WSJ: the new tax on "brilliant people"

Investment Analysis Clubs Macro Economic Trends and Risks
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{{ a $103,265 tax for employers seeking to hire high-skilled foreign workers. H-1B visas by law are capped at 85,000 a year. }}

https://www.wsj.com/opinion/the-new-u-s-tax-on-brilliant-people-5a6a6baf?mod=hp_opin_pos_4

I’d like to see a law that says you have to pay H1-B visa employees at a minimum of the Top 5 percentile salary for the profession. That would ensure that these hires were truly “brilliant people”.

Back when I was working more than 30-years ago, I used to read the Chemical Engineering Journal and was fascinated at the want ads the last few pages of the magazine. “Chem Eng, PhD, 20 years experience, salary $25k annually.” The average salary for someone with those qualifications was 3 or 4 times that at the time. Why would you waste your time and money placing an ad. Surely you wouldn’t even get a resume.

Later I learned that was the whole point of the ads. If you proved that no American was willing to work for the salary offered, you could bring in Kousin Kumar from the old country on a work visa to fill the position, putting an American engineer out of work. There was no requirement that a competitive salary be offered.

intercst

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Interesting. I agree with your proposal.

I came in on an H1B in 1993 as a fresh-faced young electrical/software engineer, with two years graduate training and two years work experience. I made $75k the first year. More every year after. Not salary. My company was billing me out per hour and paid me per hour worked, plus benefits.

I don’t believe I was underpaid. It was 3x my previous UK salary. I was saving like crazy. It was amazing.

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It’s the lottery part of H1B I find most objectionable. Firms file numerous applications to get enough accepted.

Better to base acceptance on salary offered. Higher pay means more skilled position.

Raising the application fee is another way to reduce abuse. Could be a step in the right direction.

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Not to point out the obvious, but that’s exactly what cited article describes. Of course, the application “fee” is so outrageously high, and likely combined with copious red tape that is constantly changing, that it is likely to deter most applications. Which is the point.

So will this probably reduce abuse? Yes. And it will likely reduce all use too. That’s what the current administration is trying to achieve while avoiding the need to go to Congress to change the laws- use administrative tactics to make the immigration process impossible to use for everyone who doesn’t have connections to the current administration.

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I spent a year working at Exxon’s office in London in 1985-1986. My salary was at least 3X what they were paying Brits doing the same job. Plus the company paid for housing and provided an automobile. If I had kids, they’d pay for private school, too.

I had two female cousins about my age (29-30 at the time) that lived in London.They were of course very exited to have their American cousin in town.

One asked where I’d be working, Exxon’s office was near St. James Park, one of the most expensive areas of London, and we got a housing allowance that allowed us to live nearby. The fact that the British pound was near parity with the US Dollar at the time also improved the arithmetic.

One of my cousins asked, “What’s your housing allowance.” It was 400 GBP.

“For 400/month you’ll get a palace”. It was 400/week.

I ended up renting a penthouse in a new building overlooking the Thames River near Chelsea, and still came in about 200/month GBP under my allowance. I cut a deal with the landlord to raise the rent and let me buy some furniture more to my linking at one of the stores on the Kings Road in Chelsea. (The landlord would keep the furniture at the end of the lease.)

But I still had a much more luxurious lifestyle in Houston (i.e., palm trees, swimming pools and tennis courts).

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Yes. I like visiting London but wouldn’t live there. I lived in Las Vegas, back when it was still cheap. Same amenities as you.

Initially my company paid for my apartment and rented a car for me. Once I realized I wanted to stay (didn’t take long) we did a deal - I took care of all living expenses in return for a substantial hourly rate increase. Yes, I’d pay more tax, but I did the arithmetic. I immediately sent back the rental car and furniture. Bought some cheap furniture and a used Honda Civic.

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They need to get rid of the H1-B and all temporary worker visas. With American citizens out of work, there is no reason to be brining in guest workers.

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The US unemployment rate is far below the average for the last half century…

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There are at least two reasons from the employer side:

  1. worker is captive to the employer sponsor of visa, kind of like indentured servant (very difficult for worker to switch employers)
  2. lower wage costs

But now we have an anti-free market conflict: some still want immigrant workers (free movement of labor), others less so.

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Yeah, but back in the day you had to have a real job or no job at all. Now, you can be ‘employed’ doing some sketchy gig work and be considered employed.

Better to look at the work force participation rate which is close to an all-time low.

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The functional unemployment rate is almost 25%.

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The same was true for the Engineering News Record - PhD in Civil Engineering, 20 years experience in HDPE seismic LD pipeline design., $30K per annum.

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