The Immigrant Sheetrocker Effect

The street-level consequence of a 12.5% foreign-labor incursion into an unsophisticated labor market causes a 23.4% income loss for natives.
 
Hanging sheetrock (drywall) appears to be a job that anybody could do, until you actually try it.  The weight of 5/8 inch sheetrock is 2.3 lbs per square foot, or 110.4 lbs per 12 fo0t sheet.  Done properly, the ceiling is first, most rooms require full sheets, each sheet is balanced on your head while you and your partner struggle to get a few nails (requires both hands) into the sheet.  You can nail the sheet if the measurements are correct and the sheet did not get damaged in the process, in which case you start with a new sheet.  Many homeowners will try to save money doing their own sheetrock, but when they find out how proficient professional sheetrock crews are, and how little money they saved trying to do it themselves, most people never want to hang a piece of sheetrock again.

Sheetrock installers are very proficient and  there are hundreds of tricks of the trade.  “Rocking” is almost never an hourly job because the work is so strenuous, your arms are above you head much of the time, which is seriously painful until you get used to it.  Sheet-rockers take jobs on a per-foot basis to stay motivated and profit from their proficiency. There is generally a set minimum per foot price that is upheld throughout the regional market to ensure that this proficiency does not become a liability to himself and his vocation. 

There is an economic equilibrium that most construction markets will fall into, a certain amount of builders will require a certain amount of completions per year, roughly the same number of homeowners will do additions;  therefore, the demand for sheetrock hanging stays relatively static, unless the supply of sheet-rockers increases.  An increase in labor supply can be a hardship, but if the market rate is upheld, everyone adjusts their lifestyle accordingly and there is no hard feelings – it’s just a fact of life.

A problem occurs when there is an incursion of foreign-labor, generally illegal labor and therefore indentured, generally having complete disregard for the per-foot minimum status quo. Having no ties to the community, their only interest is improving life for themselves, bringing in more relatives to the US and “buying” into the market with lower per-foot prices.

Increasing H-1B cap reduces wages?

The National Science Foundation (NSF) has published a document entitled, "Science and Engineering Indicators 2008."

One very interesting NSF point for FY 2006 was for H-1B visa holders in Computer-related and Writers occupations. In both occupations, Bachelor’s degreed H-1B workers earned an average of $400.00 more per year than those with a Master’s degree.

2006 Computer-related occupations H-1B Average Salaries:
Bachelor’s Degree = $56,000.00
Master’s Degree = $55,600.00

2006 Writers occupation H-1B Average Salaries:
Bachelor’s Degree = $37,900.00
Master’s Degree = $37,500.00

http://www.nsf.gov/statistics/seind08/c3/tt03-29.htm

The NSF document also states:

"In 2006, 44% of those receiving new H-1B visas in computer-related occupations had master's degrees, and a little more than 1% had doctoral degrees."

"In 2006, 51% of new H-1B recipients were in computer-related occupations, including 48% in the United States Citizenship and Immigration Services occupational category of "occupations in systems analysis and programming," which includes many S&E occupations, such as computer scientist, and technician occupations, such as programmer. "

"Over two-thirds of the slightly more than 110,000 recipients of H-1B visas in 2006 are in S&T [Science & Technology] occupations."

"Total 2006 new H-1B visas approved: 113,593."

Checking these NSF statements, the computer-related H-1Bs would total 57,932 in computer-related occupations. Forty-four percent, those with Master’s degrees, equals 25,490 H-1Bs. Subtracting 1% for Doctoral degrees, the remainder would be 55%, or 31,862 computer-related H-1Bs with bachelor's degrees.

The number of H-1Bs granted to computer-related Bachelor’s and Master’s holders were significant samples and comparative in number 31,862 to 25,490 respectively.
What happened in FY 2006, that drove salaries down for Master's degree holders in Computer-related & Writers occupations?

Of interest is the fact that FY 2006 was the first year of the 20,000 visa, U.S. postgraduate degree exemption to the H-1B program.

". 20,000 cap exemption for U.S. masters and higher. Up to 20,000 aliens with masters or higher-level degrees from U.S. institutions of higher education will be exempt from the H-1B cap each year. Petitions for such individuals that are filed after the 20,000 exemptions are granted will be counted against the cap. Note: this does not impact the general exemption from the cap for individuals employed by institutions of higher education; that exemption remains. Effective date: March 8, 2005. [Sec. 425]. [Note: No further details of how this will be implemented have been announced.]" http://www.oiss.yale.edu/visa/h1refact.htm

Recapping, the 20,000 visa H-1B exemption for postgraduates of American institutions of higher learning became effective less than 30 days prior to the H-1B FY2006 application date of 4/1/2005.

Subsequently, in the largest group of subscribers to the H-1B program, the value of a Master's degree appears to have become less valuable than a Bachelor's degree in computer-related occupations. (Sorry, the NSF did not supply additional data for Writing occupations.)

Source:
National Science Foundation: "Science and Engineering Indicators 2008"
Chapter 2. Section: Higher Education in Science and Engineering
http://www.nsf.gov/statistics/seind08/c2/c2s4.htm

Chapter 3. Section: Global S&E Labor Force and the United States
http://www.nsf.gov/statistics/seind08/c3/c3s4.htm