> if we dropped 10 million software engineers in Silicon Valley from around the world, guess what?
Guess what, we'd get a lot more overseas clients as they wrestled with the labor shortage abroad. (Although, the real problem would be the humanitarian crisis in housing 10m more in SV overnight, ha)
It's not a coincidence that the biggest numbers of applications went to some of the big Indian IT companies.
It's a good thing they will be changed so that the cost get equalized rather than allowing big companies to import cheap and skilled labour. If it's skilled it should be paid the same of course not less.
This has been known for a long time to be a problem but was mostly ignored until recently.
https://www.nytimes.com/interactive/2015/11/06/us/outsourcin...
It's because the scarcity of that particular labor makes it on one of the best paid tech sectors in the world. Most people go there for the money even if they may stay for other things. Well that, and the fact that other highly skilled people compete for those few spots available, which means you might be surrounded by interesting peers.
China for example has 10x as many communication network engineer graduates as the whole of Europe altogether. That's ignoring the fact that a significant number of graduates are migrants themselves. I believe China and India have the longest Green Card waiting lists.
Isn't it? Increases in productivity, normally called automation, must reduce labour scarcity unless demand for the product is proportionately increased. There are plenty of sectors where this is exactly what happens, and some where it isn't.
That is a wrong assumption to start with. Inventing the wheel wasn't automation.
Production has three components: capital, labor, and technology. Automation, as I understand it, both improves technology and lowers the cost of capital.
If I recall right, this strand of economic lit is called Total Factor Productivity.[0]
I believe the Wheel falls squarely in the technology bracket.
[0] https://en.m.wikipedia.org/wiki/Total_factor_productivity
Why would the wheel, which allows the movement of goods with much less labor, be any different in concept than the transistor, which allows e.g. the accounting of a corporation to be done with far fewer accountants?
Or the assembly of a car with robots?
All productivity gains (expressed as production per person-hour) is a result of either (1) advancement in technology or (2) the increased use of existing technology through capital investment or (3) quality of labor (education, training, etc).
The invention of the wheel, the invention of fire, the invention of the steam engine, and the gas engine, the solar cell and the transistor all fall under (1) and the expansion of their use falls under (2).
So exactly when is it that India is going to become a major client? You seem to think that a country with high unemployment or underemployment that exports a portion of their workforce won't quickly absorb that "shortage". That's a pretty poor assumption.
India produces more than 20 million undergrads every year. I don't think 10 million will make a dent in developers supply in India.
Yes, this logic is perfectly sound. Increase in productivity has both good and bad impacts on a system within which it happens - the whole difficulty of managing a system (like a job market) is to find ways to pocket the good, and mitigate the bad.
I understand your point that the average working stiff might experience wage loss or lose their job altogether, but I'm not sure you're considering the benefits to consumers, which is another role of the average working stiff.
I implore you both to read and listen about it (google/"lump of labor").
Does this statement also seem true?
"It is hard to believe so many * economists * don't "get it". You cannot inflate the supply of labor, regardless of the means, and get a good result for the average working stiff."
What do we think economists are doing with all their data sets and papers and conferences and stuff?
Second, the idea that immigrants and women getting jobs is a major factor in 40% of Americans not having significant savings is so completely ungrounded in reality or even popular thought as to make me wonder if you're being deliberately dishonest.
Though it does look like total compensation (adding in benefits) did actually increase recently, they don't have anything for back to 1960. So maybe the story is that wages stayed flat, but benefits accounted for most of the income increase. Not an economist so I don't know how to tease this out.
Heath care does go up from 5% of gdp in 1960 to 18.2% today, maybe most compensation gain is going there? Plus retirement benefits.
But... from 1960 to 2000 the civilian labor force increased from 70 million to 141 million [1]. With all those new workers, by your link, compensation didn't actually shrink. That's weird huh? Also real median family income grew from $41K to $72K [2].
And sure 10 million software engineers added to SV tomorrow would lower wages. But maybe not long term? If it was 10 million countrywide? What would an economist or a careful wage survey say? Anyway we're talking about 85,000 jobs all over the country.
