In the past few decades, the change in norms removed a lot of cushions that were there:
1. There are fewer entry level jobs -- few companies are willing to train people.
The buzz from Jack Welch was to treat team members like pro athlete stars -- pay the alpha performers well and get rid of the beta performers. The problem is that almost all new comers will under perform for a while. Why hire them?
2. There is less loyalty towards an employer.
Again this hurts entry level jobs. The norm used to be that employers used to train people, and the people would stay with the employers for a few years, even if the pay was less. The loss in productivity and the training costs from an employers perspective would more than be made up
by the long term savings. From an employees perspective, skipping from job to job made you appear unreliable and would hurt your job prospects. Then with the dot com boom, everything changed. People used to join a company that offered training and then immediately jump ship to get even a slightly higher pay. Jumping from company to company became the most reliable way to get a pay raise. Most companies saw their investment in training wasted and eliminated or severely reduced training.
3. There is no loyalty towards employees and long term planning is no longer considered.
IT is typically a cost center. The norm today is to look for saving by cutting payroll where ever possible. Strategically employers look for a cheaper alternative, even if the long term risk to the business increases. incentives for managers are based on short term performance, so even star employees are at risk of layoffs. Salaries are often cut, irrespective to the damage to the morale of the workforce, because by the time the effects are seen, the people responsible for the cut would have moved on.
4. The geographical mobility has decreased in the past 30 years.
The drag caused by having ever larger mortgages, and complexities of ensuring both the husband and wife have a job, often prevents people from moving to places where there are new jobs.
With constant layoffs a new fact of life, the risks of moving, particularly to smaller markets and single company towns has risen. In a larger metro like NYC, folks can look for new jobs more easily if they feel their job is at risk, and even go to interviews in their lunch breaks. In a small town, this becomes much harder.
5. The move towards orienting IT personal to a project at all times creates a need for an ability to hire and lay off people at all times. As the projects becomes larger, at times there is a glut and times there is such a shortage that the project is moved offshore.
6. The need to restrict liabilities, reduce fixed costs and deflect responsibility is leading to more outsourcing. (Outsourcing != off shoring.) This in turn leads to a need for a more mobile workforce.
Just pouring money into these issues will not make it go away, and often the cost could be too high. The solutions for these problems -- rethinking at will employment, tort reform, rethinking home ownership as a primary method to build equity, rewarding long term performance over short term performance are complex, difficult to implement, and will require a ton of time, and right now these problems are not even on the public radar. In the mean time business must go on.
H1Bs offer a quick fix to many of these problems by creating a more mobile, more employer dependent workforce. They are a crutch, and do not solve the long term issues, and they do have a downward pressure on wages. But they also buy time for US society and business to get its act together. Whether this time is used properly, I have no idea.