The United States is letting one of its most valuable resources slip through its borders: highly skilled immigrants. And rather than fighting to hold on to the people who could help turn the economy around, the current trend in immigration policy is rather misguided.
While undocumented immigration has long been a contentious issue in the United States, not enough attention is paid to business immigration. And business immigration could be the key to turning the U.S. economy around.
In recent years, more and more Indian and Chinese students have been coming to the U.S. to pursue higher education. But rather than staying to join the workforce in the U.S., they are then returning home to seek employment. And, following suit, the number of high-tech startups started by immigrants to Silicon Valley from those countries has dropped by 8% over the past seven years. That represents a significant loss of capital and opportunity that is only compounded by the fact that these skilled individuals are taking their ideas overseas.
And the ingenuity that immigrants bring to the nation is undeniable. A study by researcher Vivek Wadhwa, author of The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent, found that 25% of U.S. all patent applications filed in 2006 listed foreign nationals living in the U.S. as inventors or co-inventors. In addition, a quarter of American science and technology companies founded between 1995 and 2005, which employed 450,000 employees, had a foreign-born lead technologist or chief economist.
Another study, Then and Now: America’s New Entrepreneurs, Part VII, co-authored by Vivek Wadhwa, Francis Daniel Siciliano II, and AnnaLee Saxinean concludes that the period of unprecedented expansion of immigrant-led entrepreneurship that characterized the 1980s and 1990s has come to a close. Today, the growth rate of immigrant-founded companies nationwide, at 24.3 percent, has plateaued. In the high-tech hub of Silicon Valley, the proportion of immigrant-founded companies has dropped from 52.4 percent during 1995-2005 to 43.9 percent during 2006-2012.
Immigrant founders of engineering and technology companies have employed roughly 560,000 workers and generated an estimated $63 billion dollars in sales during this time. While the rate of growth of immigrant entrepreneurship has stagnated, these numbers nonetheless underscore the continuing importance of high-skilled immigrants to the maintenance and expansion of the national economy. These findings are interestingly complex, since the two major skilled-immigrant groups — Indian and Chinese — are starting companies at higher rates than they did previously. Historically and today, the United States continues to benefit directly from the contributions of such immigrants. Far from expendable, high-skilled immigrants will remain a critical asset for maintaining U.S. competitiveness in the global economy.
A copy of this paper can be downloaded at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2159875
What is the Solution?
An article by Charles Kenny in Bloomberg Businessweek has a few creative suggestions. First, he proposes the U.S. remove its current caps on H-1B visas. These 85,000 visas, which are released on a first-come, first-served basis at the beginning of April every year, allow American companies to employ foreign workers in specialty occupations, including fields such as engineering and mathematics, without granting them the status of a legal immigrant.
He also finds fault in the EB-5 program, which was instituted in 1990 and gives visas to those who invest at least $500,000 and create 10 jobs. The specifics of the program led to only 3,127 people (just under 23% of all applicants) being approved in the first 10 years of its implementation.
As far as new legislation on immigration goes, Kenny is in support of passing the DREAM Act and the Schumer-Lee Bill, which would grant residency to anyone spending over $500,000 on a house, as well as giving green cards to graduate students in U.S. universities.
All in all, the U.S. needs to do something to fix its current problem with immigration. And the solution is not to keep all immigrants out—it is to strategically let them in. For more information on business immigration law, consult Zulkie Partners LLC.