Entrepreneurs, Stay Out! The Utter Idiocy of U.S. Immigration Law

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If America wants to solve its innovation problem, solving its immigration problem would be a good start.

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People with creative ideas, intellectual talents and personal ambition drive innovation. From advances in science, mathematics and health care to new technologies, products and companies, America has always relied on individual and collective breakthroughs in human knowledge and production to enhance our lives and our economy. As the nation continues to find ways to improve the educational and life opportunities of its own citizens to help spark innovation, we should not ignore an obvious source of human capital--those from other nations.

If America wants to solve its innovation problem, solving its immigration problem would be a good start.

Immigrants founded 1 in 4 public companies between 1990 and 2005, like Intel, Yahoo, and Google.

Although clichés about smart and eager immigrant children and their "Tiger mothers" abound in popular discourse, it is worth acknowledging that the foreign born and their families are a powerful source of new ideas. Immigrant-led innovation is a core part of our history and our current economic reality. From the farmer and merchant entrepreneurs who first settled here to the multitudes of immigrant small business owners and startup founders today, America always has been a place where skilled and inventive people from around the world come to realize their dreams. What's more, an impressive body of literature indicates that diversity is positively correlated with innovation.

Immigrants who come to the United States to study at our best universities and then go to work at our nation's leading companies contribute directly and immediately to our nation's global economic competitiveness. High-skilled immigrants who have started their own high-tech companies have created hundreds of thousands of new jobs and achieved company sales in the hundreds of billions of dollars.

Where great ideas really come from. A special report

All of us benefit greatly from this surge of human energy and aptitude. Consider the following: immigrants founded 1 in 4 of the publicly traded companies created between 1990 and 2005. Prominent companies founded by immigrants and their families include Intel, Solectron, Sun, eBay, Yahoo, and Google. And foreign nationals in U.S. were inventors or co-inventors of 25 percent of all patents filed in U.S. in 2006.

To be certain, improving our high-skill immigration policies must not be considered a substitute for investing in our homegrown workforce. Improving access to top-flight education for everyone in this country is a national imperative. It is true, as is often pointed out, that two thirds of doctorates from U.S. universities in engineering and computer science are awarded to foreign born students. But it is also true that some 96 percent of all Bachelor's degrees in the sciences and engineering fields go to U.S. citizens or permanent residents. Making it easier financially for these homegrown engineers and scientists to pursue advanced degrees will be the foundation for our continued global leadership and prosperity.

Nor are high skill reforms a substitute for the manifold problems that afflict our immigration system. Broader reforms that bring undocumented workers in to the legal fold and keep families together are crucial to spurring economic growth and protecting American workers. Moreover, immigrants at all skill levels carry the potential for important entrepreneurial and innovative contributions.

THROWING AWAY OUR INVESTMENT IN MINDS

At the same time we must recognize that our university system already attracts the best and brightest minds from around the world and then forces these immigrant students into a difficult choice upon graduation--go home or find an employer to sponsor their entry into what amounts to a lottery that might allow them to stay and work. This makes no sense.

Why subsidize the education and training of foreign-born students--many of whom want to stay in the United States--and then thrust them into an immigration system that prevents us from capitalizing on their collective knowledge and skills? In a globalized economy we cannot expect to fill all of our labor needs with a homegrown workforce alone. In fact, our current educational demographics point to growing shortfalls in some of the skills needed in the modern economy. As global economic integration deepens, the source points for skill sets will spread, such as green engineering in Holland or nanotechnology in Israel, so the breadth of skills needed to drive innovation will expand and global labor pools must become more mobile.

Even with today's abysmal job market there is a need to access this human capital. With national unemployment at 9%, unemployment rates in the technology industry hover far lower at around 4%. Facilitating access to international talent and putting Americans back to work are not mutually exclusive goals. The purpose of harnessing that talent is to fuel economic growth in industries that will create jobs. For example, a 2010 study by the University of Washington's Economic Policy Research Center found that every job at Microsoft supported 5.81 jobs elsewhere in the state's economy.

Arbitrary limitations on our ability to access skill sets from across the globe are clearly self-defeating. Companies will lose out to their competitors making them less profitable, less productive, and less able to grow; or they will move their operations abroad with all the attendant negative economic consequences. And the federal treasury loses tens of billions of dollars in tax revenues by restricting the opportunities for high-skilled foreign workers to remain in the United States and contribute to the national economy. What is needed to fix the related problems of immigration and innovation?

LOOKING FOR THE NEXT EINSTEIN

The overall end goal must be a system that inherently preferences the hiring of U.S. workers but streamlines access to foreign workers with needed skills; welcomes entrepreneurs who can garner financial backing; and treats all workers employed in the United States on a level plane. Reforms that enhance legal immigration channels for high-skilled immigrants and entrepreneurs--such as increases in employment-based green cards and new visas for immigrants with good business plans backed by capital -- must be paired with to ensure that a worker's immigration status cannot be used to manipulate wages and working conditions.

Similarly, our existing enforcement mechanisms are too weak to adequately prevent fraud and gaming of the immigration system. Current regulations tie foreign workers too tightly to a single employer, which empowers employers with disproportionate control over one class of workers. That control enables unscrupulous employers to deliberately pit one group of workers against another to depress wage growth. Even when there is no malicious employer intent or worker mistreatment, the restriction of labor mobility inherently affects the labor market by preventing workers from pursuing income maximizing opportunities.

Innovation requires talented people with good ideas and a solid support network. If we want more innovation that will create more jobs, we need to do a better job of welcoming the world's brightest and most inventive people and ensuring that they have a chance, if desired, to put their skills and ambitions to work in our economy.

As we continue to cultivate the next homegrown Steve Jobs or Bill Gates, we should also keep in mind that the next Albert Einstein, Jonas Salk, Andrew Grove or Sergey Brin could be right under our nose.

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Presented by

Marshall Fitz & John Halpin

Marshall Fitz is Director of Immigration Policy at American Progress, where John Halpin is a Senior Fellow focusing on political theory, communications, and public opinion analysis.

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