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Report

Creating a “Brain Gain” for U.S. Employers: The Role of Immigration

Darrell M. West

Policy Brief #178

One of the strongest narratives in U.S. history has been the contribution made by talented, hard-working and entrepreneurial immigrants whose skills and knowledge created a prosperous new country. Yet today, the nation’s immigration priorities and outmoded visa system discourage skilled immigrants and hobble the technology-intensive employers who would hire them. These policies work against urgent national economic priorities, such as boosting economic vitality, achieving greater competitiveness in the global marketplace and renewing our innovation leadership.

In the long term, the nation needs comprehensive immigration reform. In the short term, policymakers should focus on reforms that are directly related to increasing the “brain gain” for the nation—creating new jobs and producing economic benefits—to produce tangible and achievable improvements in our immigration system.

RECOMMENDATIONS
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  • Rebalance U.S. immigration policies to produce
    a “brain gain,” with changes to visas that will allow employers to access workers with the scientific and technological skills they need to improve economic competitiveness, employment and innovation
  • Tie immigration levels to national economic cycles to meet changing levels of need
  • Use digital technologies to modernize the
    current visa system
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Background

Immigrants are now one-tenth of the overall U.S. population—a situation that defies facile stereotyping. Immigrants have made significant contributions to American science and economic enterprise, most notably in the areas of high-tech and biotech.

  • Immigrants’ productivity raises the U.S. Gross Domestic Product (GDP) by an estimated $37 billion per year
     
  • More than a quarter of U.S. technology and engineering businesses launched between 1995 and 2005 had a foreign-born founder
     
  • In Silicon Valley, more than half of new tech start-up companies were founded by foreignborn owners
     
  • In 2005, companies founded by immigrants produced $52 billion in sales and employed 450,000 workers
     
  • Nearly a quarter of the international patents filed from the United States in 2006 were based on the work of foreign-born individuals (more than half of whom received their highest degree from an American university)
     
  • Economists calculate that, as a result of immigration, 90 percent of native-born Americans with at least a high-school diploma have seen wage gains
     
  • Historically, immigrants have made outsize contributions to American science and technology, with Albert Einstein perhaps the leading example. One-third of all U.S. winners of Nobel prizes in medicine and physiology were born in other countries
    Far from “crowding out” native-born workers and depressing their wages, well-educated, entrepreneurial
    immigrants do much to create and support employment for Americans.

In order to fully reap the benefits of the worldwide talent market, U.S. immigration policy must be reoriented. Current policy is significantly—and negatively—affected by the unintended consequences of the 1965 Immigration and Nationality Act that made family unification its overarching
goal. Although the law may have contributed to the high-tech boom by removing long-standing, country-specific quotas and expanding immigration from places with strong science and engineering education programs, its main effect was to enable immigrants to bring in family members, without regard for the new immigrants’ education, skill status or potential contributions to the economy.

Thus, in 2008, almost two-thirds of new legal permanent residents were family-sponsored and, over the past few years, the educational attainment of new immigrants has declined.

U.S. employers have a large, unmet demand for knowledge workers. They are eager to fill jobs with well-trained foreign workers and foreign graduates of U.S. universities—particularly those with degrees in the sciences, technology, engineering and mathematics—the “STEM” fields that continue
to attract too few U.S.-born students. In 2008, the “Tapping America’s Potential” business coalition reported that the number of U.S. graduates in STEM had been stagnant for five years, and that number would have to nearly double by 2015 to meet demands.

Meanwhile, the United States is falling behind in the pace of innovation and international competitiveness. Evidence for the decline in innovation is the decreasing U.S. share of international patents. In 2009, for the first time in recent years, non-U.S. innovators earned more patents (around 96,000) than did Americans (93,000). Only a decade earlier, U.S. innovators were awarded almost 57 percent of all patents.

To date, Congress—for a variety of reasons, including partisanship—has stalled in addressing the problems of immigration and immigration policy. Unfortunately, this inaction extends to problems
hampering the nation’s economy that, if remedied,
could help the United States grow employment,
pull out of the current recession more quickly and
improve its position in the global economy.

Game-Changing Policy Reforms

Rebalance Fundamental Goals

The goals of U.S. immigration policy should be
rebalanced to give priority to immigrants who have
the education and talent to enhance America’s
economic vitality, by stimulating innovation, job
creation and global competitiveness. At the same
time, it should decrease emphasis on family reunification
(other than parents and children of U.S.
citizens). Changing the composition of the immigration
stream, even without increasing its size,
would result in a “brain gain” for the United States.

Other countries, such as Canada, the United Kingdom
and Australia, strategically craft immigration
policy to attract skilled and unskilled workers,
making the benefits easy to see and strengthening
public support for immigration in the process. Canada,
for example, explicitly targets foreign workers
to fill positions for which there are not enough
skilled Canadians. Applicants for admission to the
country accumulate points based on their field of
study, educational attainment and employment
experience. Upon reaching the requisite number
of points, the applicant is granted a visa. Some 36
percent of all Canadian immigrant visas are in the
“skilled-worker” category, as opposed to only 6.5
percent in the United States.

