There has recently been a lot of infighting in conservative circles. It started when Elon Musk defended H-1Bs citing a shortage of talent in the US. And then people attacked him. Then Elon banned all their Twitter accounts.

It's hilarious to watch. But it also brings up an old debate in the tech industry: Why do tech companies love H-1Bs so much? Clearly there are plenty of US workers looking to work for US companies. And yet people are saying there's a shortage of workers? What's that all about?

The overwhelming majority seem to believe it's because you can pay H-1B workers less. And, yeah, I have heard stories about this. I once heard someone say they were told not to tell the Indian workers how much they made.

But I'm not sure if it's the primary reason. Because if you think about it who you hire is perhaps the most important part of a company. And payroll is not the only expense, only like 50%. And how much do people really save hiring cheap foreign labour? Only like 30%. And they might have to pay more on other things like legal, Visas, and compliance.

Also it's actually illegal to pay H-1Bs less than the 'prevailing wage'. It's not a perfect system, one can easily find loopholes. But it just goes to show that the H-1B system was not designed to cut labour costs as many have assumed.

If saving money was the end goal a much better option would to simply hire contractors in countries with low costs of living. Something that has not really happened that much.

So why do companies keep wanting more H-1Bs? Is there a shortage of quality applicants? Of course not. So why do companies keep on saying there is? I've thought about this for quite some time and I think I know why: there is not a shortage of talent, there is a shortage of resources to find that talent.

So if you think about it hiring is very expensive. There's generally 3 stages minimum: an initial phone screen which generally takes up to an hour, a technical assessment which could take up to 2 hours, and then a final in-depth interview that could take an entire work day. That's a lot of time to spend on a single candidate.

How many candidates are you going to check? 10? That's two business weeks of time gone. And how many positions do you have open? 50? Well you've just lost an entire year's worth of time.

Also, side-note, this is why people encourage you to negotiate your salary. The company already spent thousands getting you here, another few thousand is not a significant cost for them.

And this is in the best case scenario. I've heard of applicants going through an insane number of interviews. Enough to burn them out and drop out of the process. Plus there's sometimes a take-home assignment that someone has to review. Interviews are a mess.

So because of this there is a huge incentive to reject candidates early, even before that initial phone screen. This is why when you apply for a job you rarely hear anything except for the 'we got your application' and 'you have been rejected' emails. I'm sure most applicants who apply would be worth at least a phone call. But there are thousands of applicants, there is no way in hell you're hopping on the phone for a 30 minute call with each one.

So what do companies do? They only call the applicants that look particularly promising therefore maximizing the chance that applicant will pass all interview processes. With this process you can go through thousands of resumes picking the one or two which look particularly interesting and call them for an interview.

This system, though, is incredibly inefficient because you're discarding tons of resumes that could have been promising. You're only picking out 'unicorns'. And that means having insanely high requirements. Like 5 years of experience in a language that has only existed for 4 years.

If there are no candidates in particular that stand out it's very hard to choose a candidate. So what's the solution? Bring in more applicants. Bring in the H-1Bs. That's how you maximize the likelihood that you find a unicorn.

So Elon Musk is wrong about H-1Bs. There is not a shortage of qualified applicants, there is an overabundance of qualified applicants. And because of that employers have just kept on nudging their requirements up and up and up until, "Oh, looks like there's no one in the country that is a good fit. Guess we need foreign labour."

And, honestly, I don't think expanding the H-1B program will help at all. If anything it will expand the pool of applicants leading to requirements being even higher leading to, "We need to expand H-1Bs again."

I think if the H-1B program were to vanish tomorrow the US would be just as well off. Because many companies do not rely on foreign labour and they are doing just fine. So what's Tesla's excuse? Or any other company that uses H-1B's?

Some may say that they genuinely need X years of experience or have certain achievements. And maybe they do in certain fields. But if you don't hire someone with X years of experience it's not going to kill you. Years of experience is not highly correlated with actual skills. Like this quote which I'm unable to get a source on:

Do you have 10 years of experience, or do you have 1 year of experience repeated 10 times?

You're going to train new employees anyways, why does it matter how much experience they have? The only one exception to this would probably be fields that you need a degree in like cybersecurity. Then there is a case that there are just not enough people graduating from cybersecurity fields.

Also I guess technically some companies that are at the bleeding edge. Like AI companies. And rocket scientists. German scientists were essential for building NASA through Operation Paperclip. Yes, Operation Paperclip is a real thing. It wasn't made up by Marvel. There might be a case for SpaceX needing H-1Bs. But Tesla? They're losing to Waymo.

The vast majority of companies do not need H-1Bs and I think the reason that big companies keep on complaining about H-1Bs is because these companies have gotten so big and inefficient. When you're a small company perhaps there is a little accountability. The people sorting through applications know what they want. But when a company gets big the team sorting the applications is completely separate from the team that is looking to hire and then you get very perverse incentives.

It's actually a little weird hearing Elon Musk personally defend H-1Bs. I highly doubt he does any hiring. It's probably because his companies' HR team have told him that there's a talent shortage so Musk repeats it. But in reality it's just his HR team sucks.

Maybe not sucks, but they're only looking for unicorn candidates and the more applicants there are the higher the unicorn candidate bar goes. And HR has no incentive to fix the problem because if they did they wouldn't be in HR. Not to say HR is stupid or anything but they are siloed from the team looking to hire, that's like their entire job.

The way HR sees it they're doing just fine. So why innovate? That's risky. Better to keep your head down and not take on any risk. If someone really wants to disrupt hiring they have to do it from outside. And, you know, people have.

There was once a company called TripleByte that helped with hiring by 'prescreening applicants'. The problem with TripleByte, though, was that there was just one quiz that they made you do. It's not a very great barometer for if you would fit a particular company.

Perhaps someone could use AI to finally fix hiring and maybe it could be a billion dollar idea. It would be very difficult but it might work. And who knows? If someone makes it, it might actually fix hiring. And then maybe companies would stop using H-1Bs as an excuse for terrible hiring practices.