who studied in the US under a student visa? I am all in favor of stopping the price gauging done by Indian and other outsourcing firms, but the current measure cuts way too broadly.
That education is not the responsibility of the U.S. taxpayer either. It is not incumbent upon the U.S. worker/voter to enhance your ROI with personal negative impact.
The U.S. government has a responsibility to its own citizens first, and selling access to the U.S. labor market is a public good that should be priced appropriately.
Is $100K the “right” price? Almost certainly not and I make that clear. Is it much closer? Almost certainly and I presented the evidence.
So it is European countries / taxpayers that subsidize skilled labor for US employers, who should then pay the visa fee not to the US government, but to the European country that paid for the education instead. Or even better, pay for the education of their US hires.
This current policy has negative impacts on the country experiencing excess emigration. False signals on domestic demand for both countries.
No, the “rights of access” belong to the American taxpayer. Europe should focus itself on becoming so dynamic they experience similar immigration pressures.
I can only speak from my own experience: The attractiveness of the US tech sector for European educated engineers has deteriorated steadily over the last 10 to 15 years. The young generation no longer thinks the US is the place to go, quite the contrary. That deterioration just took a major step up. At the same time more and more Americans come to Europe for education. My kids started their education in the US, then moved to Europe with no desire to return. A Bachelor degree earned at a MA state university turned out to be not worth much and they need catch-up credits to continue. Europe has an attractive startup community now, and many look to China for cooperation, especially for all forms of manufacturing. Is it possible the US is overestimating its own attractiveness, misreading the signals, while making it exponentially worse for itself given the current climate? The US education system has some top schools, but in average lags far behind both Europe and China. The US lived off immigrants, who are now no longer coming.
I can assure you that the increasing unattractiveness had and has very little to nothing to do with wages. Engineers are not coin operated. 15 years ago tech still happened in the US - that era is gone. Combine that with the uncertainty of sudden deportation, the cost of living in the US, the polarization, the firings for free speech, the global US tax system, and many more. Sentiment has further dropped like a rock over the last few months. People don't even want to go to the US to visit. There are way too many issues that need fixing in the US before this becomes attractive again, and likely it will get worse before it gets better. I never felt foreign as a foreigner in the US, but that is changing rapidly - and it's intimidating.
The spread (ratio) between book value of the loans (NAV) and the price is what is being measured here, not price decline.
That was an interesting piece for me to read. Gave me a much needed perspective on some aspects of the Trump admin I haven't considered could be positive. Actively trying to remove any partisan blinders as I dive deeper into finance so I can analyze everything from a more rational perspective.
Thanks Mike.
I entered the U.S. on an H-1B visa over twenty years ago, and even then, I found the system to be outdated and bafflingly complex. But the recent, haphazard changes made during the COVID-19 era have created a disastrous scenario that serves no one.
The argument for immediately rolling back those changes and raising the application price is not just sound—it's the only sensible path forward. This move would finally bring sanity and long-overdue rationality to a process that currently feels like a lottery. Crucially, it establishes a fairer playing field for both American workers and the incoming talent we need. Thank you, Michael, for such a well-written piece - yet again!
Appreciate it, Andrew
As someone who is currently paying the $120,000 cost each for two American future workers, this resonates.
I am in the same boat and agree it resonates...
Hi Michael, been a long time fan of yours following your market analysis across different podcasts. So it was interesting to see your thoughts on H1-B visa, which is close to me and something I am currently on.
I want to leave my thoughts on the piece -
- American families don’t spend $120k on state universities. That number runs far lower at $30k-$50k. After scholarships, internships, on campus work, end student debt turns out much lower (taking average or median). It doesn’t remove the fact that education is expensive, so I am with you in theory only.
- By arguing based solely on your logic, American students also have the optionality to study abroad for much cheaper. That is not going to happen, which is what makes me think that a purely economical argument will always miss broader considerations.
- The $10 fee for H1 was introduced in 2019 (not 2021) under Trump admin. It is literally one google search away, but how we let our biases guide us!
- I do agree and follow your logic that the $10 fee distorted the incentive systems and more frivolous applications started flooding in. Though, this should be reverted. I don’t see how a $100k fee helps.
- With ~80k yearly visa issuance and the fact that you say workers share small apartments - is counter to the argument that would drive housing costs. That is too small of a number to make a dent in any housing market in big metros.
- It is wild that you compare $120k (one-time, exaggerated) costs that American student has to pay to $10 ($12.5k-$75k by your own estimate, paid every 3 years) that an immigrant has to pay.
- “visas shift to the most valued roles rather than the cheapest labor” - current system is a lottery at best, it definitely doesn't favor the cheapest labor.
- “they add little to the U.S. economy as residual wages beyond subsistence are typically repatriated” - man you have a huge bias here! Hurts to read something like this.