The main point of my comment is that when economists spend 10 years looking at data and arguing out every detail, they conclude that immigration is increasing jobs and increasing wages. They usually conclude that for specific wage markets too.
Maybe we can't rely on some anecdotes in the media to refute their conclusions?
[1] https://www.bls.gov/opub/mlr/2002/05/art2full.pdf (table 5)
From 1974 (they don't have data before that) to 2000, real mean personal income goes from 32K to 43K. [1], that's for individuals. The graph is useful to look at.
This is complex, for example there are also more single parent / single person households which tends to lower household incomes.
This might be compensated my the raise of monoparental households.
Way back in the ACA debates, when people talked about bending the cost curve, many people's eyes may have glazed over but that's exactly what we need to figure out a way to do. Not have a debate over immigration.
>Immigration redistributes wealth from those who compete with immigrants to those who use immigrants—from the employee to the employer. And the additional profits are so large that the economic pie accruing to all natives actually grows... But behind that calculation is a much larger shift from one group of Americans to another: The total wealth redistribution from the native losers to the native winners is enormous, roughly a half-trillion dollars a year. Immigrants, too, gain substantially; their total earnings far exceed what their income would have been had they not migrated.
https://www.politico.com/magazine/story/2016/09/trump-clinto...
Unless you're an immigrant or high up in tech business why would you cheer more high-skill immigrants? It will depress your wages and the economic gains will not accrue to you.
Why would you cheer against slavery if you could buy some up?
* control minimum wage laws etc.,
* collect the taxes,
* benefit from most of the money being spent locally,
or it’s done abroad, where a foreign government collects all the benefits.
Import duties don’t do much to fix that. And if you have most or all of the workforce, then you get to lobby against other nations’ import duties.
Economists look at the past and extrapolate into future, often with really poor results. With increasing amount of automation, software development is probably safe from paradigm change for a short while. Given that, it is always risky to claim that immigration will increase jobs and wages in the next decade, because it did so in the previous one.
You can see the tail end (looks like they didn't survey it until 1980) of it here: https://www.bls.gov/opub/mlr/2002/05/art2full.pdf Table 4, look at Black participation rates from 1990 to 2015.
For intuition think of extended families living together, being incarcerated, and being the last hired and the first fired (so out of work longer).
Exactly the answer I was looking for!
From 1974 to 2000, real mean personal income goes from 32K to 43K. [1]. The graph is useful to look at.
I do think some of the story is that most compensation gains went to benefits, especially our crazy expensive health care (again 5% to 18.2% of gdp). So the hourly wages stayed the same, but benefits went up. I think the original point, that more workers did not lower income, still holds.
Really I can't do an Econ Phd to respond to this thread. So I'll outsource to economists, who say more workers do not lower income.
However, Silicon Valley can pay handsome money because many companies located there run well and outperform their competitors for a fertile global market. And those companies can beat their competitors because (at least part of the reasons) they have the best talents available. If the skilled engineers from China, European, India all went back to their home countries, would the competitiveness of those SV companies be no different relative to their foreign competitors? If companies in SV were losing its advantage to another tech hub outside the united states, would they still be able to pay so well? I doubt that.
More people would mean smaller pieces if the size of the pie held constant. But what if there are also fewer people making the pie?
In reality, it's even more complicated in that the contribution of the pie making is not proportional to the headcounts either.
When the argument is that an increase in supply causes lower wages your counter argument doesn't make any sense at all. For wages to rise the demand has to grow faster than the oversupply. The primary way to increase demand is by lowering the price of a service aka workers get paid less. In other words it is possible that even with an extreme amount of immigration everyone still gets a decently paying job but in the end wages across the market have fallen.
Whatever pie analogy you're trying to pull doesn't matter. I don't know why people keep getting nerdsniped by that word and often even use their own hyper specific definition of it which doesn't match the definition of the other person. There is no law that says people always benefit from a growing economy and there is no law that says people can never benefit from a shrinking economy.
If 10 million software engineers dropped in Silicon Valley, a lot of things would happen (for one there’s nowhere for them to live). But that’s not what’s happening.
