Why New H-1B Restrictions Will LOWER (Some) American Tech Wages

New restrictions going into place on the H-1B immigrant worker program have been so extreme some right-groups in India are threatening to boycott of US goods, and American commentators are crying protectionism.

But opponents of the Grassley-Sanders amendment, which puts news restrictions in place on H-1B workers, have it wrong — tech companies like Microsoft (MSFT) or Cisco (CSCO) aren’t affected by the new measures. And fans of H-1B restrictions have it wrong too, the new bill will actually lower some wages in the tech sector.

Today’s debate on the H-1B program on CNBC (with six pundits, all them opposed to H-1B restrictions) is typical of some of the fear and misinformation that’s circulating.

So pay close attention to what the new law actually says: Grassley-Sanders puts roadblocks in the way of any institution taking TARP money from bringing H-1B workers on-board. Crucially, the total number of H-1B visas the US government will grant stands unchanged at 65,000.

So US citizens working in the financial industry will see a lot less competition when applying for jobs. But with the total number of H-1B workers coming into the country next year holding steady at 65,000, all those H-1Bs who would have been working bank jobs will just move to other industries. Outside of finance, times might feel like the Y2K heyday when 195,000 foreign workers were in America.

The WSJ created a fantastic map (click through for the interactive version) of where TARP-taking institutions are based. Tech workers in finance-heavy cities like New York or Charlotte, NC will doubtlessly see IT wages rise. But when those H-1B workers relocate to places where no one in town is affected by Grassley-Sanders — states like Vermont and New Mexico — expect local IT wages to plummet.


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