As Washington maneuvers on skilled immigration reform, the United States is losing its near-monopoly on entrepreneurship by forcing its educated Indian and Chinese immigrants to return home.
Everybody knows by now that Steve Jobs was the son of an immigrant, a Syrian grad student who came to the United States in the 1950s. What fewer have noted is that had Jobs’s father tried to set up residence in the United States after grad school in 2011, he might never have received a visa, and Steve Jobs would never have been born.
It’s fitting that the week after the generation’s greatest entrepreneur died, business leaders and academics descended on Washington to make the case for relaxing the policies that are cutting the country’s richest vein of entrepreneurial talent: skilled immigrants. Harvard and Duke University professor Vivek Wadwha, himself an immigrant entrepreneur from India, warned in a Congressional hearing, “The U.S. is giving an unintentional gift to China and India by causing highly educated and skilled workers, frustrated by long waits for visas, to return home.” New York City mayor Mike Bloomberg chose more colorful language. “To put it bluntly,” he said, “this is about the dumbest thing we could possibly do.”
The contributions of foreign-born business leaders to the American economy are difficult to miss. In a 2006 study, Wadhwa found that roughly one in four U.S. tech companies had either a CEO or chief technology officer who had been born somewhere other than the United States. Foreign-born employees were responsible for a 25 percent of patents secured by U.S. companies. In Silicon Valley, immigrants had launched more than half of the companies started in the previous 10 years. Indian immigrants were responsible for more than quarter of those start-ups—followed by newcomers from Britain, China, Taiwan, and Japan. Of the entrepreneurs in the Inc. 5000, more than one-quarter identified themselves as Asian.
Most of those founders came to the Valley as students, and they stayed because the United States offered the greatest abundance of opportunity. “The great majority of U.S.-educated professionals from places like India and China remained in this country to work at research labs, universities, and private companies,” reads a new report from the entrepreneurship-focused Kauffman Foundation, The Grass Is Indeed Greener in India and China. “Most stayed in the U.S. for the rest of their careers because the economic and professional opportunities here were better than in their home countries.”
All that fell apart with astonishing speed. As recently as six years ago, when Wadhwa would ask his foreign-born students whether they planned to stay in the United States, almost all would raise their hands. “Now when I ask the same thing, my students look at me funny, saying ‘Professor, what do you mean?'” Wadhwa says. “It’s like they don’t understand what that concept means anymore. To them, staying in America means staying for two or three years and getting an American company on their résumé so it enhances their market value back home.”
At the heart of the problem is a creaky immigration policy that puts up absurd obstacles to professionals who want to work in the United States. The restrictions are two-fold: Only about 140,000 employment-based permanent residency permits (or “green cards”) are issued each year. No more than 7 percent can go to any single country, so that immigrants from India and China receive the same consideration as those from such places as Iceland or Costa Rica.
An Asian entrepreneur could literally die of old age waiting for a visa. The waiting list for Indian applicants for the EB-3 visa, the most common for skilled workers, is 70 years, according to calculations by the National Foundation for American policy. (A separate visa, called H-1B, allows U.S. employers to bring in workers with specialized talents, but only 65,000 of those are issued every year.) This serves no one’s interest, says Steve Case, founder of AOL and chairman of the Start-Up America Partnership, an administration initiative to foster the growth of new companies. “We attract the world’s most talented young people here, give them a world class education and then send them home to compete against us,” he told Inc.com. “It makes no sense.”
At a time when U.S. unemployment is running at 9.1 percent, and Washington is desperate to encourage the creation of new companies (and jobs), the absurdity of turning away a rich source of entrepreneurial talent is plain. Two weeks ago, Case led a contingent of U.S. corporate leaders to Washington to plead for relaxed residency and immigration rules. There wasn’t much resistance from either party. Republican Congressman Jeff Flake already has proposed a bill that would, in his words, “staple a green card to every diploma”—as long as the diploma was in science, computer technology, engineering, or math. Massachusetts Democrat John Kerry submitted a bill waiving immigration restrictions on business leaders who’ve started a company in another country and plan to do the same in the United States.
So, what’s the problem? The problem is, skilled immigration reform has become entangled with the highly emotional issue of illegal immigration. Congress could theoretically settle the skilled-immigration issue separately, but Democrats don’t want to anger voters. They understand that any law relaxing rules for illegals has no hope of Republican support unless it is yoked to skilled-immigrant reform. The only new policy the Dems want to discuss, then, is “comprehensive” reform.
While Washington maneuvers, the opportunity to keep Asian entrepreneurs in America has all but slipped away. The Kauffman report found that 72 percent of entrepreneurs who had left the United States to return to India said that the opportunities to start their own business were better back home than in the United States. Among Chinese returnees, the figure was 81 percent. That information has filtered down to students at U.S. colleges. Nealy three quarters of Chinese students and 86 percent of Indian students say that the best days for their home countries’ economies lie ahead. Only 7 percent of Chinese and 25 percent of Indian students feel as hopeful about the U.S. economy.
The returning entrepreneurs bring home what may be even more valuable than the education and credentials they earned from Yale or Stanford (although those don’t hurt, either): the entrepreneurial mindset. As recently as the 1990s, says Wadhwa, failure was considered a deep disgrace for Indian and Chinese entrepreneurs and their families. But the Asians have since grown more tolerant and appreciative of their risk-takers, and the last cultural edge that American business owners once enjoyed has eroded. In other words, even if we removed all the artificial obstacles to residency for Asian-born entrepreneurs, the most ambitious would return home anyway.
Thanks to Walter Isaacson’s instant biography, everyone now knows that Steve Jobs lectured Obama on how much easier it was to stat a business in China than in the United States. Presumably, the U.S. will get around to reforming its ridiculous immigration policies sometime after the next election. But it will be too late. The U.S. near-monopoly on entrepreneurship is over. The next entrepreneur to lecture a President may well do it in Mandarin or Hindi.