Research shows that immigrant-founded companies generate billions in revenue and employ hundreds of thousands of Americans, so why do so many people want to seal our borders?
My colleague Paul McDougall's recent column on the Occupy Wall Street movement and its potential to make U.S. companies fidgety about their IT offshoring strategies drew a fair bit of reader commentary. McDougall's premise, expanding on comments in the Indian press by HCL Technologies CEO Vineet Nayar, was that the OWS protests could pressure U.S.-based companies to keep IT and other jobs in this country or face a backlash from American citizens increasingly worried about their employment prospects.
The eight commenters came to pretty much the same conclusion: If we keep foreigners out of the U.S., employment will rise and the economy will rebound. One of the more articulate commenters, someone whose "job was outsourced to a foreign company doing business in the US," put things this way:
"We need to put Americans back to work by sending all of these foreign nationals home. Hire Americans first. If a company wants to outsource, require that American citizens and permanent residents are used by the vendor. This would help the economy some. I truly hope that OWS threatens outsourcing to foreign companies and foreign workers."
Another commenter insisted that H-1B and other work visas "be immediately suspended. MILLIONS of our better paying jobs would be instantly RETURNED, to Americans, in America."
While I understand the deep frustrations and fear that accompany 9%-plus national unemployment, I'm not buying this line of reasoning. A body of evidence shows that encouraging highly educated technology and other professionals to come to the U.S., or to stay here after graduating from U.S. universities with engineering or other technical degrees, actually increases employment and economic growth because those go-getters are more likely than the average professional to start and build businesses.
A research team led by Vivek Wadhwa of Duke University, building on studies conducted in the 1990s by AnnaLee Saxenian of the University of California at Berkeley, determined that in a quarter of the U.S. science and tech companies founded between 1995 and 2005, the chief executive or lead technologist was foreign-born. Wadhwa's research estimates that those immigrant-founded companies generated $52 billion in revenue and employed 450,000 people in 2005. In Silicon Valley, the percentage of immigrant-founded startups was even higher: 52% in 2005. Looking over the rich history of the U.S. high-tech industry, consider the economic contributions of companies such as Intel, Oracle, Google, and eBay--all of them with immigrant founders.
Furthermore, Wadhwa's research found that foreign nationals living in this country were listed as inventors or co-inventors in 25.6% of patent applications filed from the U.S. in 2006, up from 7.6% in 1998. Foreign nationals also contributed to most of the patent applications at Qualcomm, Merck, GE, and Cisco at that time, his team found.
More recently, a 2011 report from the Partnership for a New American Economy finds that more than 40% of the current Fortune 500 companies were founded by immigrants or their children. The revenue generated by those companies "is greater than the GDP of every country in the world outside the U.S., except China and Japan," the report states.
In a speech in Washington in late September, New York Mayor Michael Bloomberg, who made his billions developing systems for financial traders, called on Congress to eliminate the cap on H-1B visas, increase the number of green cards for technical pros, and give foreign students with PhDs in science and tech fields permanent resident status. "Turning these students out of the country is, to put it bluntly, about the dumbest thing we could possibly do," Bloomberg said.
Clearly, foreign nationals aren't just "taking" U.S. jobs; they and their offspring are producing more than their fair share of innovations and economic opportunity, much of it on these shores.
Critics of this line of reasoning will point to the abuses: mainly, the H-1B and other visa holders brought in to do mid-level engineering and other work that could be done by U.S. nationals. But the answer is for government visa issuers to crack down on the abusers, not to end the visa program and shut down immigration of high-skill workers.
What about those U.S. companies moving IT and other jobs offshore by the boatload while accepting U.S. government bailout funds? In this regard, if the Occupy Wall Street climate prompts U.S. businesses and consumers to skew their buying toward companies dedicated to keeping jobs in this country, that's their prerogative. But let individual buyers decide whether to apply that pressure. Don't cede that decision to government bureaucrats.
Join us for a roundup of the top stories on InformationWeek.com for the week of December 14, 2014. Be here for the show and for the incredible Friday Afternoon Conversation that runs beside the program.