Permanent residence in the USA is a valuable asset that is enjoyed by most of you reading this article. Many potential immigrants from around the world want to acquire that asset and become valuable members of American society alongside us.
Why don’t we let more of them join us? There are two common objections: they will drive down wages, or they will be a drain on tax-funded programs. Some existing immigration paths, like the H1B visa-to-green card route, are based on the idea that for some immigrants, the benefits will outweigh these potential costs.
But the H1B path is a bureaucratic nightmare. Small startups don’t even bother with it. And for the immigrant, the H1B path puts them in the awkward position of having their visa status tied to their job until their green card is approved. You think having to leave your health insurance plan when you lose your job is bad? Try having to leave the country. → Read More
President Obama seems to understand the role that startups play and the contribution that skilled immigrants make to U.S. economic growth. He has talked a lot about the importance of science and engineering, and expressed fears that, unless we improve our game, China and India will out-innovate us. He even visited Silicon Valley recently to talk to its elite. And he has had his Chief Technology Officer, Aneesh Chopra, make several trips here to the Valley.
I commend the President for putting a spotlight on entrepreneurship with his Startup America initiative; but I can’t help wondering whether this is just a giant press release. It needs more substance: a way for foreign-born entrepreneurs to start companies here and a leveling of the playing field for entrepreneurs wanting to solve government problems.
I debated this with Aneesh Chopra, at the Economist Innovation Summit in Berkeley, last week. → Read More
In my last post about the Startup Visa, I was very critical of the Kerry–Lugar legislation. That’s because it required immigrant entrepreneurs to raise at least $250,000 in financing for their startups, of which $100,000 had to come from American VCs or Super Angels. Few startups raise this kind of seed money—even in Silicon Valley. I couldn’t foresee this bill generating more than a few dozen jobs. Yet our political leaders would have claimed “Mission Accomplished”, and we would have lost a valuable opportunity to stem the brain drain.
I was delighted to receive an e-mail, last week, from Garrett Johnson, who works for Senator Richard Lugar (R-Ind.). Garrett said that the Senator had read my articles and asked his staff to consider my comments. After consulting with Bob Litan, of Kauffman Foundation; Brad Feld, of Foundry Group; Eric Ries, of the lean-startup movement; and other champions of the visa, Garrett had revised the legislation. He sent me a draft of the bill that was introduced today. This new legislation is even better than I had hoped for. If it gets through both houses—and doesn’t have bureaucratic constraints—I expect it to unleash a flood of entrepreneurship. → Read More
NBC Nightly News anchor Tom Brokaw visited Silicon Valley last month to meet immigrant entrepreneurs. At Microsoft’s Mountain View campus, he met with a dozen of them. More than half said that they might be forced to return to their home countries. That’s because they have the same visa issues that Kunal Bahl had. Unable to get a visa that would allow him to start a company after he graduated from Wharton in 2007, Kunal returned home to India. In February 2010, he started SnapDeal—India’s Groupon. Instead of creating hundreds of jobs in the U.S., Kunal ended up creating them in New Delhi.
At a time when our economy is stagnating, some American political leaders are working to keep the world’s best and brightest out. They mistakenly believe that skilled immigrants take American jobs away. The opposite is true: skilled immigrants start the majority of Silicon Valley startups; they create jobs. → Read More
Many foreign-born techies in the U.S. and abroad are pinning their entrepreneurial hopes on the passage of a bill, sponsored by Senators John Kerry (D-Mass.) and Richard Lugar (R-Ind.), to create a startup visa. Tech-industry notables such as Paul Graham, Eric Ries, Brad Feld, Fred Wilson, and David McClure have lobbied for this. I, too, lent this my support. In fact, I have been advocating such a visa since 2007—when my team’s research revealed that 52% of Silicon Valley’s startups from 1995 to 2005 were founded by immigrants. We also learned that a million skilled workers and their families were stuck in “immigration limbo” and that many were beginning to return home—causing America’s first brain drain.
But, as I wrote in my Bloomberg BusinessWeek column, I fear that the Kerry-Lugar bill will get approved—with overwhelming support from both parties. Our leaders will declare victory and claim that they have made the U.S. more competitive. This will not, however, produce the expected startup activity; it won’t give our economy the boost it desperately needs. That’s because the bill is far too limited. And, given the divisive nature of the current political debates about immigration, this may be the only immigration bill that gets passed until way after the next elections—by when it will be too late.
Let me explain the issues and suggest some solutions. → Read More
I’ve written a lot about America’s flawed immigration policies: how the unavailability of permanent-resident visas and the growing xenophobia in the U.S., combined with expanding economic opportunities abroad, are causing a reverse brain drain. Skilled immigrants are returning home to countries like China and India in record numbers. America’s leaders are accelerating the trend by pandering to uninformed and misguided segments of their electorate who demand that the country close its doors for fear that foreigners will take their jobs away.
