By Markos
Both Elon Musk and Trump are withholding important details that should be noted before anyone draws conclusions on this interesting debate:
First of all the H1-B program is not the same as other programs that are reserved for “rare/superior talent”.. It is unlikely that Stamatis Krimigis was kept in the US on an H1-B.
The H-1B program was less about “top talent” and more about “lowering costs”.
For many years, they called this cost savings “outsourcing”. Indeed, especially in the earlier days, initial “cost reductions” were on the order of 20-30% per head. Basically, only a handful (3 or 4) big companies cornered the market and somehow secured 90% of the entire pool of H1-B allocations issued by the government, year over year…
However, what these big companies never told you is that we would see upwards of 4 x H-1B individuals sharing an apartment (living in poverty), because they would only be paid 50% of the fee that these companies were charging at a 20-30% discount. You can imagine the hardship of paying rent in an expensive zip code. This meant AT BEST, the entry-level H1-B worker was at “half the take-home wage” of the equivalent US citizen worker (when you factor in employer-side contributions to Social Security, etc). Over time, this reduced wages in a broad spectrum of job sectors, causing many local US citizens to steer clear of once lucrative careers…
Ironically, in parallel, these greedy companies found another wonderful way of “lowering costs”. The terms “on-shore/near-shore” vs. “off-shore” outsourcing were becoming more frequent. By keeping the headcount in places like India, the Philippines, Moldova, Slovenia, Ukraine, Latin America, they could lower costs even more, but these individuals were now “virtual teams”…always remote (many years before Covid). The first significant piece of evidence that Elon and Trump are withholding from us is that, while the H1-B program has likely replaced 200-300k US-citizen workers per year over the last 25 years, the “offshore” model has replaced “millions” of jobs. If Trump ever decided to put a “tariff” on something, this “offshore” model would be far more lucrative than the 100k that he is considering for the H1-B program (that’s one reason he’s considering it…to begin attracting US-citizen talent by “raising” the wages in this manner).
Now, in terms of “top talent”…my experience has been much different. While some individuals do in fact excel, in the industry we have seen enormous challenges and problems with this “cheap labor”. In short, there is a learning curve before these contractors can actually produce. If you hire someone on a 12-month contract, and it takes them 6 months to reach “peak output”, causing project delays, and resulting in another 6-month extension, how much money have you actually “saved” by hiring them in the first place?
What Elon and Trump are also not telling you is the level of corruption that is associated with this H1-B program. Not only do 3 or 4 companies (oligopoly) control most of these visas year over year, but when you see a manager (who managed to get his Green card) openly violate US discrimination/employment laws, and somehow manage to bring a team of individuals from “only his village in India”, working them 15 hours a day, including weekends, you have to wonder where the oversight is, and what the actual implementation vs. original intent of the program has become.
Another thing that Elon isn’t telling you is that while initially the “off-shore” workers in India used to work US hours so that they could collaborate throughout the day, at some point the workers “revolted”, and currently there are only about 4 hours of “common collaboration time” with East Coast companies (for example). This results in massive inefficiency and project delays, but nobody in senior management cares, because it’s always just about the perception “on the books” that “costs are being saved”…
Another thing that we noticed in the industry was “turnover”. At the peak of the H1-B frenzy, many of these individuals would spend their first 12 months “learning” at a client, while mid-level and senior-level H1-Bs would “cover for them”….once they “learned” they would be pulled from the project and sent to another client to “bill at a higher rate”. The cost of replacement, training of a new individual, etc, was immense, because project delays would be rampant. Many companies were scammed in this way. Why is Elon not disclosing these dirty details to anyone?
Between 2008 and 2012, one individual developed a significant program at a major company, but he faced criticism for using only 20% H1-B, compared to the more expensive 80% of “US-citizen” talent. He proved that he was able to deliver 2x the volume of work in 1/3 of the standard project timeline with fewer highly-experienced but more expensive people. This was not a surprise, but nobody cared enough because it was all about “perception” to the board of directors, and they eventually ordered that the “high performing team” be dismantled and outsourced…the projects ground to a halt after that for a long time. Ironically, Elon has actually done the same thing, even though he is “defending” the H1-B program. He has always been an individual who focused on paying top dollar for top talent to achieve top results. His companies are not known for “low-balling” their US-citizen employees when it comes to innovation….they will work 15-hour days, yes, but they will not be paid the “lowest in the market” either.. So, in light of what he is actually doing in his companies, Elon’s stance on this H1-B program is rather strange.
