Musk Attacks Wages; Tesla’s Struggles Show Why

In 2005 Elon Musk admitted that he had worked in the US as an illegal immigrant who had come into the US on a student visa but never took the courses. He was forced to get legal status by the investors in a company he was founding, who did not want the founder of their company being deported.

Now he spends his time ranting against undocumented immigrants and U.S. border security, spending hundreds of millions on behalf of Trump, accusing the Democrats of “importing voters.”

Instead, what Musk is doing today is importing workers, in order to rush the wages of American workers.

He needs to drive Tesla’s production costs down; this is a bad time for Tesla.

Telsa’s latest release of its quarterly figures shows that its Cybertruck sales are disastrous. Many critics are saying that Tesla should have focused on cheaper vehicles instead of Cybertrucks as originally planned. The vehicles have just undergone their fourth recall over faults.

Overall, China’s share of the global electric vehicle market reached 76% in October, reflecting strong demand for EVs in the country even as Chinese EVs are all but blocked from the US market.

Compounding Musk’s problems, Tesla vehicles have been rated as having the highest fatal crash rate of any car brand in the United States, according to a new car study by iSeeCars. Tesla cars have a fatal crash rate of 5.6 per billion miles driven; the national average is 2.8 per billion.

Tesla’s offshore low-age strategy did not deliver many benefits to the American market, but it did teach Chinese firms like BYD how to build EVs…and now they are slaughtering Telsa. Why a genius like Musk did not see this coming- in fact, he scoffed at the idea, as any good racist would – is beyond imagination.

Tesla shareholders were shaken when they saw recent headlines that the company is experiencing its first annual sales drop in over a decade. Stock dropped despite Musk’s close ties with incoming president Trump and expectations that this would benefit the company.

A problem for Tesla is that most early tech adopters in the U.S. already own electric vehicles, and mainstream buyers are concerned about range, price, and finding charging stations on longer journeys. The company's fourth-quarter deliveries fell short of Wall Street expectations by thousands. Musk’s swing to the right in US politics also upsets his normal buyers, who would be leaning Democratic.

Another upset for potential buyers is his plan to cut trillions of dollars in government funding, which will destroy the incomes of millions of Americans. Musk says we must go through some hardship; when you have billions in the bank, a statement about hardship has a different meaning than when you are struggling month-to-month with mortgage payments.

And in the middle of it all, comes his attack on wages.

Contrary to his claim that he cannot find enough talent within the US, today there is an oversupply of high-quality domestic tech labor in the U.S. as it has experienced major technology layoffs in 2024. More than 130,000 jobs were cut from 457 companies, including Tesla, Amazon, Apple, Intel and Google. In many cases, the workers were terminated because of innovations like AI that replaced their jobs.

Individual employers do not have to be concerned about social fall-out like human distress and failed mortgages, however, because they can count on the government to pick up the pieces. Many of these large companies, like Tesla, do not pay anywhere near enough in taxes to cover the social costs of a CEO’s employment policy.

Musk’s habit is to fire swaths of employees and then re-hire from the H-1B international pool. He runs Tesla as a non-union shop in the United States and is struggling to do so in Germany and Sweden as well.

He hires at the bottom of the H-1B visa pool, not the talented top part. He is after serfs.

The H-1B visa program is the largest U.S. temporary work visa program for higher-skilled workers, with approximately 600,000 visa holders currently in the United States. A bachelor's degree or higher in a related area is the minimum educational level required for a position to qualify for H-1B status. Musk’s Tesla company had a big spike in H-1B workers this year, as he replaced US workers with foreign imported labor - mostly from India. Tesla is the 16^th-highest user of H-1B visas.

Vermont Senator Bernie Sanders weighed in on the H-1B visa controversy, accusing Elon Musk of defending the program because the labor is “cheaper,” not brainier, than the American labor force, as the tech billionaire has argued. Musk said that American workers were “retarded” and that “brainier” workers were needed from abroad.

The fact that they would cost half of what he needs to pay American workers was no doubt irrelevant.

There are already visa programs for geniuses and very exceptional people: the O1 and EB1 visas. Melania Trump got into America on the EB1 “Einstein” visa. Comments welcome. Decades earlier a visa had been issued for another citizen of Germany – Frederick Drumph (aka ‘Trump’) to enter New York. To this day his son Donald claims his family was from Sweden. None of his grandparents, and only one of his parents, was born in the United States or spoke English as their mother tongue.