The result is that America is giving an unintended gift to countries like China and India, where returnees are teaching locals how to build world-class companies and how to innovate. In almost every high-growth tech company in China, you find returnees in senior management positions. The New York Times reported that it’s the same in scientific research—top research labs have returnees in lead positions, which may give China the edge it has desperately been seeking. China is a long way from challenging America in innovation ability, and if it does make some breakthroughs in cleantech, health care, and science, this is not a bad thing. As I concluded in this piece about China’s entrepreneurship boom, we benefit from innovation no matter where it happens. The problem is that the American economy is stagnant and we’re exporting the people who can help boost it. And we are creating long-term competition for our tech industry. → Read More
Silicon Valley’s vitality depends on a constant influx of bright people who challenge its inhabitants to work harder and think smarter. And, as I noted in my last post, America’s economy depends on startups to create jobs and innovation. Skilled immigrants have provided both. So, given the miserable state of the economy, we should be laying out the welcome mat for the world’s best and brightest. Yet they’re doing the exact opposite. Meanwhile other countries have figured out the secret of the Valley’s success and are laying out their red carpets and welcome mats, not only for the foreign skilled workers we’re turning away but also for our techies.
Fifty-two percent of Silicon Valley’s startups from 1995 to 2005 were founded by foreign-born workers. And in 2006, 26% of America’s global patents—including 40% of those filed by the U.S. government, 72% of Qualcomm’s, 65% of Merck & Co.’s, and 64% of General Electric’s—were invented wholly or partly by foreign nationals residing in the U.S. You would think that we would develop policies to bring in more of these people. Yet, sadly, the only immigration legislation our political leaders have been able to agree on, unanimously, is to hire 1000 more border-patrol agents and to fly drones on the Mexico border—like the ones we use to kill terrorists in Pakistan—to keep the nannies, gardeners, and farm workers out. Ironically, to pay for all this, the new border-security law levies taxes on companies that the bill’s sponsor, Senator Schumer (D-NY), calls “chop shops”—because they bring in tech workers who compete with Americans and supposedly “take their jobs away”. These “chop shops” are Indian companies such as Infosys, Tata Consulting Services, and Wipro—which have the best employee-training and -development programs, and are amongst the best-managed companies, in the world. They compete head to head with American “chop shops” such as IBM Global Services and Accenture, and increasingly with management consultants such as McKinsey & Co and The Boston Consulting Group. (In the U.S., the term “chop shop” is typically used to describe an illegal business which disassembles stolen cars for selling off the parts.) → Read More
In a speech at the American University last Thursday, President Obama highlighted the incredible economic rewards that America has gained from its immigrants. He spoke of new waves of immigrants—from places like Ireland, Italy, Poland, and China—challenging the generations before them, and consequently being subjected to “rank discrimination and ugly stereotypes”. Yet they kept coming to America. That’s because it was the only land of opportunity. The President wants lawmakers to fix the immigration system so that America can remain globally competitive. But I don’t think it’s that simple: America is no longer the only magnet for the world’s best and brightest. Fixing immigration policy is an important start, but it won’t be enough to stop the brain drain of highly educated and skilled workers that the U.S. is presently experiencing.
Just last week, there were two notable visitors to Silicon Valley—Russian President, Dimitry Medvedev, and Chile’s minister of Economy, Juan Andres Fontaine. President Medvedev wanted the brilliant Russian-born and -educated programmers who write some of the Valley’s most sophisticated software to know that they are welcome back home and that he is setting up a science park for them. Minister Fontaine wants to turn Chile into a tech hub and is following my advice on how to make this happen: by attracting immigrants; building a diverse culture that encourages risk-taking and openness; and creating networks of mentors. Over drinks (some excellent Chilean wine), the minister told me of a new program that Chile is piloting to lure bootstrappers. Chile will grant $40,000 and provide some really cheap office space and accommodation to budding entrepreneurs from anywhere in the world. All they have to do is to build their products in one of the most beautiful locations on the planet. Chile is betting that once these entrepreneurs get there, they will never want to leave. → Read More
The H-1B visa has become the beachhead in the battle against the legal immigration of skilled workers. This visa allows highly educated and skilled workers from abroad to take employment in the U.S. and eventually become citizens. Anti-immigrant groups believe that they can close the door to foreigners by restricting or abolishing it. So they have been trying to convince lawmakers that H-1Bs depress wages and take jobs away from American workers. To prove their point, they highlight examples of unscrupulous body shops that underpay their workers, and they cite questionable research published by other anti-immigrants. But a new peer-reviewed study, published in Management Science, a top academic journal, challenges these claims. This research finds that foreign-born I.T. professionals on temporary work visas actually earn more than their American counterparts; and that limits on H-1B visas cause the salaries of foreign workers—not Americans—to increase. This, along with research completed by my colleagues at UC-Berkeley, Duke and Harvard, confirms what most people in Silicon Valley already know: that foreign-born I.T. workers complement American professionals and make the pie bigger; they don’t take jobs away.
