I'm for easy immigration, but let's not pretend that this isn't going to reduce tech worker wages in the area. (In the long run though, it could help, since you tend to get more specialization and scale when large numbers of a certain type of profession are congregated around a certain area).
Right, I don't dispute this.
But whether this is good or bad depends on whether you are buying or selling the labour.
I get that there's plenty of demand for highly skilled engineers that want to work for $80k and a tiny handful of lottery tickets. It doesn't mean we need to further help the valley avoid the consequences of a lack of investment in domestic education, or their wild irresponsibility with respect to housing and transport issues in the bay.
Exactly!
Maybe most of those companies shouldn't exist, then. Isn't that how capitalism is supposed to work?
Doesn't mention anything about not paying the market price.
Those not willing to pay the market price can't buy a loaf of bread.
It is prices that incentivize people to provide what we need.
And when the bubble pops, prices will tell people the opposite.
Either way, its just a market condition that entrepreneurs have to deal with, just as they deal with all of the other things that change all the time.
It is unlikely a robot will ever be able to do the job of entrepreneur.
That's the flaw in that definition. Price is the most important factor.
Edit: If price isn't accounted for then what isn't in a shortage at prices just greater than free?
If we have a shortage of carrots, we dont have enough carrots at ANY price. If people are unwilling to pay 5$/LB for carrots but thats what they cost in the store, that is not a shortage.
What this discussion is about is substitute goods[1] replacing standard goods. In this case US workers are the standard goods, and they are being replaced by foreign workers, or substitute goods at lower cost.
No, a shortage is the discrepancy between the quantity supplied and quantity demanded at a given price.
When wages offered are too low, there is a shortage of labour supply. Increase those wages and that shortage disappears.
>If we have a shortage of carrots, we dont have enough carrots at ANY price.
This is simply not true.
>If people are unwilling to pay 5$/LB for carrots but thats what they cost in the store, that is not a shortage.
The shortage of carrot occurs at every price below $5/lb. You cannot talk about shortages in the economic sense without prices. Period.
I'm not sure why people are insistent on arguing the semantics of the word "shortage", rather than the far more interesting supply/demand dynamics underpinning the markets being discussed.
From wikipedia: "In most cases, a shortage will compel firms to increase the price of a product until it reaches market equilibrium. Sometimes, however, external forces cause more permanent shortages—in other words, there is something preventing prices from rising or otherwise keeping supply and demand balanced."
In this case, the H1-B visas are the external force, and are preventing supply and demand from being balanced. Basically because of the availability of cheaper labor, companies are willing to pay less for ALL labor which creates the shortage.
My completely misremembered thinking was that simply because they don't WANT to pay a higher wage, does not create a lack of labor - but i see know that it does in fact create an economic shortage of labor AT THAT PRICE. I was thinking of 'labor shortage' meaning that there is not enough actual people qualified to perform a job; when really in this case it is much more reflecting employers unwillingness to increase wages to the level that qualified people would be willing to compete.
thanks for the discussion!
If we had a bread shortage, some would be unable to afford the high market price of bread, while it would still be available to those who could afford it.
Sounds like a market opportunity. DoucheBot 6000 can hook right in to algorithmic trading platforms to acquire VC without human intervention at any step! It'll disrupt the startup game!
It certainly was:
http://pando.com/2014/03/22/revealed-apple-and-googles-wage-...
But this is precisely what defines an economic shortage. There's no shortage of anything, if the price offered is right.
I wonder if the discrepancy between supply and demand for labour in the Valley has to do with the fact that, unlike most other industries[1], so many companies aren't making money, and hence can't pay, but still demand much labour? It seems like labour shortages are built into the system.
[1] Speculation. What are some examples of companies with billion-dollar valuations and no-profits, outside SV?