Back to Musk’s use of the H-1B visa: Some 15,000 Tesla employees were let go in April, 2024. Tesla requested 2,014 H-1B visa holders to replace them. Many employees who were let go were more senior engineers with higher compensation and they have been replaced with junior engineers. There is a cap of 65,000 H-1B visas for the entire US annually, and Tesla alone tried to get over 3% of them.

That the visa issue is a pro-business concern came with a recent supportive comment in the Wall Street Journal: “Trump is right to endorse the value of H-1B visas.”

The H-1B visa gives Musk complete control over an employee. Underpayment is chronic. The employer can force the just-fired U.S. workers to train their H-1B replacements as a condition of receiving severance and unemployment insurance.

An H-1B employee loses their visa if they are fired, and are sent back to their home country. They can be coerced into working 100-hour weeks for below average pay. They have no rights. Musk is bringing third-world labour conditions into America.

No other country uses this serf-making visa system. In Canada and elsewhere, immigrants are given “points” depending on qualifications, and can work for whoever they choose after they enter the country.

Musk is determined to make this change in the American labor market permanent, and vowed to "go to war on this issue the likes of which you cannot possibly comprehend."

He is notoriously hard on employees. He doesn’t like the traditional 40-hour work-week and often pushes Tesla employees to work 60 to 80 hours per week.

In the past many Tesla employees would have worked the extra hours without question, convinced of their company’s mission of replacing gas cars with clear EVs, and of pushing advanced technology into the fore as a citizen aid.

That ambition has faded as Tesla’s innovation program disappears.

A dramatic illustration of Tesla’s failure came very recently in in Santa Monica when high-tech CEO Jesse Lyu, who founded AI-powered hardware company Rabbit, posted an alarming video to X claiming that he had to blow through a red light to “save my life”. Lyu was left “literally shaking” as he was forced to turn off the car’s “autopilot” and run a red light at the nearest intersection to get out of the train’s path. “This is a serious problem, and regardless how a human reacts, the autopilot algorithm should never put any of their vehicles onto the train track. That’s just fundamentally wrong.”

Musk has refused the pleas of his engineers to add a radar capacity to the car’s “smart” autopilot. His autopilot ambitions have fallen behind his Chinese rivals.

In his new book Hell to Pay: How the Suppression of Wages Is Destroying America, Michael Lind stresses that enabling employers to pay low wages is a political choice. We will review this powerful book next week. Low wages are the spoils of a successful war being prosecuted by employers against worker bargaining power.

Low wages contribute not only to poverty but also to declining marriage and birth rates, toxic identity politics, partisan polarization, moral panics, loneliness and social atomization, “deaths of despair” caused by depression and addiction, and more.

The first step in reducing wages was to crush the labor unions. Many workers today are no longer able to survive without public assistance, which Lind reframes as “employer welfare.” Employers need only pay sub-living wages because the government - the taxpayer - offers food stamps, subsidized housing, the Earned Income Tax credit, and other means-tested benefits.

In Lind’s words: “The business model of 21st century American neoliberal capitalism is privatizing the benefits and socializing the costs of cheap labor.”

People trying to rise up in the world find themselves trapped in credentials “arms race” with more graduates than good jobs. It is this last beacon of hope that Musk has just declared war on, by bringing in H-1B visa applicants to push down the middle-class wages as well.

While he is doing that, he and his oligarch buddies are helping Trump remove millions of ‘illegal’ immigrants. Their work keeps profits high in sectors like agriculture.

He has triggered a family feud within MAGA whose loyalists believe Musk's influence within Trump's circle serves his own interests. On X, Laura Loomer singled out Musk and his tech allies like PayPal co-founder Peter Thiel, alleging that the new initiative for government efficiency is just a cover for sending funds to Silicon Valley entrepreneurs.

For the richest man in the world, and an unelected one at that, to actively attempt to crush wage-building in America may be a step too far.

When people start to lose their jobs in the tens of thousands, they tend to take to the streets.

Change becomes rage, fueled by blatant injustice.

When Trump – a populist – finds himself booed in the streets, it may no be too long before Musk’s special table at Mar a Lago disappears and all his policies vanish.

But in his business dealings at (say) Twitter, Musk has never seemed to understand the consequences of his acts. He floats from one government-subsidized triumph to the next, losing track of the fact that the public sector – not himself – is the key to his growth.

Now he is going to kill that golden goose.

It will be interesting reading the apologias of his fans for why he is a genius anyway…

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