industry is full of crap when they claim there is a people shortage, what they really mean is there is a shortage of industry willing to train people inhouse.
Exactly! There is only a shortage of skilled labor if nobody is willing to train, which is exactly the situation we now have.
There was a time when you could reasonably expect that if you talked to enough people and were smart and willing you could get a job that you weren't fully competent for and pick up the remaining skills in trial by fire, but when the average length of employment fell employers learned that nobody stays around long enough for them to recover the costs of training. Over time, this, unsurprisingly, led to a shortage of properly trained specialists.
The problem, though, and where things went off the rails, is that instead of businesses being essentially forced to train people if they wanted competent employees, businesses found an alternative. Through a combination of reduced cost of travel and research and intense lobbying of the US government, they found an alternative labor supply, rich in talent and skills, who were not just willing but eager to work for below equilibrium wages. It's a big, desperately poor world beyond these shores, fertile ground for exploiting and cherry-picking the creme of less wealthy nations.
The only reason this has been largely confined to engineering and other high skilled positions, rather then basically taking over every job in the country, is that they haven't yet managed to convince government to allow enough people in and the current small numbers and low public exposure gives businesses and their government allies a degree of political cover.
At its heart, this is simply a story of supply and demand. Before H1-B visas, businesses had a certain supply of workers with the right skills. Workers were mostly trained by their employers for the skills they would need, leaving college for learning broad concepts. However, over the last several decades college has gradually shifted focus from providing a general education to a specialized education, basically shifting a great deal of the burden of training from business to the individual. Further, each business had an incentive to skimp on training and headhunt already trained people, but when too many did so the pool of qualified people would shrink with attrition. If the pool of trained people got too small those businesses either had to pay higher wages (meet the supply curve at its new intersection) or suck it up and train more people (driving the supply curve back down).
With H1-B they have discovered a third option that moves the curve down for far less cost. The problem is that while the previous system was self-correcting, the H1-B system is unbalanced, finding equilibrium only at the the rock bottom (world-wide least common denominator) or at some artificial floor. Desperate foreign workers are brought in, satisfying the demand for labor, but driving down the wages of everyone due to the new labor pool being less demanding on average then the old one (their expectations for standards of living are significantly lower then the current pool). Attrition still takes its toll, and since training is kept at a minimum, this leads to a new shortage, leading to more pressure to allow additional influxes of workers, leading to even greater wage falls, a lower percentage of non-passive labor, and so forth until you reach a limit on how much labor you can import, hit a minimum wage, or the entire labor pool is as desperate as the average foreigner.
An example of this effect in action is how few native born workers are employed by the modern seasonal crop harvesting industry compared to times when travel was more expensive. When a huge flow of low cost labor was allowed to flood this market, it drive down prices and forced out all who weren't willing to work for the new prevailing wage.
As an aside, it is not, and has never been the case, that there are jobs American's will not do. Virtually no matter the discomfort, risk, or social stigma, if there is enough profit, someone will do it. There are only jobs Americans will not do for the prevailing wage. This is important as the two statements are vastly different.
If the seasonal crop harvesting industry were purged of its current low cost labor supply, in the short run marginal operations would fail due to increased costs, some segments of the labor supply would be replaced by labor-saving technology, and the workers who were left would earn a higher wage. In the long run the wage would be higher, the output either the same or lower, and the product more expensive, but the agricultural industry would not evaporate. It existed before cheap labor, and it would exist after cheap labor.
It's the same story with H1-B. The inclusion of this alternative labor pool distorts the supply curve leading to lower wages and shifts in the balance of power between employees and employers. Talking about foreign workers making a prevailing wage is misleading if not outright disingenuous as by entering the labor market they change the prevailing wage, without even mentioning the additional coercive power their employers have over them due to their precarious legal status.
I'm all for co-opting the best and brightest of Earth and making them Americans, thus increasing the competitive advantage of the nation, but not when it comes at the expense of the native population. Long term, it's short-sighted, counterproductive, and unsustainable in a democracy to import skill at the expense of developing it domestically.
