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The Immigrant Exodus: Why Washington Needs to Listen

by Edward Alden
October 10, 2012

Entrepreneur turned scholar Vivek Wadhwa (Courtesy Wadhwa.com). Entrepreneur turned scholar Vivek Wadhwa (Courtesy Wadhwa.com).

I had the pleasure of hosting an event last week for Vivek Wadhwa to discuss his important and troubling new book, The Immigrant Exodus. Wadhwa, an entrepreneur turned scholar, has done more than anyone else to call attention to the critical role that immigrants played in the rise of Silicon Valley and the vibrant tech economy that is rightly such a source of pride for many Americans. And his warning that we are now in danger of killing the goose that laid the golden egg needs to be widely read and addressed with urgency in Washington.

The importance of immigrant scientists, engineers, and entrepreneurs to the U.S. economy is now generally accepted, but much of what we know today is the result of pioneering survey work done first by AnnaLee Saxenian of the University of California, and later by larger teams assembled by Wadhwa, Saxenian, and other scholars. In a seminal 1999 study, Saxenian found that immigrants, particularly Indians and Chinese, comprised roughly one-third of the total scientific and engineering workforce of Silicon Valley. A 2007 survey by Wadhwa and others discovered that from 1995 to 2005, more than half of all Silicon Valley startups had at least one foreign-born founder; across the country the figure was just over one-quarter. These were astonishing findings given that just 13 percent of the U.S. population is foreign-born.

In theory, immigrant entrepreneurship should be growing even stronger. Wadhwa’s work has suggested that, on average, an immigrant who launches a company does so roughly 13 years after moving to the United States – a period of time long enough to build the skills and contacts necessary for entrepreneurial success. In the late 1990s, there had been a big surge in skilled immigration due to a temporary increase in the cap for H-1B visas. In theory, that should have resulted in an explosion in new immigrant founded companies over the past several years.

Instead, their latest survey – Then and Now: America’s New Immigrant Entrepreneurs — shows a drop in the number of immigrant-found companies in Silicon Valley, from 52.4 percent from 1995 to 2005 to 43.9 percent from 2006 to 2012.

What is going on? Some of it certainly reflects the growing opportunities for Indian and Chinese students and immigrants who wish to return home. The explosive growth in China and the opening of the Indian economy, especially in high technology sectors, has created possibilities for engineers and entrepreneurs that were unthinkable fifteen or twenty years ago.

But much of the wound is self-inflicted, created by quotas and other restrictions that have made it increasingly difficult for talented immigrants to remain in the United States. How much harder is it? Vivek writes that when he moved to the United States in 1980 after graduating from the University of Canberra in Australia, he immediately found work as an entry-level programmer at Xerox and had his green card in eighteen months, allowing him to pursue better jobs. Today, he notes, if he had come on an H-1B visa, he would have been stuck in his entry-level job for as much as a decade waiting for his green card, and his wife would have been unable to work for the duration.

He writes in the book about one young Indian immigrant, Anand Chhatpar, who graduated at the top of his class in computer engineering in Mumbai and entered the University of Wisconsin-Madison in 2001. By his junior year he had launched a company, and was named by Business Week as one of the “top 5 young entrepreneurs” in the country. In 2008 he and his new wife jointly created Fame Express, which grossed about $1 million in two years building Facebook applications. But in September 2010 – still without permanent status in the United States — they had to return to India to apply for EB-1 temporary visas, reserved for skilled workers. Despite having companies and employees back in the United States, they were denied. Today, they are trying to run their companies from Bangalore.

Some of Wadhwa’s recommendations for clearing away these immigration hurdles are familiar – increasing green card quotas for skilled immigrants, eliminating the current cap that only permits 7 percent of green cards each year for any one country (huge ones like India and China included), and allowing spouses of H-1B holders to work. These remedies generally enjoy bipartisan support, but in the funhouse mirror politics of Washington, they still can’t get through Congress. Just before the congressional recess, Judiciary Committee chairman Lamar Smith proposed an increase in green cards for skilled workers, but tied it to elimination of the diversity visa, which is supported by many Democrats. No serious effort was made to cut a deal, resulting in just one more symbolic vote.

