Commentary: How U.S. Immigration Policy Hurts the U.S. Economy

By Peter J. Landis

A growing number of recent studies document what I have long suspected; rather than protecting U.S. workers, increasing restrictions on the legal immigration of foreign workers actually undermines the U.S. economy by hindering efforts to spur technological innovation and impairing America’s ability to compete in the global marketplace. Studies by the Harvard Business School, the National Foundation for American Policy, Peterson Institute of International Economics and the National Science Board demonstrate that highly skilled foreign workers actually create new employment opportunities for U.S. workers. A March 2009 Kaufman Foundation Study, on the other hand, shows that in recent years increasing numbers of highly skilled foreign workers in the U.S., often discouraged by the protracted process and long delays in obtaining lawful permanent resident status here, have been choosing to return to their home countries; an indication the U.S. is losing the world’s best and brightest to countries that compete with us in the global marketplace. When combined with clear and unambiguous census trends showing the aging of the U.S. population and a projected shortage of workers to replace the baby boomers who are beginning to retire, it is evident that our increasingly restrictive immigration policies seriously jeopardize our economy and put the U.S. at a significant competitive disadvantage.

As noted in the Kaufman Foundation Study, while some people have tried to associate an increase in foreign workers with problems that have plagued our economy, the data verifies the opposite effect. Immigrants have provided the U.S. with an enormous competitive advantage. Between 1990 and 2007, the proportion of immigrants in the U.S. labor force increased from 9.3 percent to 15.7 percent. A significant proportion of these immigrants brought high levels of education and technical skill to the U.S. These immigrants have contributed enormously to the engine that has driven the U.S. economy – the high tech sector – co-founding firms such as Google, Intel, eBay and Yahoo to name a few. In 2006, immigrant-founded U.S. companies employed 450,000 workers and generated $52 billion in revenue. In addition, immigrant inventors contributed to more than a quarter of U.S. global patent applications.

A December 2008 Harvard Business School study shows immigrants comprise nearly half of all of the scientists and engineers in the U.S. who have doctorate degrees and accounted for 67% of the U.S. science and engineering workforce between 1995 and 2006. According to the National Science Foundation more than 58% of graduate students in computer sciences in the U.S. are foreign nationals, as are more than 68% of students in graduate electrical engineering programs. Further, a study released in March 2008 by the National Foundation for American Policy (NFAP), H-1B Visas and Job Creation, further bolsters the connection between highly skilled foreign workers and the expansion of U.S. jobs. The NFAP found that among technology companies in the Standard and Poor’s (S&P) 500, there is a positive and statistically significant association between the number of H-1B temporary “specialty” workers requested by employers and the creation of new job opportunities. According to the NFAP “for every H-1B position requested, U.S. technology companies increase their employment by 5 workers” on average.

As New York Times Op-ed columnist Thomas L. Friedman commented in a column on February 10, 2009: “In an age when attracting the first round intellectual draft choices from around the world is the most important competitive advantage a knowledge economy can have, why would we add barriers against such brainpower-anywhere.” Indeed, in an earlier column written after attending a graduation ceremony at Rensselaer Polytechnic Institute, Mr. Friedman rhetorically asked why U.S. Department of Homeland Security officials were not present handing out green cards along with diplomas, as so many of the graduates were foreign nationals. One would think we would eagerly welcome these graduates with open arms. Instead, as noted in a recent May 2009 U.S.A. Today editorial, “our government tells thousands of them to hit the road – and take their sought-after skills and brainpower to countries and companies that compete with the USA. Talk about a self defeating immigration policy.”

Indeed, our outdated visa quota system makes the attainment of lawful status virtually unattainable. The waiting lines for employment-based immigrant visas are absurd. A graduate of MIT with a master’s degree in electrical engineering born in India or China, for instance, must wait 10 years to obtain a green card even after the Department of Labor has certified there are no U.S. workers available to perform an offered position. At this time, no immigrant visas are available in the employment-based three (EB-3) preference category for persons with bachelor’s degrees, even in science, technology, engineering or mathematics. Even when additional visas become available at the start of the next fiscal year on October 1, 2009, the Department of State currently estimates the worldwide EB-3 cut-off date will be March 1, 2003.

As Federal Reserve Chairman Ben Bernake recently testified before a congressional panel, “Our immigration laws discriminate pretty heavily against talented scientists and engineers who want to come to this country and be part of our technological establishment. By opening doors to more people with top technological skills, you’d keep companies here, and you’d have more innovation here, and you’d have more growth here.” Indeed, when companies cannot hire the talent they need here, they go elsewhere. A case in point, in 2007 Microsoft expanded from its home in Redmond, Washington into Vancouver, and did its hiring in Canada, in large part because it could not hire the workers it needed here. Now, if the cost of skilled labor in China and India is a fraction of what it is in the U.S. and our government will not allow American companies to employ highly skilled foreign workers here (even when they must pay the foreign workers wages that will not adversely affect the wages of similarly employed U.S. workers), it does not take a rocket scientist to figure out why U.S. jobs are going abroad.