It shouldn’t come as a surprise to anyone that studies show that being out of the job market can have a devastating impact on your ability to earn a living in the long-term. A new study out now shows this to be statistically true. By the way, this also suggests the United States needs to get rid of the H1-B and the H2-B and H1-B visas. These visas are mainly used by US corporations and other companies to undermine the compensation of US workers, thereby redistributing more money to the rich.
Increase the supply of workers and you lower the compensation for them. And then these visas allow some companies to completely displace US workers.
A college degree used to be a sure ticket of admission to a middle class life style. No more. With the rising cost of college and the accelerating disappearance of good paying jobs, exacerbated by the Great Recession, new grads are finding it very difficult to find jobs that will allow them to begin paying back the loans that got them through school. Many are forced to live at home with their parents as they postpone starting a life of their own.
Adding to the downward pressure on wages is the insistence of business to import temporary workers to fill jobs that Americans would fill but at a higher wage. A recent online study shows that IT workers, such as computer programmers and software engineers earn about 6% less than they would without the competition of H-1B visa workers. The undocumented and those with green cards or H-1B visas hold down wages for all of us.
When supply and demand are equal, the price set by their intersection is called the market clearing pricer since enough is supplied to meet demand with no overage. Business wants no government interference in setting the market clearing price since a price too low would lead to shortages and less profit on items they sell. However, when it comes to their purchases, business is happy with a price below the market clearing price since it reduces their costs and increases profits.
Let’s assume no H-1B visas are issued. Jobs would be filled with American workers and wages would rise if some jobs are not filled. That would create an incentive for Americans to train themselves in the skills needed to fill what are now better paying jobs. It might take some time, but eventually, the supply of job applicants would increase to meet demand and a market clearing wage would be established at the higher level.