If a company needs the talent they will pay for it.

Do not worry about CEO's and C-levels outsourcing themselves. Either the H1B will go unused or the salaries will be paid. Either way the market will find out what the 'natural' need for outside talent is. There are other approaches but a salary floor plus an open work permit would be a decent start.

Not everyone has the money to pay market salaries, especially early-stage startups running on meager angel funds. Add to that investors who still actually think you should bootstrap yourself on ramen before trying to get any investment to properly pay your team members and employees. There's simply no way a talent-hungry startup could possibly pay anything close to what Google, Facebook, et al. offer. People who choose to work for the startup instead are doing it because they identify strongly with the problem or market, want to have a voice, or want equity. Those people also tend to be highly talented folks who value their opportunities to apply their talents much more than the monetary compensation.

Freedom, ego, and voice have always been a bigger attractant for talent than salary, assuming basic life necessities are met. I've turned down multiple $300K+ job offers just because they were too boring, and simple brain rot would drain me of all the abilities that I have invested time learning and accumulating over the years.

> Not everyone has the money to pay market salaries

Then they can't compete in that market. Market salary is not a high bar, it's the expected fair wage. If you can't pay market salary, you don't belong in business.

What if the company is in the Midwest where I am assuming the market salary would be much lower than SF, so they cannot get the talent they need.

Midwest programmers don't cost as much; market rates vary per market. And if they can't pay what midwest programmers demand, then they should rightly go out of business.

Market salaries are currently distorted by the easy money available right now. The fact is most companies who pay market salaries can not afford it either, they're just placing a bet with investors' money and they will go out of business sooner than they could have in a more sane market.

I think it's shortsighted to just throw up your hands and say "because free market" in this kind of scenario. The fact is if "market" salaries for software engineers are based on unicorn thinking and the salaries that Apple, Google and Facebook can pay, then there won't be much of a long-tail of interesting companies, we will all end up working for mega corps.

That is the nature of business, those salaries are not distorted, they're what's in demand. Those companies pay that because they must to capture the amount of dev supply they require. If they blow up because they can't afford to maintain it, it'll correct the situation and release some supply back into the market. Salaries are high because supply is low, not because there's too much easy money.

Supply of developers that meet the high (whether justified or not) bar of those companies is low.

Not at all.

Supply of developers that both meet the high bar and are willing to accept poorer economic futures (see eg housing costs that have doubled in the last 5 years, expensive childcare, etc) is low. My experienced mid-career engineering peers keep moving to Austin, Seattle, and various cities in the midwest because being able to get a house for $300k, $500k, or $250k, respectively, massively changes their financial outcomes.

If anything market salaries are artificially low because of the power imbalance between employers and employees.

All the current H-1B debacle does is increase that power imbalance even further.

Welcome to capitalism - If you can't afford the going rate for staff the your start-up is not a viable business and should never have got funded.

It's funny to see anti-capitalists encouraging employers to pay below market wage.

> People who choose to work for the startup instead are doing it because they identify strongly with the problem or market, want to have a voice, or want equity.

So very true; but if you're looking to make a quick buck you shouldn't join a startup [1] or want to checkout from work 5-6 pm everyday (BTW, there's nothing wrong with that) With the insane valuations that exist today, a decently funded startup can at least match a base salary with an established company.

[1] https://www.cbinsights.com/blog/startup-failure-post-mortem/

If the "most talented and highly-skilled" people only get "very mediocre salaries", it sounds like there is not actually a dire shortage of them, then, unlike what H1B proponents claim. Either that, or the market's price signals are not working properly for some reason (due to downward wage pressure from something else, like collusion?).

Because in early stage startups, you accept to forgo a market rate salary for equity that still has low value. You do that because you expect, or you bet on the equity value to go up. Risk, reward, it's simple.

A bidding system for H1Bs would in effect prevent earls stage companies to apply for visas. Many actuall do apply for their own founders. A large proportion of startups have foreign founders, and these people need a visa.

Those startups at least claim to be paying market-rate salaries, because the H1B visa category can't be used to hire employees at below-market salaries.

> If the "most talented and highly-skilled" people only get "very mediocre salaries", it sounds like there is not actually a dire shortage of them

It's not always black and white. The same argument has been used against mexicans in low paying jobs. However you kick the mexicans out, farms and restaurants will collapse.

I don't think anyone would argue that there is a shortage of service-sector labor. The debate there is purely over prices: there are business models designed around having large quantities of $7.50/hr-and-no-benefits labor available (in some cases, $5/hr under the table), and they are averse to having to pay more. But pretending that their unwillingness or inability to pay $10/hr means that there would be a "shortage" of unskilled labor at that price is disingenuous. There's plenty of it available, but maybe only for "fairly cheap" rather than "dirt cheap". That might just mean that certain business models are not very good business models.

In any case, that's not what the H1B program is officially about: the purpose of the program isn't supposed to be to keep wages down in sectors where wages would otherwise get too high for businesses to afford them. Instead the argument is that businesses literally can't find workers in these areas, so H1Bs constitute talent filling a critical national skills gap. My argument is that, if that were true, the wages in these critically-lacking sectors would rise accordingly.

I agree the H1B program is abused, but I dont believe there is enough local talent to replace the tens of thousands of h1b workers.

It will result in a lot of small and mid size business closing down. Unfortunately I dont have any suggestions on improving the h1b program.

If the h1b program were closed, I think companies would miraculously discover how to (1) pay more (moving to sfbay is a ludicrously bad economic decision for most families), (2) train employees, and (3) stop leaking women, minorities, and parents out of their companies. In other words, they'll figure it out just fine if forced to do so.

You're not thinking this through: they'd set up more operations abroad.

You apply tax sanctions against them then. It's done constantly to level the playing field between domestic and foreign industry.

> farms and restaurants will collapse.

because they have based their business on illegal practices.

I agree its based on illegal practices. But quite a few of the businesses (not all obviously) do it for survival because that is the only way for them to stay in business.

No, not in the slightest. Take strawberries: an additional 5 cents per pint would increase picker wages by 50% [1]. Businesses minimize worker pay both because they can, and because there is a collective action problem that needs to be solved by the government. Wages for fast-food employees are similar. viz the raise in minimum wages in Seattle which, contra all predictions from conservatives, has not driven restaurants out of business. See eg study suggesting a minimum wage of $15 for fast food workers would increase customer prices by 4.3% [2].

[1] http://www.ufw.org/_board.php?mode=view&b_code=res_white&b_n...

[2] https://www.purdue.edu/newsroom/releases/2015/Q3/study-raisi...

Your business is not a business if it's survival depends on treating workers as slave labor.

Then they should go out of business?

Doctors, musicians, and professors often come in on an O-1 visa . (Professors can start on the H1-B path too, though. This would push many more people into the O-1 path, which is more expensive and may be suboptimal.)

Or could it put upward pressure on salaries for those who are high talent but mid salary?

Top CEOs/analysts can already probably get in on L/O/E-2/EB-5 visas, which all have separate caps -- if they qualify under those visas they probably wouldn't try for the H1B lottery.

This is such a crappy argument.

You're acting like cost of living at work location couldn't easily be tied in, as well as incorporating average salaries at said locations.