- Throughout the article, you keep mentioning the $10 fee, when earlier you have deduced that the new system costs employers $12.5k-$75k. I understand the $10 number is emotionally charged, but I didn’t expect you to write like that.
I give up half way because it gets incoherent and shoots in multiple directions. If you used AI to do your research, I’d argue you need proof readers.
Jay, appreciate the detailed response from a position of knowledge.
However, you make a number of errors:
1) The $10 fee rule was officially effective December 2019, but the electronic registration + fee process didn’t kick in until the FY2021 H-1B cap season. That means the first possible cohort managed under these rules would have begun work in Oct 2020. I am happy to edit out the “under the Biden Administration” although I’d note that’s an accurate characterization of where we’ve seen the changes manifest. My objective was not to politicize the policy and your point that it was a Trump 1 policy is absolutely valid.
2) you suggest I intentionally politicized it with the objective of scoring political points. Nothing could be further from the truth and I would have hoped you give me the grace of pointing out the error without the assumption it was nefarious.
3) you are incorrect in assuming I emphasize the $10 for the same reason. There is a huge difference between $10 entry fee, easily abandoned, and an upfront investment of thousands.
Thanks again,
Mike
Thanks for taking the time to respond! I respect your take both here or in all areas finance. I will just leave it at a note that I am grateful to be here in US, but if the admin decides it is in the best interest of citizens to severely restrict my visa program, then I will respect that decision also.
Tuition + other costs can be many multiples of that. Take UCLA, $45K/yr for in-state residents. https://admission.ucla.edu/tuition-aid/tuition-fees
My alma mater (a large private school) now has tuition+fees for $75K/yr undergrad and a total estimated cost of $99K/yr. With ~8% annual increases, that's just roughly $200K for the state school and $500K/undergrad for a private college.
Point taken! LA/Cali is definitely expensive. I was going for median or average tuition costs across the country. I would assume that runs lower.
I live in the rust belt area and have two kids in college in rust belt colleges and Mike's numbers are spot on for what I will be paying over 4 years for each. Lower than LA, CA but still within Mike's numbers. Yes, they are also state universities.
$80-100k for 4 years of in-state tuition, fees, and living expenses would have been a fair estimate 15 years ago, when I started university. Texas, not Cali.
Scholarships are borne still by the economy as a whole (i.e. the American economy), thus it actually makes sense to tally it into the whole cost for making an American worker. Since that money still comes from either a wealthy American or taxes. I don't think a number should be placed, but I am with mike that a reverse dutch auction will give the IRS much more than 100k per VISA and will likely be much better for the average US job entrant and the dismissal of a lottery type system will ensure that the very best is the one taken at market price.
Mike, I really appreciate the way that you use deep, thought-provoking analysis to highlight the societal impacts and the human experience we are sharing. Thank you!
Thanks for writing this analysis and making it public. This aligns pretty much exactly with my intuition on the subject. It’s kind of amazing that you’re the only one I’ve seen willing (or able) to write what should be pretty obvious to anyone with a modicum of familiarity with basic economics. The lack of critical thinking amongst the commentariat has reached epidemic proportions
Fantastic, thoughtful piece Mike! I had no idea that there was a rule change in 2021 which allowed for wage arbitrage. The $100K may actually be a benefit to employers and employees if it makes the visa progress much faster (vs the historic $50K lawyers fees that I've heard anecdotally and long lengths of time).
As someone in healthcare, I don't think it affects hospitals. Neurosurgeons and the practicing physicians in the USA need to go through residency training (generally ACGME accredited) in the USA to practice. Residency programs almost always select from med students who graduated from the USA (e.g. not the Caribbean).
Aaahhh, the penny has just dropped. All those profiles in that dating website I'm on are phantom profiles. I feel much better about myself now. On a serious note, I cannot remember if it was you Michael or Danielle who was saying this, or maybe I misunderstood what was being said, but say I claim unemployment benefits and my 26 weeks are up, am I now not counted in the official continuing unemployment claims?
Beyond eligibility, typically 26 weeks but extended to 99 in GFC, you are not counted as continuing unemployed.
as always deeply thoughtful but in a wrong direction imo. instead of admitting that basic education in computer science doesn't worth 300k we artificially putting tariffs on foreign labor to make it look like it does. instead of admitting the EV car can be profitably produced and sold for 15k (BYD) we put the wall and pretend that cheapest we can get is 35k. i understand we can't just say "sorry guys, your 300k diploma worth nothing now because we got Arjun for 10$ visa and 60k salary here doing the same thing". but intellectually honest analysis telling us exactly this. we build guardrails to pretend everything worth what it worth in inflated prices and then when the dust settles and we need to actually produce shit on competitive level we discover that China outproducing us in a major way for all war time means. lets pretend that building a drone is 100k and not 1k because we got 300k student debt of an American drone engineer. good luck with that. everything becomes clear when you measure it in not constantly inflationary currency, but yes, i forgot, Bitcoin is scam because its not elastic in supply. prices fall to the marginal cost of production, always. trying to artificially keep them high will only make inflation of the money supply growing at faster pace.