This new study was completed by University of Maryland professors Hank Lucas and Sunil Mithas, using data from a survey of 50,000 I.T. professionals that InformationWeek and Hewitt Associates conducted from 2000 to 2005. After adjusting for educational qualifications, work experience, and other individual characteristics, the researchers found that I.T. professionals without U.S. citizenship earned 8.9% more than U.S. citizens. Tech workers on temporary visas were paid 6.8% more than those with U.S. citizenship; green card holders took home 12.9% more than their American-born counterparts. In years when Congress increased the numbers of visas available, salaries of foreign workers dropped. → Read More
A bill introduced today in the Senate by Democrat John Kerry and Republican Richard Lugar proposes a new type of visa for immigrants who create startups and jobs in the U.S. A similar proposal is part of an immigration reform bill in the House. The Startup Visa has been controversial and will no doubt draw fire from anti-immigrant forces and xenophobes. But if we are going to be giving away visas, giving them to people who will help build the U.S. economy and create jobs is hard to argue against.
The Startup Visa Act of 2010 would create a two year visa for immigrant entrepreneurs who are able to raise a minimum of $250,000, with $100,000 coming from a qualified U.S. angel or venture investor. After two years, if the immigrant entrepreneur is able to create five or more jobs (not including their children or spouse), attract an additional $1 million in investment, or produce $1 million in revenues, he or she will become a legal resident. → Read More
Free speech is a basic human right and is essential to creativity and innovation. But every society places limits on this, particularly when it transgresses into “hate speech” – which disparages someone or some group on the basis of race, gender, age, ethnicity, nationality, religion, sexual orientation, and so on. Calls to violence are tolerated even less. These often lead to jail terms.
The Electronic Frontier Foundation (EFF) has been the tech world’s champion of free speech since its inception in 1990. I have always admired this group for defending the oppressed. But when organizations achieve too much success, they often develop a sense of confidence and arrogance that, when unchecked, leads to their downfall. They begin to believe they can “do no evil”. A recent statement by EFF makes me wonder whether it has reached this stage and needs to have its “Google China” moment. Michael Arrington wrote in 2007 that “EFF may be getting a tad overzealous in its desire to defend our right to violate copyright and other intellectual property laws, and needs to take a step back and consider if the oppressed are now becoming the oppressor”. I’m beginning to believe that Michael was right.
Let me explain the background of a case which EFF has just passed judgment on so that you can decide for yourself whether this is indeed the situation. → Read More
Every time I publish a research paper on immigration or write an article for BusinessWeek or TechCrunch, the xenophobes rush out of their caves to launch mindless attacks. They fill the comment sections with bile, send me nasty emails and sometimes threaten to do me harm. I was convinced that my last BusinessWeek column on the Startup visa presented such a compelling argument that even these poor souls would support it. After all, this visa is about creating American jobs and moving innovation here which would otherwise happen in other countries. We can boost the economy without any cost to taxpayers. It’s not about admitting H-1B visa holders who sometimes make Americans compete for high-paying jobs, but bringing in entrepreneurs who expand the pie for everyone. Not only do the Democrats support this, but so do the Republicans (their thought leader, Newt Gingrich blogged about my previous TechCrunch post on immigration and his staff told me that he was a supporter of the startup visa). So this seems like a no-brainer.
But, no, logic doesn’t prevail with this crowd. I got the same stream of hate mail that I’m used to, and the xenophobes hijacked the BusinessWeek reader feedback section again. Most of their statements are illogical and uneducated. But there are two potentially meaningful arguments which opponents of the startup visa make, which are worth discussing: that the founders we are bringing in aren’t always the “best and brightest” and that there is already a visa category for geniuses called the O-1 visa. → Read More
Editor’s note: This is a guest post by Vivek Wadhwa, an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Executive in Residence at Duke University. Follow him on Twitter at @vwadhwa.
I spent Columbus Day in Sunnyvale, fittingly, meeting with a roomful of new arrivals. Well, relatively new. They were Indians living in Silicon Valley. The event was organized by the Think India Foundation, a think-tank that seeks to solve problems which Indians face. When introducing the topic of skilled immigration, the discussion moderator, Sand Hill Group founder M.R. Rangaswami asked the obvious question. How many planned to return to India? I was shocked to see more than three-quarters of the audience raise their hands. → Read More
Are you an immigrant who is fed up with waiting for years for a green card which you may never get? Or a tech entrepreneur looking to dramatically cut costs? I’ve got a suggestion for you. Move South. No, I don’t mean to Los Angeles or San Diego, I’m taking about way down South in Chile. They’ll welcome you with open arms and offer you incentives which will cut your burn rate more than half. And you’ll get to live in a land which makes even California look drab. → Read More
