High-Skilled Immigration and the U.S. Economy

The story of America, in large part, is a story of immigrant entrepreneurs building communities, businesses and entire new industries here. That story, however, has been twisted in recent years into one of immigrants as “job takers” who wrest opportunities away from native-born workers.

A closer look shows that story to be fiction, particularly when it comes to science, technology, engineering and mathematics (STEM) workers.

Foreign-Born Workers an Engine of Economic Growth

According to Forbes, from 2000 to 2007, every 100 additional foreign-born STEM workers created 262 employment positions for native U.S. workers. Over the last 15 years, Indian and Chinese entrepreneurs alone founded around 30% of Silicon Valley technology companies and created 72,000 jobs in the process. Forty-percent of U.S. Fortune 500 companies were started by immigrants or their kids, including Google (by Soviet immigrant Sergey Brin) and Yahoo (co-founder Jerry Yang came to the U.S. from Taiwan as a boy).

New workers do more than create jobs. They also affect demand. As The Economic Policy Institute points out, immigrant workers create more jobs by consuming goods and services. “An economy with more people does not mean lower wages and higher unemployment, it is simply a bigger economy,” writes Heidi Shierholz for EPI.

Focus on H1B Visas

Inflamed rhetoric and partisan Washington deadlock make it difficult for comprehensive immigration reform to get done.

Reuters reports that President Obama wants “to staple a green card to the degrees of graduate students instead of forcing potential innovators and job creators to leave after being trained at our universities.”

Critics maintain that such a policy would hurt U.S. workers.

Obama’s reference was to H-1B visas, which are granted to degree-educated, foreign-born workers. The U.S. currently issues only 85,000 H-1B visas per year, with 20,000 of those reserved for workers with advanced degrees. The visas, awarded through a lottery system, are usually exhausted within a few days.

Business leaders want to raise the cap to as many as 180,000 per year, says the Boston Globe, an initiative that was part of a comprehensive immigration bill that passed the Senate last year but was never taken up by the House.

In May, new rules for highly skilled immigrants—including employment eligibility for the spouses of H-1B visa holder and more flexibility for employers to document that immigrant researchers and professors are among the best in their field—were proposed.

But these changes would do little to reform a US employment-based immigration system that hasn’t been significantly upgraded since 1990 and hasn’t been overhauled since 1965.

The Immigration Act of 1990 raised the cap on employment-based immigrants from 56,000 to 140,000 and created five employment-based immigration preferences, changes that The American Immigration Council (AIC) said in its 2011 report Rebooting the American Dream: The Role of Immigration in a 21st Century Economy were “set years ago by Congress, without regard to real labor-market needs” and “have not been updated to conform to evolving economic realities.”

Instead, piecemeal fixes such as those proposed in May “have turned current law into a web of outmoded, contradictory and inefficient quotas, rules and regulations.”

Considering that approximately 28 percent of new businesses in the United States are started by immigrants, failure to enact meaningful immigration reform is a loss for foreign and native-born workers alike.

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