But Wadhwa has some novel approaches as well. Instead of “stapling a green card” to the passports of foreign students who graduate with science and engineering degrees from American universities (which he fears would create “diploma mills”) he would extend the Optional Practical Training program to allow students to remain and work in the United States for up to four years. Those who are successful would then be able to apply for a green card on the merits. And he supports changes to the H-1B program that would allow visa holders to switch jobs and advance their careers without risking their immigrant status. In all likelihood, this would raise wages as companies vie to retain talented workers, addressing the legitimate concerns of some American tech workers that H-1B holders comprise a kind of captive, low-wage workforce.

There is much more in the book, and I urge you to read it. You can also see the full October 5 discussion with Vivek Wadhwa at the Council on Foreign Relations here: The Immigrant Exodus.

Post a Comment 14 Comments

  • Posted by Emma

    As soon as the tech-industry drops its “just give US what WE want, okey?” attitude towards immigration, we can get progress on immigration reform.

    There will be no STEM/Startup visa reform bill passed as a stand-alone bill because there are too many other stakeholders, but if you tell you Senators and Representatives that they cannot count on your votes unless they support comprehensive immigration reform, we can get some action on this issue in 2013.

  • Posted by R.W.

    And what’s out there to protect American professionals’ jobs from the flood of younger foreign = lower-cost competition that would result if we “extend the Optional Practical Training program to allow students to remain and work in the United States for up to four years”?

    Answer: nothing.

    There is already a problem with U.S. companies stipulating in their job postings that they want ONLY entry-level entry-wage Optional Practical Training (OPT) program candidates to apply for jobs.
    Don’t believe it? Read here:

    http://www.computerworld.in/news/ibm-india-job-student-visa-stirs-debate-31362012

    http://brightfuturejobs.com/us-jobs-apply

    There is a booming business in fake colleges and diploma mills specifically designed to fool the U.S. government into putting undeserving foreigners into the OPT Program.
    Don’t believe it? Read here:

    http://chronicle.com/article/Little-Known-Colleges-Exploit/126822

    http://indiawest.com/news/6886-ice-closes-herguan-univ-then-abruptly-reverses-position.html

    http://www.huffingtonpost.com/2011/01/31/trivalley-university-soca_n_816623.html

  • Posted by Robb Moffett

    The H-1B Visa program, like many othher Visa programs is riddled with loopholes and fraud that allows many companies to abuse the system and hire cheaper and younger foreign workers in place of USA workers. We have over 1.8 million Americans with Engineering degrees that can not get work in their field.

    if there is such a shortage of STEM workers , why have the wages been going down or stagnant for so long?

    Remove the tax advantages for hiring H-B visa workers and also let them leave a company when they choose to go to work for a different company and you will see a dramatic drop in hiring H-1B workers immediately.

  • Posted by James

    Asking Vivek Wadhwa if America needs more Indians immigrants is like asking a barber if you need a haircut! Seriously! An Indian born immigrant preaches the gospel of salvation through more Indian born immigration and is funded by companies that want cheap foreign labor!! Might there be some bias towards advocating what is good for Indian immigrants as opposed to what is good for Americans? The large number of foreign born workers is due to the fact that foreign workers are cheap labor (20 percent cheaper than Americans) not that there are no Americans available.

    No independent study has ever shown that the foreign born are any more inclined to found a business than native born Americans. Advocates of cheap foreign labor have a very loose definition of foreign born founder. More important, often foreign born entrepreneurship is harmful to Americans. Consider, for example, the two businesses founded by Indian born “entrepreneur turned scholar” Vivek Wadhwa. He founded two businesses which hired cheap foreign labor using the H-1B to undercut the price of American competitors. He put Americans out of work! A large number of firms founded by foreigners do the same thing. We would be better off without these firms.

    Mr. Wadhwa has been singing this immigrant exodus song for several years and we have yet so see significant reduction in cheap labor taking American jobs.

  • Posted by magyart

    American has plenty of talent, but too many companies want hire CHEAP foregin workers. Yes, they may be skilled, but with 8% unemployment put LEGAL residents to work. Reduce immigration and work visas.

    American IT workers can’t find good jobs. They have been hurded into massive positions for only contract labor. They recieve no benefits. Yet, employers want more foregin IT workers, if they are cheaper. They will always be cheaper. Half the world works for less than a dollar a day.

    Globalization is a race to the bottom, for cheap labor.

  • Posted by P Henry

    The cheap labor shills are out in full force. They know it’s a hard sell trying to convince Americans to admit slave labor from the third world in the midst of high unemployment but this is how they make their living. Let’s examine some facts. This year the U.S. imported 85,000 foreign workers on h-1b visa’s during a period of time WHEN THE ENTIRE AMERICAN ECONOMY created 200,000 jobs. Since we need to create 125,000 jobs per month simply to keep up with population growth, it is not difficult to figure out why THERE ARE NO JOBS FOR AMERICANS.