More and more I notice how similar software engineers are beginning to sound like the "Made in America" factory workers who said China could never do their job. Never take the present comfy situation for granted
Imports are paid for by exports. The US is currently paying for the manufacturing that it exported with dollars and documents. It could be paying with cars, and airplanes, and espresso machines, and in-sink garbage disposals, and novelty CNC lathes for engraving wooden pencils and chopsticks, and rapid refrigeration devices for single canned beverages, and maybe even non-imaginary 8K OLED television sets. If you make the specific exports that produce the most internal economic activity the cheapest way to pay for imports, increases in imports would encourage more exports.
If you're covering a trade deficit with cash, that impacts the same currency you use to conduct domestic trade--you're giving the trade partner leverage over your whole economy. What you really want to do is make a note spent in your own country buy far more than the same note spent elsewhere, so that the notes stay in the country, and the goods and services get exported instead. But you also want the rest of the world to have high demand for your currency, so that you can bring in a lot of imports, or go on lots of cheap tourist vacations. So devaluing your currency is not the best option.
But if you had, say, a 50% tax on foreign money transfers, if someone were to buy a $1 doodad from Elbonia, they would have to pay $2 for it in cash--$1 for the importer, and $1 for the tax. But they could also pay for it by purchasing a $1 doohickey locally and trading that for the $1 doodad, avoiding the tax, and keeping the $1 circulating in the domestic economy, and the Elbonian money circulating in Elbonia. Instead of taxing the trade itself, tax imbalanced trades and trade deficits.
Of course, any real-world implementation would be politicized to Hell and back, and chock full of loopholes, but it works just fine between imaginary countries.
As a patriot I'd rather pay higher price for domestically made products and know that our local workers made it.
There is a balance of course between killing imports and selling country short and flooding it with crap - but certainly China was having a party paid by north american consumers for last 3 decades.
I have no doubt that if companies can pay workers less then they will. But that’s not what’s happening.
Monthly rent for 85 m2 (900 Sqft) furnished accommodation in NORMAL area:
SF: $3,663 (£2,789) London: £1,766 Difference: 58%
https://www.macrotrends.net/2549/pound-dollar-exchange-rate-...
If you take 1.6 USD = 1GBP as typical of recent times, then it's more like 20%.
This also coincides with the end of the gold standard ('68) and subsequently cheaper interest rates and (thereby) access to much more and cheaper capital for those who already have enough capital to begin with.
Also, lower interest rates beget higher inflation.
Any smooth annual negative impact below the rate of technological advance is very hard to detect due to this.
Of course, this belies the fact that wealth inequality increases. This means though the median may stay stable, the tails get fatter: or, in other words, the standard of living isn't necessarily getting better for everyone.
The US tax code has gotten more progressive over time, not less. The very high tax rates from the past were quite narrow in scope, they covered few taxpayers.
The top 25% are paying 85-88% of all income taxes in a given year. The top 10% are paying 70% of all income taxes.
The top 1% yield 20% of all income and pay 39% of all income taxes.
How do you qualify that very progressive tax code as "stopped taxing rich people"?
Simultaneously the US welfare state has massively expanded since 1970. Poverty and homelessness have declined by a lot, while healthcare coverage expanded dramatically. The US spends the equivalent of 20% of its GDP on social welfare programs. That's higher than Canada and Australia, just slightly behind the UK at 22%. All of that is paid for by the top 25% of income earners.
That's not how that works. The U.S. has become massively more disparate in income and wealth, which alone would explain why more taxpayers fall into high tax brackets: the middle class is evaporating, leaving a somewhat larger upper class (more high-income taxpayers paying a lot!) and a massively larger lower class (also more low-income taxpayers paying very little), thus shifting the balance of how much the wealthy pay for the poor: with less of a middle class, the wealthier are the originators of a higher percentage of the tax revenue just by mathematics. That's not the tax code becoming "more progressive over time," that's the US having more inequality over time.
But it didn't happen alone. It also happened under repeated tax cuts for the wealthy. The U.S. tax code has become demonstrably less progressive over time, just as the U.S. has become demonstrably less economically equal.
