Evidence from a US government lottery shows that restricting foreign low-skill workers shrinks businesses without creating jobs for Americans.

112 points•neehao•10 days ago•133 comments•

133 comments

bambax10 days ago
> "When policy is politically polarized, you need more facts," he said.

Mmmm... It seems in the world of politics, esp. populist politics, more facts don't bring better policies. They are simply ignored, or accused of being lies pushed by the ennemies.

> "We have all the facts on this we need. We don't need any more facts. In the land of truth, my friend, the man with one fact is the king."

-- Linton Barwick, In The Loop (2009)

https://www.youtube.com/watch?v=PdoN1LWGgfQ

N_Lens10 days ago
My friend was saying that we just need to show people the facts to change their minds. I showed him a pile of scientific studies indicating that it doesn't work. His response was "I still think it'll work"!
prolly9710 days ago
That's funny :) Though when presenting facts and studies, it's also worthwhile to think about how much of the world these studies are accurately able to explain. For physics this number is high. " For social sciences there's good reason to be skeptical. Even if (big if) a study is directionally replicable, the total proportion of the world, that can be accurately and consistently be explained isn't great.

"Economist X says there's relation R between variables P and Q" Meanwhile another economist might have found a different result.. or not have published a non-effect. Or have found the effect to be non-existent given confounders.

The danger is when/if people selectively choose studies, that just so happens to repeat what their ideology would dictate.

keeda9 days ago
Interestingly, research shows LLMs are better than humans at persuading people, and one of the reported reasons is that their arguments are deemed to be more evidence-based. (Findings even show that people are more likely to be persuaded when they KNOW the other side is an AI... maybe the underlying dynamic is that they assume people have vested interests?)

So maybe evidence does help, but what detracts from its effectiveness is how it is presented. Like we see every day on various public forums including this one, arguments are made in a rather heated manner, which are probably not conducive to making the other side more receptive to ideas. I'm not sure if this might be the confounding in these previous studies.

LLMs have the advantage of infinite patience and RLHF'd dispassionate mannerisms and the presumption of no vested interests. But that also means your friend could be technically right.

baxtr10 days ago
I have looked into some of these studies and realized that it’s near impossible to change people’s minds.

Humans have a machinery reinforcing their world view. Contradicting observations and facts are usually ignored or interpreted such that it matches their already held opinions.

NoMoreNicksLeft10 days ago
What facts do you think can change my preferences? I'm sitting here telling you I want apple pie, and you're harping on about how "kale salads have all the vitamins you need!". We're talking at each other, because you failed to understand. This isn't about what you think the facts are, but about what I want to happen. I can accept those as facts and it wouldn't change anything.
RealityVoid10 days ago
Hillarious, to be honest. It still leaves me wondering... what _does_ work?
throwup23810 days ago
Finally a The Thick of It reference in HN.

An AUS Utopia reference would probably be more fitting though.

armchairhacker10 days ago
Sometimes they are lies. Governments including Western ones have lied before (e.g. Tuskegee Syphillis), and academics have published flawed, misleading, or straight-up fabricated studies (e.g. “landmark” Alzheimer’s study).

But more often, the “fact” does not address the individual’s issues, and the individual may give a stupid counterargument (“…lie pushed by my enemies…”) but they have a legitimate one. In this case, I guarantee there are specific people who’ve been indisputably replaced by H1Bs, maybe clustered in specific reasons, and maybe specific fields. Telling these people “overall H1Bs create jobs” won’t convince them.

Like telling poor people “the economy is improving, inflation is only 0.x%”. Both may be true in general at the population level, but to the person you’re speaking to, they don’t matter; economic improvements can go to others while they suffer more.

dansquizsoft10 days ago
> But more often, the “fact” does not address the individual’s issues,

I feel like this has been a big failing of one (left) side of politics in recent years. Quick to state 'facts' as arguments but those haven't landed as well as they have in the past (15 - 20+ years ago), for whatever reasons...

JoshTriplett10 days ago
> Equally striking is what did not happen. Employment of low-skill American workers at losing firms did not increase. Across all firms the effect of foreign hiring on US employment was zero or positive, and in a prespecified subsample of rural firms it was significantly positive, with an elasticity of 0.61, meaning that for every one percent increase in H-2B workers there was just over half a percent increase in US workers.