    Also, let’s dump the ridiculous “immigrant job creator” argument. No one disputes the fact that immigrants create jobs but there is a huge distinction between immigration and the h-1b visa. There have been ZERO jobs created by the h-1b slave visa because one has to be sponsored by a company to even get one of them. The immigrant job creators that the author is talking about usually came to the U.S. under the age of ten (think yahoo, google etc.).

    Enough lies. I would respect you traitors just a little more if you came out and told the truth. “We want h-1b workers because they will accept slave wages and if they complain, we’ll simply ship them back to the third world”.

  • Posted by Annette

    “A 2007 survey by Wadhwa and others discovered that from 1995 to 2005, more than half of all Silicon Valley startups had at least one foreign-born founder; across the country the figure was just over one-quarter. ”

    Start-ups seek out “at least one” foreign founder simply to get classified as “minority-owned.” Minority owned businesses qualify for special grants and low cost loans. Many of the ‘minority founders’ are simply a figure head for the minority owned classification.

    You’ll have to try another angle to convince me, and it better not be one so easily shot down.

  • Posted by hacimo

    Vote for Romney if you want to keep these self serving foreigners from stealing more american jobs and destroying the middle class and the national character. He and Lamar Smith and Kris Kobach together with many other patriotic citizens are ready with very practical and workable programs to finally end this on-going disastrous flood of immigration that we suffer from. Romney knows how the market works and he understands that america is for Americans. He will cut immigration back to the levels that existed during the 50′s and 60′s, (i.e. about 300,000/year). He will totally end illegal immigration. He will reconfigure the priority of different immigrant categories to focus mainly on people with advanced degrees and special business skills of various sorts. These are the individuals that can truly increase the per capita gdp of our nation. We have no need for floods of illiterate peasants and we certainly have no need for their families and relatives.

  • Posted by test test

    I was offered a job at microsoft last year. I turned it down.

    One of the reasons for my decision was one of the Indian programmers told me “you don’t just hit the publish button to deploy your code. It’s a complicated process here.” I replied by asking–since cloud is their new strategy–if they use multiple virtual servers to split test different versions of the website. Different versions could be stored on different cloud servers, and changes in the conversion rate tracked. It was a good interview response. But the statement made bothered me.

    If I wrote something, it wouldn’t get deployed to production easily. He implied that he, and his friends would be an obstacle–even if the boss decided to hire me (which the manager did.)

    I suspect that racism among Indians is the true reason for the “shortage” in this economy. The development staff–in a world that includes China, Russia,and Mexico–is 60%-70% Indian. The racism of Indians is the only explanation–India is NOT the highest scoring country in STEM or in any other field.

    But Indians are among the most racist people the US imports. They simply refuse to work, or cooperate with anyone who is not Indian.

    The result is–once you have a 70% Indian development staff, it must be 100% or nobody gets any work done.

    The US has 100 times as many Mensa members as Microsoft employees. That’s right–we could fill every member of Microsoft’s staff, including the janitor, with a member of Mensa’s high-IQ society, 100 times over and still not run out of geniuses.

    So, at the right price–which Microsoft is WILLING to pay–geniuses exist in the US market.

    The simple, and sad truth, is Indians won’t work with qualified Americans–or for that matter, qualified people of any non-Indian nationality.

    Indians are SO racist in the workplace that people are scared to talk about it. If you call an Indian racist, you’re fired. If you call a white American racist, he asks you to forgive him for whatever he might have done wrong. Indians are known for being so racist that, as a common expression goes “Indians are never racist.”

    One Indian, whose intelligence I did admire, once told me sarcastically, “OK, so you’re smart. I guess I’ll just pack my bags and go home.” He instead choose to play political games with his coworkers to ensure accomplishing anything would be difficult.

    The fact is, H-1B is not nearly diverse enough. There’s talented people all over the world. Many of these countries have math scores MUCH higher than India’s.

    We need to make sure H-1B is diverse enough that there is no chance for racism amongst the immigrants whom we are giving A LOT of power and authority to.

    It’s as if the Army were to recruit mercenaries to be officers because they’re both smart and cheaper. While that decision may be questionable, I sure wouldn’t want all the mercenaries to be from the same country. Every mercenary may have a second loyalty, but they shouldn’t all agree on what it is.

