Fellow, Arthur & Toni Rembe Rock Center for Corporate Governance at Stanford University
Recently, President Obama made a startling concession to the
Republican Party: that he would accept a piecemeal approach to
overhauling America’s immigration system. "If they want to chop that
thing up into five pieces, as long as all five pieces get done, I don't
care what it looks like", Mr. Obama said.
This is startling
because, for the past few years,
Democratic Party leaders have insisted
on an all-or-nothing approach to immigration. They would not agree to
increase the numbers of visas for skilled workers unless the Republicans
agreed to legalize the more than 10 million immigrants who are in the
country without documentation. The Republicans refused to provide
“amnesty” to the unskilled, so the Democrats let the skilled immigrants —
and U.S. competitiveness — suffer. This is no different from the
juvenile behavior you see in other democracies.
The President
realizes the political reality and is trying to get whatever he can
through the system. But it is unlikely that he will have any success on
immigration, because House leaders are still reeling from their loss on
the fiscal shutdown and will not hand the President any kind of
political victory.
This is bad for the U.S. but is good news for
countries such as India, China, and Brazil. That’s because the U.S. has
been giving these countries an
unintended gift:
highly educated and skilled workers with experience in U.S. markets. It
has been sending would-be immigrants back home, exporting its
competitive edge.
Immigrants have always given America its
economic advantage. Skilled immigrants made it into a technology
superpower. Wave after wave came to America’s shores and brought with
them their education, knowledge of global markets, and determination to
achieve success. They made the natives think smarter and work harder and
contributed to practically all of its technology breakthroughs.
Over
the past three decades, immigrants have been fuelling the majority of
Silicon Valley’s innovation and growth. My research team at Duke,
Harvard, and UC-Berkeley documented that from 1995 to 2005, immigrants
founded 52% of Silicon Valley startups, and 25% of startups nationwide (
read this research paper).
They contributed to 72% of the WIPO patents filed by Qualcomm, 65% of
those by Merck, 64% of General Electric, and 60% of Cisco Systems.
Incredibly, 40% of the international patent applications filed by the
U.S. Government also had foreign-national authors (
more data here).
Indians
thrive in Silicon Valley. They have founded 33.2% of its
immigrant-founded startups—more than immigrants from any other ten
countries combined have, including China, the U.K., Canada, Germany,
Israel, and Russia. Indians also co-author 13.7% of America’s global
patents.
Despite this amazing contribution, the U.S. is allowing
itself to bleed competitiveness. It admits hundreds of thousands of
students and workers on H1-B visas, but it doesn’t provide enough
permanent-resident visas to let these skilled foreigners make the U.S.
their new home. The result is that there are more than a million skilled
immigrants and their families stuck in “immigration limbo”. The U.S.
only issues about 140,000 permanent-resident visas to educated and
skilled workers per year, and there is a 7% per-country limit. This
means that applicants from high-population countries such as India,
China, and Brazil get the same numbers of visas as those from Bhutan and
Mauritius do: about 10,000. It takes decades for people from these
countries to become permanent residents. While they wait, they are
generally stuck in the same position with the same employer.
I explained the reverse brain drain that is in progress and the consequences of this in my book
The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent.
In a nutshell, because of improving opportunities in countries such
India, China, and Brazil — and out of frustration with the delay in visa
processing — the tide has turned. Skilled workers are returning home in
record numbers. In research that my group at Stanford completed
recently,
we found that
the proportion of companies founded in Silicon Valley from 2006 to 2012
that had been founded by immigrants had fallen to 44%. This was not
because immigrants had become less entrepreneurial, but because they
could not get the visas necessary for starting companies.
America’s
loss has been a huge gain for other countries. If you visit any top
Chinese research lab, you will find returnees from the U.S. at their
helm. The tech centers of both India and China are growing rapidly with
the infusion of Silicon Valley-trained talent. These returnees are
bringing America’s best practices and entrepreneurial culture back home
with them.
American leaders are well aware of the damage that the
brain drain is doing to U.S. competitiveness. The President has cited my
research in his speeches, and I have been asked to testify to both the
House and Senate. The problem is that in addition to the issue of
amnesty, there is also a xenophobic element in the U.S. that wants to
keep foreigners out. And there are technology workers prevented from
getting jobs by their location, age, or skills. They are all rallying
against immigrants and complicating the factional battles in Congress.
This is creating the stalemate.
So America’s loss is the world’s gain.
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