Goodbye Chang, So Long Singh
America's real immigration problem will soon be returning emigres.
This country's floundering economy has never needed the world's best and brightest immigrants more—but, unfortunately, these immigrants have never been interested in this country less. So this would be a good time to roll out the red carpet and stand garland in hand on America's shores to usher in new talent. Far from taking away American jobs (as restrictionists argue), this talent creates more jobs by growing the economic pie.
Yet Congress last month decided to thumb its nose at immigrants who can fill top jobs in the high-tech sector. It added to the "stimulus" bill a provision that will effectively put foreign workers off limits to financial companies that receive bailout money through the Toxic Asset Recovery Program (TARP). The provision was sponsored by Sen. Bernie Sanders (I-Vt.) and Sen. Charles Grassley (R-Iowa). Grassley in particular has been acting like he has a new mission from god to chase away foreign high-tech workers who enter the country on temporary visas. These work permits are called H1-B visas and are specifically designed for "workers in short supply."
Besides making it virtually impossible for TARP companies to hire H1-Bs, Grassley has also been sending letters to Microsoft, a non-TARP company, telling it to fire temporary foreign workers ahead of Americans. But like other forms of protectionism, this exercise in nativist labor policy won't "stimulate" America's economy. If anything, it will work to prolong the recession by keeping out precisely the sort of folks who can rejuvenate the economy.
Vivek Wadhwa, a researcher at Duke University, notes that even before the current downturn, a steady stream of highly skilled immigrants from India and China—the major donor countries—had been returning home. In fact, Indian and Chinese companies have been reporting a seven to tenfold increase in job applications from their émigrés in the last five years or so.
According to a recent study that Wadhwa coauthored with Harvard University's Richard Freeman and University of California at Berkeley's AnnaLee Saxenian, most of the people are not leaving because they are having a tough time getting by in the United States. Rather, they are virtually the best of the best with excellent prospects in the United States.
Most of the returning emigres are in their 30s and over half hold advanced degrees in management, technology, or science from excellent schools. That puts them "at the very top of the educational distribution" even for this highly educated cohort. Most stunning of all, 27 percent of the Indians and 34 percent of the Chinese who opted to return home had already obtained green cards or citizenship.
Even a decade or so ago, giving that up to return back to India or China would have seemed pure lunacy. No more.
What's changed? Thanks to economic liberalization, professional opportunities have improved dramatically for these immigrants in their home countries. Over half of the Indian and Chinese polled by Wadhwa said that, relative to cost of living, they were making more money upon returning home compared to what they were earning in the United States.
This means it is no longer necessary for high-tech workers to tear up their roots and make an alien land their home for the sake of economic advancement. They can live the American dream in their own country close to family and friends.
This will have profound implications for America's ability to hang on to its immigrant talent in the coming years. Migration patterns naturally ebb and flow with the business cycle, picking up during a boom and dropping during a recession.
But the problem of reverse brain drain is likely to be particularly acute for America during this downturn given that India's and China's economies are so far on track to outperform the United States'. Despite the global recession, according to the IMF, China is expected to grow 6.7 percent and India 5 percent this year. If this prediction pans out, Indians and Chinese will sprint—not stroll—to the exit doors in coming months.
This would be genuinely unfortunate since people who have willingly uprooted themselves from their homes to travel across oceans and establish themselves on foreign soil are natural risk takers. They are precisely the kind of folks America needs to help jumpstart its sputtering economic engine and create new jobs by starting businesses. It is not a coincidence that one in two companies in Silicon Valley has been founded by immigrants. If America is unable to replenish its crop of immigrants, the next Silicon Valley won't be in California—it'll be in Beijing or Bangalore.
Sens. Sanders and Grassley's crusade against H1-B workers is thus both economically illiterate and outdated. Their stimulus provision, incidentally, was inspired by a single, scurrilous Associated Press story that found that the top 12 banks receiving TARP money had in the six years before the economic downturn filed 20,000 or so H1-B applications—which makes foreign workers anywhere from a whopping 0 percent to 0.74 percent of their total workforce.
Before slamming the door on foreign workers, Sanders and Grassley might have checked to see if there were throngs of crowds still clamoring on the other side. America can no longer count on gifted immigrants automatically flocking to its shore. It will have to compete for them, just like every other country.
Instead of posting "No Entry" signs, Congress should be rolling out the welcome mat. It can begin by scrapping the annual H1-B visa cap. Set at 85,000, this cap is so low that for the last few years it has been getting filled within days after immigration authorities begin accepting applications on April 1, leaving tens of thousands of potential high-tech immigrants in the lurch for the rest of the year.
Beyond that, it should put in place a fast track process that makes these visas available within weeks—not the months and years as is currently the case—of the application. That is what nearly every other industrialized country which is experiencing declining interest by high-tech immigrants is doing.
Otherwise, America, the proud nation of immigrants, might well be the big loser in the global race for talent—hardly something to celebrate.
Shikha Dalmia is a senior analyst at Reason Foundation.