Greenspan: H-1B cap would make US workers 'privileged elite'

Former Federal Reserve chairman Alan Greenspan Thursday offered a spirited defense of the controversial H-1B program, telling a U.S. Senate subcommittee that the visa quota is "far too small to meet the need," and that it protects U.S. workers from global competition, creating a "privileged elite."

Greenspan, testifying on immigration reform before the Subcommittee on Immigration, Border Security and Citizenship, said more skilled immigration was needed "as the economy copes with the forthcoming retirement wave of skilled Baby Boomers."

This hearing was called by subcommittee chairman, U.S. Sen. Chuck Schumer (D-NY), to encourage the U.S. senate to take up immigration, despite the economy. Greenspan was the marquee witness.

Greenspan provided a list of reasons for increasing skilled competition. One in particular, would help fix a problem -- the housing bubble -- that grew on his watch as Fed chair, a position he held from 1987 to 2006.

Skilled workers from overseas "will, out of necessity, move into vacant housing units; the current glut of which is depressing prices of American homes," said Greenspan. In 2005 Greenspan characterized rising housing prices as "froth."

But what will likely be the most controversial aspect of Greenspan argument will be his call for more wage competition.. He said that increasing the numbers of skilled workers from "would address the increasing concentration of income in this country," he said.

"Greatly expanding our quotas for the highly skilled, would lower wage premiums over lesser skilled," said Greenspan. "Skilled shortages in America exist because we are shielding our skilled labor force from world competition,' he said.

Greenspan said Visa quotas, "have been substituted for the wage pricing mechanism. In the process we have created a privilege elite whose incomes are being supported at non-competitively high levels by immigration quotas on skilled professionals," he said. "Eliminating such restrictions would reduce at least some of the income inequality."

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