GDP growth = employee growth + productivity growth. H1-B visas do both. The top few percent of China & India's 2.8 billion population provides a lot more smart and driven people than the top few percent of US's 340 million. H1-B's create sufficient mass for clusters of genius to innovate and execute. They are what has enabled the US to lead the Western world in innovation and growth. They will be more important in a world of falling birth rates. Welcome them.
I'm all for a better method of visa distribution, but dramatically raising price generally lowers demand and quantity. If we're worried about the cost of college, then subsidize it much more, like it was when I was a teenager. If we're worried about rent, then build more housing.
Kent, it’s disappointing I failed to convince you otherwise. I believe the evidence is pretty clear that by turning the H1-B into a random lottery rather than a high probability recruitment tool, we have done the opposite of attract “talent.”
I agree that the lottery is a bad selection tool. I've never heard anyone defend it. We must do something! $100k fee is something, just not the right thing. The first thing I would cut on H1-B's are contractor employers. They are middlemen taking the profit and passing little on to the employee, who they keep on short and dependent leashes.
I've found that former H1-B immigrants are now advocates of reducing H1-B's. Why? Because they don't want job competition for their children, which they are guiding through elite colleges. I think this is a common concern among parents.
I also think the nature of H1-B's is already changing. IT employee count has been shrinking for years. AI, but I suspect also due to earlier overhiring, and that a lot of code has already been written (job security in pointless changes to menus and icons in GUI). I also can't see regulators continuing to require the massive model building in banks, and that's a lot of H1-B's. The government has also slashed health research, another big source of H1-B demand.
Many H1-B's originally come to the US on a student visa for graduate school. If they don't think they can get jobs (yes, they have an immigration tendency), then it is going to hit US colleges hard. That will have a ripple effect.
So many of your points are valid, but I'm still struggling to get you to see the overarching thread. Your suggestion is to ban a CLASS of workers based on your view. That is simply more central planning. The beauty of capitalism, as I tried to make clear, is that self-organizing decisions WHEN GIVEN PROPER INCENTIVES is far more economically efficient.
Is $100K the right level? I explicitly argued "No." But regardless, it does provide a necessary shock to the system to reset it. If we can have reasoned support from both sides, we are more likely to arrive at economically superior policies.
I now suggest to ban a class of workers? I can see they're banned because of their high unemployment rate? No, that's male high school dropouts. By saying that a $100k visa fee is arbitrary, I'm accused of advocating central planning, as if I'm a Marxist.
Look, I'm fine with a carefully designed auction to more efficiently allocate H1-B's. I'm fine reducing the number of visa's in particular fields if there's good evidence that US citizens' wages are depressed in those fields. But if you don't see enough of them in the graduate level courses to begin with, then that tells me that we have a domestic shortage without immigration. Walk into an advanced computer science class and tell me what you see.
Again, you’re making the point for me. Price is the mechanism of information exchange in a market economy.
The across the board $100k fee is as market-based as the current lottery, which is to say that neither are. It contains no price information. It is the essence of a command economy, dictated in an arbitrary and capricious matter. The $100k fee checked all the political boxes: demand supplication from tech bros, appeal to xenophobic followers, and punish Modi.
Unfortunately I think the equation you posted ignores many important variables. Social discord, safety net costs for un-and under-employed Americans, not to mention relying on a labor source that can be taken from us by a higher bidder in the future.
The libertarians and free-trade-absolutists have convinced themselves that a nation is simply the product of a complex economic equation, but it is not. Look no further than China. The only country to come close to America's economic power, yet two very different nations in character and deed.
Well said. GDP is an outdated, overrated measure of living standards if you ask me. Using GDP growth as an argument to degrade living standards through mass immigration is neither valid or intellectual.
China manages to GDP growth targets. more than any other nation ever. Every governor is supposed to hit the growth target (5% lately). So they build real estate, infrastructure, and now invest in export industries. They direct giant amounts of credit to investments in favored industries, leading to enormous innovation, as well as massive surplus production and waste. But they always hit their GDP targets. By directing so much money to investment to hit GDP targets, they starve their citizenry of income. They also provide poor safety nets and financial repression, which incentivize large domestic savings. China does have beautiful trophy properties and infrastructure, but their own citizens can't afford to buy their production. Which is why they depend on foreign demand.
I wish that China would set provincial goals for growth in real median income, or something like that. Those income growth goals should overshadow their GDP goals until they achieve a sustainable balance in consumption and investment.
Someone should make a list of things that were guaranteed to collapse the American economy that seem to work just fine. Higher rates from the Fed, tariffs, closing the border, and now H1Bs.