> "If you don't allow firms to hire immigrant workers, they just become smaller firms," Lewis said. "They are not replaced with US workers. Instead, the output of the firm shrinks, and there are fewer total workers."

This is incredibly important. Everyone who fears immigration is going to take their job should read this and realize that fear is not only false but inverted.

anilakar10 days ago
> Everyone who fears immigration is going to take their job should read this and realize that fear is not only false

This is only because immigrants are willing to do jobs at wages and working conditions that locals do not accept. Employers in the Finnish berry industry were just jailed for human trafficking. Meanwhile the same companies have been loudly complaining that no Finn wants to work for them.

keeda9 days ago
> This is only because immigrants are willing to do jobs at wages and working conditions that locals do not accept.

I would partially disagree with this assertion (immigrants are clearly very constrained in their job mobility, and their wages are correspondingly suppressed) but what TFA and other similar studies and history show, it's not like wages increase for native employees with lower immigration. Typically what happens is that there just aren't enough people to do the work, and so the work just doesn't get done, which is why businesses just don't grow.

Sometimes the economics just don't work out. Relevant berry-related example, California farmers often have had to let entire years' worth of strawberries rot in the field when they could not find enough farmhands to pick them. And they did try raising wages and perks: https://www.ucdavis.edu/food/news/california-farmers-have-ra...

But sometimes even with the right economics there just are not enough workers. TFA gels with my experience working in Tech in the US for almost 2 decades, conducting countless interviews for positions that I know paid very well, and just not finding enough qualified candidates regardless of visa status, which constantly put significant constraints on our roadmaps.

jltsiren10 days ago
Finnish wild berry industry does not really make sense. Imported cultivated berries set an effective price ceiling, which isn't high enough to hire Finnish workers. The ones you could hire are not productive enough, and the ones who could get the job done have better options.

There are similar issues in agriculture, hospitality, and construction. Many jobs are seasonal and require you to live away from home. And because the outputs are supposed to be affordable, they don't pay enough to support you for the rest of the year. So you need an actual job, which is probably nicer and pays enough that you don't want the seasonal job anymore.

matheusmoreira10 days ago
But would the corporarions raise salaries and improve conditions if they had literally no other choice? That is the question.

Unionization demonstrably leverages benefits out of corporations, so I'm inclined to think that immigration bans would have the same effect.

ozgrakkurt10 days ago
It is also meaningless, there is no time frame specified.

I don’t think limiting immigration like this is a good thing. But this also doesn’t mean that it isn’t hurting local people.

Big tech would have been super heavily invested in education if they weren’t getting an endless stream of high-performing well-educated immigrants

miroljub10 days ago
> they weren’t getting an endless stream of high-performing well-educated immigrants

That's not how you write "cheap".

But remember, cotton was once also cheap because of the endless stream of immigrants, consequences are paid every day since.

triceratops9 days ago
You're thinking of second-tier and third-tier tech companies, big banks, insurance and telecom companies, consulting shops.

Big Tech pays enough to hire whoever it wants, regardless of nationality.

The evidence is they continue to pay obscene wages to people to work in the most expensive parts of the country: Silicon Valley and SF, NYC, Seattle. Until very recently even new grads made close to $250k at FAANG (MAAMA? whatever it is) and peer companies.

Big Tech could easily hire in cheaper American cities, save a ton of money, hire only citizens, avoid the visa hassles of hiring foreigners. But they don't. Because they can't hire enough.

Having the people they want, in the places they want them working, really, really matters to them. Much more than saving a few bucks.

If it were restricted from hiring in America, Big Tech would have invested even more in global capability centers instead.

I can think of few things more threatening to big tech SWEs in Silicon Valley than their management becoming more comfortable with work done outside of the US.

CobrastanJorji10 days ago
Nobody's immigration fears are data-driven, nor have they ever been.
JoshTriplett10 days ago
Sure, but there's a difference between a fear being tenuously plausible but overblown/stoked, and a fear being flatly incorrect and inverted. The former is harder to counter. The latter still has the standard problem of lies propagating faster than the truth, but it at least theoretically should be countered by the truth.

At least in theory, many people perpetuating this myth are at least nominally convinced that it must be obviously true, because the zero-sum thinking is simpler than the reality.