> The US spends the equivalent of 20% of its GDP on social welfare programs. That's higher than Canada and Australia, just slightly behind the UK at 22%.
Right, but that's because the health care system of "no preventative care for the poor, but massive spending on medical procedures once you're already dying" is incredibly inefficient. Single-payer healthcare is cheaper than what we have, demonstrated by almost every large country with it spending less (while often getting better results). It's not because the tax system is progressive, or because the social safety net is somehow better or larger than countries with free healthcare and cheap higher education.
We had large numbers of mostly independent economic centers populated with local businesses owned and operated by local individuals. In many ways it's something akin to what you can find in many parts of the developing world today. And it's awesome. But as the economy 'globalized' we've reached a point such that an urban business streetscape in California can very often look effectively identical, in terms of businesses in operation, to one all the way on the other side of the country in New York. You're never going to have anything even vaguely resembling economic equality when a handful of companies control immense amounts of the entire economy.
This also distorts governmental systems since extensive wealth means the reach of companies is practically unlimited. Civil servant versus a company sitting on billions of dollars with international connections spanning the entire globe and the best legal and public relations teams that money can buy? That's not even David vs Goliath, that's ant vs foot.
How exactly is that worked out? Income taxes ($1.6t) and payroll taxes ($1.2t) are a similar level, and rich people tend not to pay payroll taxes as they aren't on a payroll.
Payroll taxes cover social security payments ($1t), so that leaves income taxes paying for things like Defence ($1.2t for military and veteran affairs), which wealthy people disproportionately benefit from.
Medicare and medicaid are the unusual ones, for the cost of those two alone ($1t, or $3000 per head) you could afford universal healthcare in other western countries.
Focusing on how much the wealthy pay, as a proportion of all taxes paid, is rolling up the progressiveness of the tax code with the income inequalities that already exist. Why do you rob banks? That's where the money is. Why do you tax the rich? They're the ones who can afford to pay.
I really don't see why income tax can't be defined as a polynomial equation in a single variable (for gross income) and an additional constant, equal to median income for the previous year. With a floor function to obviate negative taxes.
The tax can be zero up to the median income, ramp up quickly to an inflection point at about 30% for the dollar at 3x median income, then increase at a decreasing rate to asymptotically approach 100% for infinite income. For the purposes of argument, I'll say that the dollar at 100000x median income would be taxed at 90%.
As long as it's a continuous and increasing function--after the first "median income" amount of one's income--every additional dollar of gross income is still a positive amount of additional net income. Only the winners pay. It's always worth something to increase your gross income. It could also be a viable strategy to reduce your own taxes by spending a lesser amount on increasing median income--i.e. pay your below-median workers more money.
your math is way off because your're mixing nominal, ordinal, interval and ratio[1]
e.g. ten people in econony 9 poorest make $100/year 1 richest makes $200/year
poor tax rate: 5% rich tax rate: 20%
rich pay 42% of taxes 40 / (40 + 45)
now, lower tax rates on the rich and at the same time his income explodes (what's actually happened since early 1980's)
1 richest person makes $1000/yr rich man tax rate 15% rich pay 76% of all taxes (150 / (150 + 45)), which is much higher than before (your progressive argument)
but you claim that tax rates have become more progressive, when in fact and in example above they have become more regressive.
[1] https://www.mymarketresearchmethods.com/types-of-data-nomina...
Even when the US had high marginal tax rates for the wealthy, there were tons more loopholes so the effective tax rate was significantly less. That’s the reason people were on board with lowering the marginal rate in exchange for the elimination of lots of deductions.
Not sure how income tax would apply to that
Not exactly too much of a price drop would negate the point of them wanting to come in the first place.
Thank decades of union busting and neoliberalism for that one. When corporations only pay out the minimum that they can get away with instead of following the historic Ford mantra that people must be paid liveable wages, this is what results.
That's true if you only look at wages. If you look at total compensation, it's grown quite a lot even adjusted for inflation - doubling between 1970 and 2006.[1]
I'm broadly sympathetic to your viewpoint, but this isn't accurate. Children are fundamentally not expensive. The problem is that couples believe they can't afford to have kids, not that they actually can't afford them.
