'Bad time to be an IT professional in US'
It is a bad time to be an IT pro in the US unless you are into some really high-end & customised work.
By PTI |
The US political system is once again raising questions on the visa programme for skilled workers because “companies are using H-1 B visas to displace qualified American workers”. The IT industry, which has put outsourcing on global agenda, has also attracted detractors, not just from politics but even economics. First, there was Paul Samuelson who questioned the gains from free trade a few years ago. Of late, Alan S Blinder, a Princeton University economist and a former vice chairman of the Federal Reserve Board, has warned that there are more downsides to trade than previously thought. A few weeks ago, PTI spoke to Mr Blinder , who is also a longtime adviser to Democratic candidates, about his observations on free trade. Excerpts:
Countries like India have managed to create a buy-in for free trade with great difficulty, and now you and Mr Samuelson say free trade may not be all that good. Why?
Nobody should read what I have said or written as being against free trade. I am for it. The benefit of free trade are well established, especially for a country like India. It has created many jobs in India and will create many more. I was speaking from a US perspective and the issue is really about transition costs. The US will have to make significant reallocation of labour away from some jobs and towards other jobs.
But statistics show that outsourcing to India (which has displaced several American workers ) does help the US Economy at a broader level...
There is little doubt about that. However , the purpose of my writing those articles is that not every American will gain. There are going to be Americans who are going to lose their jobs (because of outsourcing). And we need to do a better job, in the US, of taking care of these people.
What about people like US software programmers who are going to lose their jobs?
No, you can’t. Some people will be worse off. And indeed it is a bad time to be a computer science professional in the US unless you are into some really high-end and customised work.
And these people will form the biggest voice against free trade?
Yes. And there are number of issues. The big one is the so-called safety net: unemployment insurance, retraining, maintenance of healthcare benefits and pension rights. In the US, we are pretty weak on all these things. We rely on the private markets to get people re-employed , which happens eventually but we could cushion the blow much better. European countries do this much better.
But haven’t the European countries been taken to task for their inflexible labour markets and lower productivity? So how do you strike a balance?
Well, the productivity and the per capita GDP is pretty high in those countries. One can argue that European countries can move a bit to the right, while the US could move a bit to the left because right now there is a huge gap on this issue between the US and Europe.
Countries like India have managed to create a buy-in for free trade with great difficulty, and now you and Mr Samuelson say free trade may not be all that good. Why?
Nobody should read what I have said or written as being against free trade. I am for it. The benefit of free trade are well established, especially for a country like India. It has created many jobs in India and will create many more. I was speaking from a US perspective and the issue is really about transition costs. The US will have to make significant reallocation of labour away from some jobs and towards other jobs.
But statistics show that outsourcing to India (which has displaced several American workers ) does help the US Economy at a broader level...
There is little doubt about that. However , the purpose of my writing those articles is that not every American will gain. There are going to be Americans who are going to lose their jobs (because of outsourcing). And we need to do a better job, in the US, of taking care of these people.
What about people like US software programmers who are going to lose their jobs?
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No, you can’t. Some people will be worse off. And indeed it is a bad time to be a computer science professional in the US unless you are into some really high-end and customised work.
And these people will form the biggest voice against free trade?
Yes. And there are number of issues. The big one is the so-called safety net: unemployment insurance, retraining, maintenance of healthcare benefits and pension rights. In the US, we are pretty weak on all these things. We rely on the private markets to get people re-employed , which happens eventually but we could cushion the blow much better. European countries do this much better.
But haven’t the European countries been taken to task for their inflexible labour markets and lower productivity? So how do you strike a balance?
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Well, the productivity and the per capita GDP is pretty high in those countries. One can argue that European countries can move a bit to the right, while the US could move a bit to the left because right now there is a huge gap on this issue between the US and Europe.
So are you saying more government role in “helping people find jobs” and cushion “when they lose one” ? Would free market economists like you for saying this?
They would oppose this. I don’t agree. Apart from a humanitarian motive behind bigger government intervention there is another motive. And that is to get support for free trade. I think that if they do a better job of protecting those displaced by free trade, then we are going to have a hard time getting political support for it.
Are there countries that have been able to come up with some answers to this problem?
No one has the complete solution. But there are some. Denmark seems to do a good job of retraining people. Finland and Sweden do a good job of helping people when they are out of a job. In the US, some interesting experiments have been tried in states like Massachusetts, but no one has a grand plan. I think we all need to be working on this for the future.
Visa holders earn less than Americans
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A study that fuelled a debate in the US on the merits of H1-B visa has found that Indians working there temporarily get nearly $13,000 a year less than their American counterparts. The December 2005 findings by Center for Immigration Studies (CIS), on whose basis two US Senators wrote to nine Indian companies asking for details of how 20,000 H1-B visas were used, reveal that such visa holders were being paid an average salary of $52,312 as against $65,003 to locals. The findings are part of the report prepared by software industry expert John Miano for CIS, an independent non-profit organisation. The report noted that H1-B is often misused by employers to import cheaper labour - apparently the key argument of US lawmakers Charles Grassley (Republican) and Richard Durbin (Democrat) for restricting the number of such visas. - PTI Download
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