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U.S. Immigration Policies Are Sabotaging the U.S. Economy

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By Walter A. Ewing, Immigration Policy Center

The U.S. immigration system undermines the U.S. economy in many ways. Two particularly glaring (and interrelated) examples concern foreign students and high-tech workers.

Each year, foreign students graduate from U.S. universities, often with in-demand science and engineering degrees. Yet many are forced to return to their home countries rather than putting their newly acquired knowledge to work here. Likewise, each year many high-tech workers from abroad (some of whom studied in U.S. universities) are forced to return home when their temporary work visas expire, regardless of how valuable their continuing contributions to the U.S. economy might be.

Both of these scenarios are nonsensical. That is why President Obama said in his inaugural address that the nation’s work will not be complete “until bright young students and engineers are enlisted in our workforce rather than expelled from our country.”

A Crucial Segment

Foreign students and their dependents added $21.81 billion to the U.S. economy during the 2011-2012 academic year, according to NAFSA: Association of International Educators. However, this figure doesn’t begin to capture the contributions which many foreign students go on to make as part of the high-skilled U.S. workforce and U.S. business community.

For instance, according to a 2012 report from the Information Technology Industry Council, Partnership for a New American Economy, and U.S. Chamber of Commerce, “every foreign-born student who graduates from a U.S. university with an advanced degree and stays to work in STEM (science, technology, engineering, and mathematics) has been shown to create on average 2.62 jobs for American workers—often because they help lead in innovation, research, and development.” And yet, as President Obama noted in a July 2011 speech, “we have a system right now that allows the best and the brightest to come study in America and then tells them to leave.”

Entrepreneurs in the Making

Regardless of where they went to school, the innovation and entrepreneurship of immigrant scientists and engineers make a substantial economic contribution.

A 2007 study by researchers at Duke University and Harvard University concluded that one-quarter of all engineering and technology-related companies founded in the United States from 1995 to 2005 “had at least one immigrant key founder,” and that these companies “produced $52 billion in sales and employed 450,000 workers in 2005.” Similarly, a 2011 report from the Partnership for a New American Economy concluded that immigrants were founders of 18 percent of all Fortune 500 companies, many of which are high-tech giants. As of 2010, these immigrant-founded companies generated $1.7 trillion in annual revenue and employed 3.6 million workers worldwide. President Obama has noted on many occasions that these companies include Google, Yahoo!, eBay, and other well-known names.

Holding Up Progress

The contributions of immigrant scientists and engineers would be even greater if not for the arbitrary restrictions imposed by the U.S. immigration system. A 2009 study from the Technology Policy Institute found that, in the absence of limitations on green cards and H-1B temporary worker visas between 2003 and 2007, foreign graduates of U.S. universities in STEM fields would have raised the U.S. Gross Domestic Product by about $13.6 billion in 2008, and contributed $2.7 to $3.6 billion in taxes. In other words, numerical caps on immigration which don’t change with economic conditions can exact a high price.

Nevertheless, immigrants are already an integral part of the high-tech workforce in the United States. In STEM occupations, the foreign-born account for 26.1 percent of workers with PhDs and 17.7 percent of those with master’s degrees. According to the Brooking Institution, immigrants are three times more likely to file patents than U.S.-born citizens among people with advanced degrees. Even more U.S. scientists and engineers would be immigrants if not for the arbitrary limits imposed by the U.S. immigration system, particularly the inadequate supply of green cards and H-1B temporary work visas. Given that STEM professionals tend to create jobs through their innovative work, such limits are economically self-defeating.

For the sake of the U.S. economy’s recovery and long-term competitiveness, lawmakers should couple new policies to improve STEM training throughout the U.S. educational system with revisions to the antiquated rules that currently govern how many and which scientists and engineers from abroad are allowed to work in the United States. Reform initiatives that address the imbalance between the demands of the U.S. economy and the archaic constraints of the U.S. immigration system are an important component of overhauling the immigration system and supporting economic recovery.

In a May 2011 speech in El Paso, President Obama noted that “instead of training entrepreneurs to stay here, we train them to create jobs for our competition. That makes no sense. In a global marketplace, we need all the talent we can attract, all the talent we can get to stay here to start businesses.” Let us hope that he puts some muscle behind those words in the years to come.

Walter Ewing, Ph.D., is the Senior Researcher at the Immigration Policy Center. He has authored or co-authored numerous reports, fact sheets, and opinion pieces for the IPC and has published articles in the Georgetown Journal of Law and Public Policy, Stanford Law and Policy Review, and Immigration Law Today. Before joining the IPC, he was an Immigration Policy Analyst at the U.S. Conference of Catholic Bishops and Program Director of the National Citizenship Network at Immigration and Refugee Services of America. Mr. Ewing received his Ph.D. in Anthropology from the City University of New York (CUNY) Graduate School in 1997 and his B.A. in Sociology and Anthropology from the University of Maryland, College Park, in 1987.