High-Skilled Immigrants Fuel Economic Growth

REUTERS/Michael Spooneybarger

Stuart Anderson Executive Director, National Foundation for American Policy
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Since 2009, the U.S. economy has grown slowly, which, one hopes, would inspire elected officials to support policies to improve productivity, labor force growth and entrepreneurship. Despite this, with the exception of Senator Orrin Hatch (R-UT) and his “I-Squared” Act, most members of Congress who have introduced immigration bills have aimed to shut down high-skilled immigration, rather than adopt policies to promote economic growth.

Efforts to restrict high-skilled immigration, which are expected to reemerge in the next Congress, strike at the heart of America’s economic growth engine by slowing the growth of high-skilled labor and limiting those workers most important to improving U.S. productivity. “Economic growth stems from two main sources: putting more people to work or enabling workers to operate more efficiently (i.e., better productivity),” explains The Economist. “With the workforce in many developed economies likely to stagnate or decline in the next two decades as the baby-boomer generation retires, a lot is riding on improvements in productivity.”

Economists Giovanni Peri (UC, Davis), Kevin Shih (UC, Davis) and Chad Sparber (Colgate University) concluded that H-1B visa holders significantly improve U.S. productivity: “The productivity growth and skill biased growth due to growth in foreign STEM [science, technology, engineering, and math] workers may explain between 10 and 25 percent of the aggregate productivity growth and 10 percent of the skill-bias growth that took place in the U.S. during the period 1990-2010.”

Arguments against high-skilled immigration ignore a simple fact – the labor market is global. That is why immigration restrictions, such as the low quotas on H-1B visas and employment-based green cards, are ineffective in “protecting” U.S. workers. Companies unable to hire or retain a talented foreign-born individual in the U.S. can hire and place the individual abroad. This means immigration restrictions most harm startups and small companies without international offices, despite critics’ assertions that such restrictions will most hurt large companies.

Amr Awadallah and Cloudera, the company he cofounded in 2008, illustrate how America gains more from openness than restriction. When Amr left Egypt to study at Stanford he intended to return home to become a professor. Instead, Amr became so immersed in the school’s entrepreneurial culture that he later received an H-1B work visa and started two companies, the second of which, Cloudera, is today valued at $4.1 billion. More than half of America’s startup companies valued at $1 billion or more had at least one immigrant founder.

Cloudera delivers a modern platform for data management and analytics, helping farmers, companies and governments with crops, medical research and counterterrorism. A fast-growing company, Cloudera employs over 1,000 people in the U.S. and until recently had conducted all of its research and development in America. However, the company could not find enough people in the desired specialties in the U.S. and the H-1B visa process is too uncertain and takes too long. As a result, the company felt it had no choice but to establish an office in Budapest, which, due to the European Union’s (EU) rules on labor mobility, allows it to hire anyone within the EU.

To understand why U.S. employers petition for high-skilled foreign nationals, note that 77 percent of the full-time graduate students in electrical engineering and 71 percent in computer science at U.S. universities are international students. An H-1B visa often represents the only practical way to hire high-skilled foreign nationals to work long-term in the United States, which is why it’s so important. Despite concerns from critics, on an annual basis, new H-1B visa holders represent only 0.07 percent of the U.S. labor force and approximately 54 percent earn a master’s degree or higher.

A bill (S. 2394) by Senators Jeff Sessions (R-AL) and Ted Cruz (R-TX) would essentially expel international students from America by eliminating any means for them to stay and work after graduation, and would require them to work 10 years outside the country before returning (two years if a Ph.D. holder). It would be difficult to design a bill more aimed at weakening America’s ability to grow and innovate, although Senators Richard Durbin (D-IL) and Charles Grassley (R-IA) try hard. The Durbin-Grassley bill, S. 2266, similarly aims to prevent high-skilled foreign nationals from working in America, including even those who already work overseas for U.S. multinational companies.

Lagging business investment has slowed U.S. economic growth and preventing companies from hiring key personnel discourages business investment in the United States. With America already experiencing problems in growing its economy, preventing high-skilled foreign nationals from working in the United States would harm economic growth, entrepreneurship and job creation at a time the country can least afford it.

Stuart Anderson served as executive associate commissioner for policy and counselor to the Commissioner of the Immigration and Naturalization Service from August 2001 to January 2003 and is executive director of the National Foundation for American Policy, a nonpartisan research group based in Arlington, Virginia.