Isn't it a remarkable coincidence that whatever-we're-doing-now, even if we started doing it recently, is the only possible way to do it or we risk economic doom?
"Experts" indeed.
Thanks Mike. changed my perspective. I love your explorations between facts and emotions. I don't always agree with you but find your missives important for edification. And they are stimulating.
Great article.
I saw a real strong labor market back in 2005-2007, completed an MBA at USC after the GFC crushed the construction industry, then came out to a world of ghost jobs and endless rejection. It really weighs on you putting all this time and effort into every job application and getting continually rejected.
The labor numbers have been fake and getting worse since 2009, resulting in a damaged adult generation that feels rejected and sees no chance of independence, marriage, and kids.
I’m glad we finally have an administration that actually cares about American workers, and it sounds like this move will really help to push things in the right direction.
I knew the the H-1B program was troubled and being gamed by corporations to undercut American workers. Stories abound of American workers being forced to train the foreign worker who was replaying them in the job, hardly what the program was about. Your piece really helped me understand just how screwed up it really is.
Regarding the BDCs and HY, it makes sense that as the FED lowers rates (as BDC loans are generally floating rate) and the premium between investable and junk compress, that the discount on BDCs would increase. Conversely, lower interest rates have the positive effect of lower defaults in the BDC portfolio. It’s hard to see how the HY credit spreads can get much tighter so it seems that the FED lowering interest rates will be the primary impact on BDCs which again is a double edged Sword. There’s also the possibility that as the FED Lowers rates, inflation will increase there by pushing the HY credit spread up as well as the floating rates.
It seems to me that quality BDCs are a bargain particularly the ones that have already bit the bullet and cut their distribution. I generally like to buy what everyone hates so I’ve been layering in on well run CEFs including your ETF CDX. Your statement, got popcorn, implies that you think things could blow up? If so, what am I missing?
As always, love reading your articles!
Cheers, Bill
Bill, I agree that high quality BDCs (low PIK content among other metrics) are compelling.
Isn't the problem with this argument of cost of education that foreign workers also pay for their education? This was my situation: I earned a Ph.D. in Europe, paid for it, and came to the US on an H-1B initially. That education in Europe is a lot cheaper is not the foreign worker's problem, but a core issue of the US education system, which makes education unaffordable. Auctioning off visas does not change any of that. In addition, aren't many legitimate H-1B applicants people who studied in the US under a student visa? I am all in favor of stopping the price gauging done by Indian and other outsourcing firms, but the current measure cuts way too broadly.
That education is not the responsibility of the U.S. taxpayer either. It is not incumbent upon the U.S. worker/voter to enhance your ROI with personal negative impact.
The U.S. government has a responsibility to its own citizens first, and selling access to the U.S. labor market is a public good that should be priced appropriately.
Is $100K the “right” price? Almost certainly not and I make that clear. Is it much closer? Almost certainly and I presented the evidence.
So it is European countries / taxpayers that subsidize skilled labor for US employers, who should then pay the visa fee not to the US government, but to the European country that paid for the education instead. Or even better, pay for the education of their US hires.
This current policy has negative impacts on the country experiencing excess emigration. False signals on domestic demand for both countries.
No, the “rights of access” belong to the American taxpayer. Europe should focus itself on becoming so dynamic they experience similar immigration pressures.
I can only speak from my own experience: The attractiveness of the US tech sector for European educated engineers has deteriorated steadily over the last 10 to 15 years. The young generation no longer thinks the US is the place to go, quite the contrary. That deterioration just took a major step up. At the same time more and more Americans come to Europe for education. My kids started their education in the US, then moved to Europe with no desire to return. A Bachelor degree earned at a MA state university turned out to be not worth much and they need catch-up credits to continue. Europe has an attractive startup community now, and many look to China for cooperation, especially for all forms of manufacturing. Is it possible the US is overestimating its own attractiveness, misreading the signals, while making it exponentially worse for itself given the current climate? The US education system has some top schools, but in average lags far behind both Europe and China. The US lived off immigrants, who are now no longer coming.
Martin, whether you realize it or not, you are describing symptoms of the same problem.
US students are going to Europe for school. Europe workers see the U.S. as less attractive as wages and benefits have fallen with H1-B competition.
I can assure you that the increasing unattractiveness had and has very little to nothing to do with wages. Engineers are not coin operated. 15 years ago tech still happened in the US - that era is gone. Combine that with the uncertainty of sudden deportation, the cost of living in the US, the polarization, the firings for free speech, the global US tax system, and many more. Sentiment has further dropped like a rock over the last few months. People don't even want to go to the US to visit. There are way too many issues that need fixing in the US before this becomes attractive again, and likely it will get worse before it gets better. I never felt foreign as a foreigner in the US, but that is changing rapidly - and it's intimidating.