An interesting by-product of this strategy—which
is both clearly articulated and of obvious benefit to
the national economy—is that Canadians see the
benefits of the policy and, as a result, immigration
is far less controversial than in the United States.
In 2005 polling by The Gallup Organization, only
27 percent of Canadians wanted to decrease immigration,
whereas 52 percent of U.S. citizens did.
And, three times as many Canadians (20 percent)
as Americans (seven percent) actually wanted to
increase it.

An obvious place to begin the rebalancing process
would be with the many foreign students who
come to the United States for education in scientific
and technology fields. They are familiar with
our culture and speak English. Many would like to
stay and build careers here. But, under current
visa rules, most are sent home as soon as they
graduate. A complete policy reversal is needed,
with automatic green cards for foreign graduates
of U.S. science and technology programs.

In fact, the United States should make it as easy
as possible
for these highly trained students to
stay, since the expansion of job opportunities in
India, China and other growth-oriented countries
now offers them attractive options. Our current
counterproductive policy, quite simply, puts
the United States in the position of training our
global competitors.

New York City mayor Michael Bloomberg, in a
December 2009 Meet the Press interview, said
about immigration: “We’re committing what I call
national suicide. Somehow or other, after 9/11 we
went from reaching out and trying to get the best
and the brightest to come here, to trying to keep
them out. In fact, we do the stupidest thing, we
give them educations and then don’t give them
green cards.”

Universities collectively invest huge sums in
the development of these students. In addition,
research suggests that increasing the number of
foreign graduate students would increase U.S. patent
applications by an estimated 4.7 percent and
grants of university patents by 5.3 percent.

Another strategic policy change would be for the federal
government to take U.S. workforce and economic
conditions into account when setting immigration
levels and annual H-1B visa numbers for scientists
and engineers. Such a flexible approach would reflect
labor market needs, protect American workers’
jobs and wages, and dampen public concerns about
employment losses during lean economic times.

Author

Revamp the Antiquated Visa System

Increase the Number of Visas for
Highly-skilled Workers

Today’s visa programs for high-skilled workers
are not large enough to fill the numerical demand
for such employees and are too short in duration.
For example, H-1B visas for workers in “specialty
occupations” are valid for a maximum of six years.
Between fiscal years 2001 and 2004, the federal
government increased the annual allocation of
H-1B visas for scientists and engineers to 195,000.
The rationale was that scientific innovators were
so important for the country’s long-term economic
development that the number set aside for those
specialty professions needed to be high. Since
2004, that number has returned to its former level,
65,000—only a third of the peak, despite rapid
technologic change in almost every field, such as
information, medicine, energy and logistics.

Most of these visas are allocated within a few
months of becoming available. Even in recessionplagued
2009, applications exceeded the supply
of visas within three months. Almost half of the
visa requests came from U.S. employers, most of
them in high-tech industries. Clearly the demand
for visas is greater than the supply, and a minimal
step would be to raise the set-aside for high-skilled
workers to the previous, 195,000 level.

Only a small percentage of aliens with student
visas and aliens with H-1B visas are able to change
directly to legal permanent resident status—about
seven percent of each category, according to a
study published in 2005—although about half
of H-1B visa-holders eventually become legal permanent
residents. Such an uncertain path is not
conducive to career (or employment) planning in
a competitive environment.

Several additional small programs support talented
scientists and entrepreneurs. These, too, could be
aligned with economic goals, expanded or more
effectively promoted:

  • The O-1 “genius” visa program allows the government to authorize visas for people with “extraordinary
    abilities in the arts, science, education, business, and sports.” In 2008, around 45,000 genius visas were granted. The clear intent is to encourage talented people to migrate to America. However, the current program is too diffuse to have much impact on the level of scientific and technological innovation talent in the
    United States.
     
  • The EB-5 visa program offers temporary visas to foreigners who invest at least $500,000 in the nation’s rural or “targeted employment areas” or at least $1,000,000 in other areas. If the investment creates at least ten jobs, the visa automatically becomes a permanent green card. The program is authorized by Congress to offer approximately 10,000 visas per year, but it is significantly underutilized—about 500 EB-5 visas a year were granted between 1992 and 2004. In 2009, 3,688 people did become legal permanent residents under the “employment creation (investors)” category, a number that includes spouses and children.

According to a March 2009 report from the
Department of Homeland Security, the causes of
the persistent underutilization of this program
include “program instability, the changing economic
environment, and more inviting immigrant
investor programs offered by other countries.”
The report makes a number of recommendations
designed to streamline program administration
and encourages greater efforts to promote the
program overseas.

Update the Visa System Infrastructure

Aside from questions about the number of
visas allowed, the infrastructure for considering
and granting visas needs a major upgrade.
Currently, the U.S. visa process requires people
seeking entry to provide paper copies of
sometimes hard-to-obtain documents. Often
these are lost in the system and must be submitted
repeatedly. Obtaining a visa can take
months and, in some cases, years. Implementation
of the USA PATRIOT Act has slowed the
process even further.