Children are extremely expensive. I have raised 4. You are broke the entire time and can always spend more on them.
In the US you are 1 medical incident from not affording anything and relying on welfare
https://www.thestreet.com/personal-finance/cost-to-raise-chi...
You must have a very weird definition of "cheap".
My current plan:
$100/mo - me
$125/mo - me + child(ren)
$350/mo - me + spouse + child(ren)
You are referring to a benefit you get from your salaried position. Nice but many developers do not have this luxury.
Imagine all the hand wringing that would ensue if at lunch with my colleagues (which is a rough approximation of the HN demographic) I mentioned that I got a 5yo hand-me-down car seat instead of buying the latest and greatest. Generalize that pressure to pretty much every child raising related expense.
I know plastics become more brittle with age but a modern car seat that's expired is going to be tons safer than a car seat from 2000 (mostly because engineers now have better access to good simulation tools at lower cost). So what if little Jimmy isn't maximally safe. He's still a heck of a lot safer (from an unlikely edge case no less) than he would have been if he were born 15yr ago.
How do you know this? Maybe there's technology (crumple areas) that only works when the plastic is relatively new or cushion areas that only are most effective before they degrade, thus making them less safe than good old fashion plastic. We see this with modern cars in their bumper technology - they take the first impact better, but they aren't as rugged as older models. Do you actually know the trade-off, or are you just assuming?
This statement isn't supported by the Pew Research article you linked to. If real average earnings are constant then a household which now has two breadwinners will double its income and be better off.
Also keep in mind longitudinal effects: native-born Americans have seen their wages rise but this is offset by immigrants who generally have lower-than-average wages - but still higher than in the country they emigrated from. Both groups are better off even though average wages haven't changed.
This strikes me as ridiculous as a broad-brush, general statement. It's not that Americans can't afford to have kids, it's that they incentivize different things than they did in the past. I don't deny that real wages haven't risen because of the supply of workers and dual-income families, but c'mon. There's been an increase in professional married people that want it all, and these DINKs refuse to sacrifice anything materially to have children. They have lots of adult toys and other conveniences, but somehow can't find the money to raise a child.
I'm German and affected by this. It begins with being unable to rent an apartment with enough space for a kid and ends with "how to afford a car in this city".
Dragging toddler around on public transit is a massive PITA. One is doable but two is hell.
> these DINKs refuse to sacrifice anything materially
> to have children. They have lots of adult toys and
> other conveniences, but somehow can't find the
> money to raise a child.
Also, in many American cities, public school is totally out of the question (if you actually care about having well-educated children). Families either have to send their kids to elite private schools at ~20K/per year OR they have to move to somewhere on the periphery of the city where schools are good but you have other trade-offs in time or money. These aren't selfish materialistic concerns they're real obstacles that cause people to defer having children.
This all supports your point, other than to say it’s even more expensive than you’ve indicated.
There are also those that have the best motives for not having children - namely that the country is getting worse, and why inflict a negative future on them? Environmental destruction, overcrowding, pollution, insane property prices, worsening opportunities to get on in life, rampant crime and drugs with disinterested policing and lax punishment apart from against those that are legitimately defending their rights (who are punished harshly), general undermining of traditional values, etc..
Oh but of course I'm just a bigoted dinosaur for holding these thoughts.
You do realize there hasn't been a raise in real wages since the 70s when you account for inflation right? Coincidentally during that same time period the income gap exploded because the wealthy had plentiful cheap labor and were able to pocket the productivity gains as pure profit because workers had no leverage to demand higher wages because there were 0 labor shortages. American's used to be able to support large families of 4+ kids with only 1 working parent. Now you have households with both working and they can't afford to have kids.
http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-...
I support high skilled immigration because it benefits the country but let's be real, if we dropped 10 million software engineers in Silicon Valley from around the world, guess what? Wages would drop massively because it would be a buyer's market for tech companies, they could pick and choose the most talented for pennies