“The period of unprecedented expansion of immigrant-led entrepreneurship that characterized the 1980s and 1990s has come to a close,” writes an ominous new Kauffman Foundation report from Stanford researcher and Washington Post columnist, Vivek Wadhwa.
He and his team of researchers are finding that, despite being the source of venerable American businesses, from Carnegie to Google, immigrants no longer see the United States as the only land of dreams, driven in large part by Congress’s inability to enact high-skill friendly immigration reform. In the words of immigrant and President of Xerox’s Innovation Group Sophie Vandebroek, with whom Wadhwa spoke for his new book, Immigrant Exodus: “Clearly the attraction the United States had on people like myself two to three decades ago is very different now. Countries all over the globe now have successful and growing research universities and labs.”
Both Wadhwa’s book and accompanying report continue his seminal research on the importance of immigrants to the high-tech sector. Nearly a quarter (24.3 percent) of engineering and technology companies had at least one foreign-born founder; in Silicon Valley, it’s nearly half (43.9 percent). Nationwide, they’ve helped employ more than half a million workers (560,000) who contributed $63 billion in sales just in 2012.
The faces behind the names make the impact all the more extraordinary, writes Wadhwa:
“Each decade has yielded top-flight entrepreneurs not born in this land, from Andrew Carnegie (Carnegie Steel Company) to Alexander Graham Bell (AT&T) to Charles Pfizer (Pfizer) to Vinod Khosla (Sun Microsystems) to Sergey Brin (Google) to Elon Musk (PayPal, SpaceX, Tesla Motors). A 2011 study by the Partnership for a New American Economy tabulated that first-generation immigrants or their children had founder roles in more than 40% of the Fortune 500. These companies had combined revenues of greater than $4.2 trillion and employed more than 10 million workers worldwide.”
But this foreign source of talent is now waning: After an impressively thorough sampling of 1,882 tech companies founded in the last six years, it was discovered that the immigrant’s usual contribution to the startup founder scene had stagnated, dropping from 25 percent to 24 percent. While that tiny number doesn’t seem to match Wadhwa’s (relatively) apocalyptic language, he sees it as an early warning sign. In Silicon Valley, the drop in foreign-born founders is far more pronounced, plummeting from 52 percent to 43 percent.
Behind the numbers, tales from immigrants are full of legalistic hamstringing and crippling uncertainty. Asaf Darash, founder of business website services firm Regpacks is the on the path to hiring a hundred workers this year. But those jobs are threatened by pending deportation after Darash’s work visa was denied due to a minor legal oversight he made while filing the petition. Though he tells TechCrunch the correction has been accepted, the legal system isn’t nimble enough to translate that correction into a timely path to a visa. So he waits “for months and months” for papers he hope will be approved, all while dealing with the normal chaos that goes into a technology startup.
Lawmakers are, at least, philosophically in agreement that foreign-born entrepreneurs are vital to the U.S. economy, but traditional partisan divides have stunted any meaningful reform. The last great hope for high-skilled immigration reform, the STEM Jobs Act, would have re-allocated the 55,000 visas reserved for underrepresented areas, such as Africa, and given them to foreign-born graduates from U.S. universities. Democrats, however, felt STEM Jobs, like other reforms, should not prioritize high-skilled immigrants at the expense of impoverished nations. “Republicans are only willing to increase legal immigration for immigrants they want by eliminating legal immigration for immigrants they don’t want,” said Illinois Representative Luis Gutierrez.
The next opportunity for reform is likely the Startup 2.0 Act, which also adds 50,000 new visas for foreign students and creates a new kind of entrepreneurship visa for 75,000 immigrants who found a business, employ Americans, or raise funding in the U.S. The bill had been put on hold in the Senate by Chuck Grassley, who said, “the H-1B visas program should complement the U.S. workforce, not replace Americans.” The hold has since been released and is awaiting the next Congress.
Until then, Darash, thousands of other immigrants, and the U.S. economy waits for reform. But if Wadhwa’s research is any indication, by the time the U.S. figures out a solution, the next Andrew Carnegie, Elon Musk, or Sergey Brin may have already moved on to another country.