The visa system should adopt digital technology
to reduce both errors and delays. Further,
if the nation’s immigration policy moves toward
a more credential-based approach, any new
electronic processes should be designed to
minimize the potential that false documents
regarding an individual’s education and experience
will be accepted.

Tie Immigration Levels to National
Economic Indicators

To ease U.S.-born workers’ understandable worries
about job competition from immigrants,
Congress should tie overall annual levels of
immigration to the unemployment rate and
growth in the Gross Domestic Product. Immigration
levels can be adjusted up or down depending
on the level of economic conditions. These fluctuations
should occur automatically, triggered
by authoritative statistical reports.

Political Hurdles to
Immigration Reform

U.S. news reporting on immigration focuses heavily
on illegality and largely ignores the benefits of
immigration. Sadly, important news organizations
follow the tradition set in the 19th century, when
many journalists railed against groups of newcomers,
such as immigrants from Ireland and China.
Immigration opponents’ unfavorable media narratives,
often widely publicized, have a discernible
impact on public opinion and affect policymaking.
The economic, social, and cultural benefits of immigration
are rarely reported.

The State of Public Opinion

Immigration does not rank high on Americans’ lists
of the country’s most important problems. In 2008,
only four percent of Americans (mostly people
from Southwestern border states concerned about
illegal entry) thought immigration was the country’s
most important problem. Even during 2007’s
acrimonious national debate about comprehensive
reform, 60 percent of Americans believed new
arrivals benefit the country. But public opinion
can shift quickly, which makes politicians wary.
Fifty-seven percent of voters in the November 2010
mid-term election considered immigration a “very
important” issue, ranking it 7th and on a par with
taxes and national security/war on terror, according
to the Rasmussen report.

The Need for Reform Follow-Through

Administration and enforcement of immigration
laws and visa programs are complex, in
part because federal, state and local officials are
involved in various aspects and are overseen by
multiple federal agencies. Aligning the goals of
these different entities to put an emphasis on
the brain gain can help build support for policy
improvements.

As the report of a 2009 Brookings Forum on
Growth Through Innovation pointed out with
regard to promoting innovation more broadly,
“while the actions we need to take are clear and
reasonably simple to outline, our political culture
erects insurmountable barriers to long-term planning,
funding and implementation.”

Achieving an Improved
Immigration Policy

It will be difficult to achieve comprehensive, coherent
policy reform in the face of many competing
goals and interest groups and in the current polarized
political environment. The task is made more
difficult by the divided authority over immigration
matters within Congress, involving several committees
and subcommittees with competing interests
and different political dynamics. Individual members
of Congress tend to focus on local concerns,
forestalling consideration of broad, long-term
national interests.

In the past, elected officials have overreacted to
specific episodes of problems related to immigrants
or anti-immigrant sentiments in developing
policy, rather than taking into account
long-term national economic priorities. Just as
deleterious, stalemate and inaction have prevented
needed reforms, despite a frustrating
status quo for employers who need talented
scientists and engineers, and who could hire
many more Americans if they could fill key slots
with skilled workers they cannot find in their
local workforce.

A spectrum of experts has suggested creation
of a broadly representative, independent federal
immigration commission that could develop specific
policies under parameters set by Congress.
Proposals for such a body have the common
themes of depoliticization, insulating members
from parochial political pressures and relying
on technical experts. Given past missteps and
the current policy stalemate, it makes sense to
consider such proposals seriously, in the hope
that all aspects of immigration—especially those
that affect U.S. economic vitality—receive the
thoughtful attention they need.

Conclusion

The immigration policy reforms in this paper
focus on those that would have swift and direct
positive impact on the nation’s economy. Clearly,
these are not the only reforms the system needs.
A fairer, more comprehensive immigration policy
also would:

  • Develop more effective and cost-effective
    border control strategies
     
  • Strengthen the electronic employment-eligibility
    (“e-verify”) system and add an appeals process
     
  • Improve the immigration courts system and the
    administration of immigration law
     
  • Work harder to integrate immigrants into
    American life and teach them English and
     
  • Create a path to citizenship for illegal immigrants
    with requirements that applicants learn
    English, pay back taxes, and pay fines.

Meanwhile, a number of the needed corrections to
the system as it affects national economic goals,
employment, innovation, and global competitiveness
can be addressed, including:

  • Tying visa and immigration levels to U.S. economic
    indicators, in order to assuage American
    workers’ concerns about threats to employment
    and wage levels
     
  • Creation of an automatic green card for foreign
    graduates of U.S. science, technology, engineering,
    and mathematics educational programs and
    other steps to make staying in the United States
    a desirable option
     
  • Expansion of visa programs (especially H-1B for
    highly skilled workers) and making more effective
    the O-1 and EB-5 visa programs and
     
  • Creating a modern, electronic visa system.
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