Guestworker Economics

Being a guestworker here, whether on an H1B or an L1 visa (or even as an illegal alien) can be a great financial deal for the guestworker, even if they are paid a great deal less than an American citizen would be paid.

The guestworker gets to arbitrage the difference between the cost of living between the US and the country they came from (and where their family and relatives still live). In countries such as India and Mexico both normal wages and the cost of living is one tenth what it is here. So if the guestworker can endure harsh living conditions here (living many to a room, for instance), every dollar they can send back is worth ten times as much. Some H1Bs have told me that they can retire with a wealthy lifestyle back in India with what they can save from working here for the six years the H1B visa lasts, even if our Department of Labor allows them to be paid at only the 17th percentile of normal wages here for the job. And I’ve been told by guestworkers from other countries that the cost of living differential in their countries is 50 to 1 instead of merely 10 to 1, making it even more desirable to work here, legally or illegally. They are not merely surviving, they can become the financial elite of their country. At the expense of American workers, and to the enrichment of American corporate executives.

Even if the job is offshored, the worker in the foreign country is getting a good deal. I’ve been told that the prevailing wage for high tech workers in India is between 4 and 7 dollars an hour. But with the cost of living differential, the worker can afford a mansion and two maidservants with that salary. Still a good deal for them, if not for us. (But I hear that the employers in India are being told by American companies that they are paying their workers there far too generously, and the job can be done for far less in China and Vietnam and some of the Eastern European countries.)

But the economics are bleak for the American workers being dumped. When an employer can get any workers at the 17th percentile of current wages, then not only is an American worker laid off, but ALL Americans working at that job will get wages lowered to that level. At one location I worked at for years, as soon as H1B contractors came in working for 30-40% lower wages, the rates offered to all American contractors were lowered by the same amount. And on the illegal side, as soon as illegal immigrants could be encouraged to come here as meatcutters, the wages for all those meatcutters fell from $20 an hour to $9 an hour.

And the harm to American workers cascades. When an American computer programmer is replaced by a guestworker, that guestworker is used as a liason to enable the offshoring of two more jobs, so now three Americans are out of a middle class job. They are forced to work at jobs making only a fourth or a fifth as much as they used to make. Not only do their entire families suffer, losing homes, kids having to leave college, but they displace the workers at the lower paying jobs, all the way down to the bottom of the wage scale.

And it will get worse, pushed by our many corporatist legislators who, under the guise of “immigration reform”, want to destroy many more of our families by increasing the number of guestworkers to virtually unlimited levels.

Computers and engineering are virtually dead as careers for American workers, with college enrollments continually declining. Students are not stupid. They know there will be no jobs for them. What they do not know is that ALL middle class jobs are going to be outsourced to guestworkers or offshore.

I suspect some folks reading this think that surely their job will be immune. Good luck.

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