    India is not as diverse a country as the US. Indians have not been taught to be tolerant like the Americans have.

    We’re going to accept them. The question is, if we turn over the keys to Indians and allow the to “own” an important software development center, will they accept us?

    If the answer is no, and we want opportunity for Americans, wouldn’t it be better to import a diverse group of Chinese, Mexican, Kenyan, Indian, and Russian programmers? With such a diverse group, wouldn’t it be guaranteed the new development team would also tolerate an American or two?

    Two questions for your non-racist Indian friends:

    Are Indians smarter than Americans?

    If they are smarter than Americans, are they Americans?
    \

  • Posted by Dolores

    Vote for Romney because he will curb visa misuse? That’s not what he promised the Indians: http://www.thehindubusinessline.com/industry-and-economy/info-tech/article2450667.ece

    What about all the Americans with advanced degrees and special business skills who are still standing in line at the Unemployment Office?

  • Posted by twins.fan

    The exodus is happening because of the H1B visa and will expand if more visas are granted.

    The entrepreneurs that Vivek Wadhwa admires are commonly called Indian H1B body shops. Indian HB 1body shops are in business to help corporations reduce labor costs by replacing highly skilled, well educated US STEM workers with cheap entry level workers from the third world, primarily from India and Communist China.

    The process is known in the industry as “Knowledge Transfer” (KT) and proceeds as follows:

    1. US corporation begins process to reduce labor costs.
    2. US corporation hires Indian H1B body shop with staff of workers who are recipients of the H1B visa.
    3. US corporation lays off half of their US STEM workers and instructs the remaining workers to train the staff of the Indian H1B body shop.
    4. Once H1B recipients are trained, remaining US workers are laid off.
    5. Once team of H1B workers are trained, US operations are dismantled and reassembled in India.
    6. US corporations and their sock-puppet politicians deny that it ever happened.
    7. Corporate media, including the Council on Foreign Relations, tout the H1B visa.

    This scenario has played out tens of thousands of times during the past decade all across America. The exodus is happening because of the H1B visa and will expand if more visas are granted. The exodus is being performed by IBM, HP, Bank of America, … and is all taking place because of KT and the fraudulent work visas that are being touted by Vivek Wadhwa.

  • Posted by Joe Blocks

    Romney will cure visa abuse?
    Oh that is almost funny
    Romney CAN’T GET ENOUGH cheap workers from India

    See

    http://thehill.com/blogs/hillicon-valley/technology/261717-romney-calls-for-boost-in-high-skilled-immigration

  • Posted by Mark

    Top domestic grads in Electrical Engineering and Computer Science can submit their resumes hundreds of times to employers such as Microsoft, Cisco, Google and other H-1B abusing employers and not even receive the courtesy of a response.

    If employers were interviewing these grads, and finding them to be inferior to the Indians, fine, that would be just fine with me. However they’re not even bothering to interview them anymore. The joke that is commonly repeated in the Silicon Valley is that because of the huge glut of top talent out there, even Linus Torvalds wouldn’t be considered for a Linux Kernel Engineer job at Google.

  • Posted by Jahan

    The current immigration policies encourage corporations to offer lower wages to lower their costs however by doing this, they are very likely positioning themselves for long term reduction in profits. The allure of a STEM careers has decreased among aspiring students and fewer candidates are pursuing these majors. Currently there is a considerable shortage and unfilled positions are contributing to loss of productivity and lower tax revenues for the state.

    I do not see how this policy will benefit anyone, the state, the corporation or the worker in the long term. Workers should always be provided fair consideration for jobs, promotions and bonuses based on their qualifications regardless of what their nationality is. This is how a meritocracy works, not by discriminating based on visa statuses.

    The H-1B restrictions ultimately create lower standards of living of workers in particular professions and it has created a drought of STEM workers in the United States. Although salaries are recovering now back to the dotcom days, they are still nowhere nearly as competitive when compared to salaries in Healthcare, Finance and Legal professions.

    Compared to doctors, tech workers are earning half or in some areas a third or even a quarter of physicians at equal levels. Although the training time for an engineer may not be as high, it is certainly disproportionately lower. The glory of becoming an Engineer has died it is now considered a profession for the desperate foreigner. On the other hand, healthcare professionals are kept in lower supply than a free market should provide for the likely reason of maintaining their earning abilities at the expense of the well being of seniors and other individuals in need.

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