IT Tycoons Take on Trump

Published on February 22nd, 2017

Silicon Valley is angry at President Donald Trump. First, after putting piles of cash at the feet of Hillary Clinton, tech executives suffered a doomed love affair with their defeated candidate. Tech workers and other residents in the Bay Area contributed about $31 million to Clinton’s campaign, in part because they counted on her to push for more H-1B visas that they rely on to the detriment of American engineers. That’s what I call a low return on investment!

Trump and tech, mutually distrustful.

No sooner had Trump been inaugurated than Silicon Valley ramped up its hostility against the president. Based largely on Trump’s executive order, which has since been temporarily blocked, to limit immigration from seven Middle Eastern nations, executives feared that further restrictions could hamper their efforts to import cheap labor.

On his Facebook account, Netflix’s chief executive Reed Hastings wrote that Mr. Trump’s actions “are so un-American it pains us all,” and that “it is time to link arms together to protect American values of freedom and opportunity.”

For Reed to call Trump’s pro-U.S. worker immigration reduction objectives “un-American” takes gall. Since Congress approved the H-1B visa in the early 1990s, Silicon Valley and U.S. employers have used it to displace tens of thousands of American engineers. During the Obama administration, the displacement became blatant at Disney, Caterpillar and Southern California Edison, among dozens of others.

Although Trump is never short of words, and doesn’t need to rely on outside reports to defend his policies, one recently published analysis is available to him when he challenges the tech tycoons. Economists John Bound and Nicolas Morales of the University of Michigan and Gaurav Khanna from U.C. San Diego studied the tech industry during its Internet boom years, 1994 to 2001. The scholars found that in 2001, the number of employed U.S. computer scientists was between 6.1 and 10.8 percent fewer than in prior years, and wages between 2.6 percent and 5.1 percent lower. The winners were consumers who benefited from lower cost goods, and employers whose profits increased.

The report’s authors acknowledge that their study, titled “Understanding the Economic Impact of the H-1B in the U.S. Economy,” hasn’t been peer-reviewed, and I’ll add that the time period under consideration is quite long ago. Nevertheless, their report’s findings are consistent with dozens of other nonpartisan studies which arrived at the same conclusion: the H-1B provides cheaper labor to employers, displaces Americans and contributes to higher corporate profits.

Read a small sampling of articles that support this in the Economic Policy Institute, International Business Times, The Wall Street Journal and Science.

Go to the CAPS Action Alert page here to tell President Trump that you support lower legal immigration levels, including a reduction in employment-based visas like the H-1B.

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