Of course, the other problem is people going "my anecdote beats your study", because they personally know someone who blames immigration for losing their job, and a study of people in general still lets someone go "ah, but that's not always true".

nicbou10 days ago
I also think that the main fear - at least where I live - is not job loss but national identity and crime. At least that's what the anti-immigration political messaging is about. I haven't seen the job loss argument in the decade I've lived here.

Facts are much lesd helpful here because half of the perceived problem is emotional.

weatherlite10 days ago
1. Immigration to the U.S is very different than immigration to Europe in terms of outcome , and even immigration to Europe could be further disected; lots of differences if you come from MENA or come from Thailand

2. Not everything can be answered by gdp; there is a real issue of culture and values that could become eroded by huge influx of immigration causing societal strife.

ifwinterco10 days ago
The data in the UK says GDP goes up, GDP per capita and salaries go down (which is exactly what you'd expect to happen from first principles...).

So the trade is your country gets (sort of) richer overall and the elites get richer while the average person gets poorer.

If you're okay with that outcome, then yes no need to worry about the data!

_blk10 days ago
Elasticity 0.8-2.2 means there are/were cases (<1) where an increase of H2b would mean lost 20% US jobs per additional visa or do I read that wrong? I didn't read anything about average or median elasticity or how those figures are ranged in the article.
t0mpr1c39 days ago
Yes, it would be helpful to have more guidance on how to interpret estimates of "elasticity".
modo_mario10 days ago
They did not limit migration across the board. Those losing firms compete for workers with non losing firms.
collabs10 days ago
> The results suggest that low-skill foreign and low-skill American workers are poor substitutes for one another. The authors' estimates put the elasticity of substitution between H-2B and US workers at roughly 0.8 to 2.2, far below related studies of immigrants in low-skill work, which typically find an elasticity of 4 to 10, and nowhere near the perfect substitutability assumed in some influential studies.

I feel like the wording "low-skill" has become a technical term that doesn't mean what the word says and it makes people make assumptions they shouldn't with regards to these jobs. A lot of these so called low skill jobs require a highly specific job experience and/or productivity to simply keep pace and not drag down the rest of the team. We talk about Joel Spolsky and how a poor hire in a software development team can hurt morale but it simply isn't that big of a factor with us as it is in these so called low-skilled jobs but we aren't ready for that conversation.

Also about housing, who do you think builds all these additional housing units if we don't bring in the labor we need to build them?

fwlr10 days ago
The firms who do not win the visa lottery “just become smaller firms” instead of hiring market-rate labor because they still have to compete in a market against other firms who won the visa lottery and have access to below-market-rate labor.

Did the economists who ran this study miss this? Do they explain it?

grubbydiff10 days ago
Have you gotten a chance to read the paper? If not, you should consider reading it. They have explained it. It's got to do around the fact that domestic labor supply is inleastic but the foreign supply is infinitely elastic. You might want to focus on sections VI and VII for more details around their model and assumptions.
HexPhantom10 days ago
I think the interesting question then moves one level down: how well do those elasticity assumptions describe the actual H-2B labor markets in the study?
emmelaich10 days ago
AEA leans strongly left. I wouldn't put much store in this.
t0mpr1c39 days ago
[citation needed]
HexPhantom10 days ago
I’d push back a bit on the idea that they simply missed it. They actually test something very close to this in the appendix: whether losing the lottery changes the competitive environment firms report facing. They don’t find a statistically significant competition effect
coolandsmartrr10 days ago
> Firms that won and could hire all the foreign workers they sought saw revenue rise with an elasticity of approximately 0.20, meaning a doubling of H-2B employment raised revenue by about a fifth. Investment in equipment, vehicles, and structures responded even more strongly, with an elasticity of 1.5 to 2.1.

The "investment in equipment, vehicles, and structures" seem to be referring to Capital-labor ratio, a metric in economics that is often attributed as a good indicator of company productivity. I wonder if firms would still prefer to invest in labor force in lieu of capital, given the greater revenue multiple achieved by capital investment.

While this study pertains to US labor force, it is also salient to the Japanese economy. Here in Japan, we have a shrinking working population. Firms have responded by importing labor from abroad and investing in capital (e.g. automation). For example, convenience stores would hire foreigners, but eventually reduce headcount when they install self-serviced checkout.

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