Oh, You Didn't Want to Decrease Inequality That Way?

Judging from the comments, Marketplace listeners do not seem all that receptive to the standard explanation of growing wage inequality, nor to the idea that limits on H1-B visas constitute a subsidy to domestic skilled workers that exacerbates the wage gap. Anyway, that’s what I argued today. Here’s my conclusion:

These days, almost everybody but their beneficiaries think agricultural subsidies are a lousy idea. They benefit a few already relatively wealthy American farmers and agribusiness firms to the detriment of poor farmers around the world. But H-1B visa restrictions are subsidies that benefit relatively rich domestic workers over their poorer foreign peers, and so it turns out many of us liberal-minded college grads are enjoying our own protectionist boost.

In this case, it seems the moral outrage is… well, we seem to be keeping it to ourselves.

And not only are we keeping the moral outrage to ourselves, it is apparently morally outrageous to address inequality by actually addressing the mechanisms that cause it — the relation between the supply and demand of skill — if that involves making some foreigners a lot wealthier.

By the way, I do not endorse the headline, “U.S. should import more skilled workers,” which of course I did not choose. If you dammed up a river, then found you had too little water downstream, and so released a bit of water from the dam, you could think of it as “importing more water.” Or you could think of it, more accurately, as removing the artificial barrier to supply.

Author: Will Wilkinson

Vice President for Research at the Niskanen Center