The Self-Inflicted U.S. Brain Drain

Wall Street Journal (Opinion)

By Michael S. Malone

October 15, 2014

The Self-Inflicted U.S. Brain Drain

The process of bringing skilled immigrants to the U.S. via H-1B visas and putting them on the path to eventual citizenship has been a political football for at least a decade. It has long been bad news for those immigrants trapped in this callous process. Now the U.S. economy is beginning to suffer, too.

Every year, tens of thousands of disappointed tech workers and other professionals give up while waiting for a resident visa or green card, and go home—having learned enough to start companies that compete with their former U.S. employers. The recent historic success of China’s Alibaba IPO is a reminder that a new breed of companies is being founded, and important innovation taking place, in other parts of the world. More than a quarter of all patents filed today in the U.S. bear the name of at least one foreign national residing here.

The U.S. no longer has a monopoly on great startups. In the past, the best and brightest people would come to the U.S., but now they are staying home. In Silicon Valley, according to a 2012 survey by Duke and Stanford Universities and the University of California at Berkeley, the percentage of new companies started by foreign-born entrepreneurs has begun to slide for the first time—down to 43.9% during 2006-12, from 52.4% during 1995-2005.

The brain drain from this dysfunctional skilled-immigrant policy has begun. Some of the most thoughtful alarms have been raised by Vivek Wadhwa, the author of “The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent” (Wharton, 2012).

Mr. Wadhwa, who teaches at Duke and Stanford, is particularly worried about the so-called STEM disciplines—science, technology, engineering and mathematics. “Companies like Alibaba and Tencent are a warning signal that it is almost too late,” he tells me. “Either we get back to picking off the best and brightest STEM talent in the world, or someone else will.”

The first step in solving the skilled-immigrant crisis is to be honest about the real problem—and the motives of the players involved.

First, the difficulty is not about raising H-1B quota numbers. Surprised? That is all you hear about in the news: American business wants more H-1B immigrants. In fact, while H-1B visas have been stuck at about 65,000 a year (plus 20,000 students), that number can be changed with relatively simple moves by the president or Congress. A decade ago the cap stood at 195,000.

Mr. Wadhwa says the real problem is what he estimates are up to 1.5 million skilled immigrants and their families who—thanks to visa quotas, bureaucratic sloth and other roadblocks—are trapped in the limbo between H-1B and the green card that earns them permanent residency and a chance for citizenship. At current green-card approval rates, Mr. Wadhwa tells his students here from India, it will take 70 years for them to gain permanent resident status. Most will eventually leave. They’ll add to a growing brain drain—100,000 skilled immigrants a year from China, India and other nations, Mr. Wadhwa and his team estimate.

Why haven’t you heard about this? Because almost all of the major immigration players don’t want you to know. These include unskilled-immigrant advocates, notably Rep. Luis V. Gutierrez (D., Ill.), chairman of the Immigration Task Force of the Congressional Hispanic Caucus. They want to keep the H-1B cause mixed with their own because they believe it will force the tech industry to join them and thus improve the chances of victory.

Then there is the Democratic Party, which covets those estimated 11 million unskilled and undocumented workers as potential new and permanent Democrat voters. Thus Democrats are demanding citizenship—rather than merely legal-immigrant status—for the undocumented, and hope to make the unskilled-labor cause more palatable by blending it with the issue of skilled labor.

Large tech companies are an unacknowledged factor in the brain drain. As long as H-1B immigrants are in limbo (that is, once they have started the process of applying for permanent-resident status), they can’t risk changing jobs and have the clock start over. It is to the advantage of Big Tech, especially mature companies fearful of losing top talent to startups, to retain the failed status quo precisely because it freezes employee mobility. Mr. Wadhwa believes that‘s why Silicon Valley tends to lobby only for more H-1B visas, rather than more green cards.

Some blame also rests with Republicans. While more flexible, they have let themselves be trapped by the Democrats’ successful bolting of unskilled-illegal immigration to skilled-legal immigration. Rep. Pete Sessions of Texas expresses concern lest immigrants take jobs from Americans with STEM skills. Yet as industry analysts Rob Atkinson and Linda Rosen showed in Forbes.com last month, there is no clear evidence of head-to-head competition for the same jobs. Hiring a 50-year-old Utah programmer who works in stodgy old Cobol over a gifted 23-year-old code writer from Bangalore is not going to make the U.S. technology industry more competitive or the economy healthier.

Can anything be done immediately to stop the U.S. from rerouting much of the world’s best talent in areas vital to tech—one of our largest industries and biggest job creators—to foreign shores?

Until the people sitting around the dinner table every time Mr. Obama comes to Silicon Valley finally tell the president no more money until he opens up green cards for skilled immigrants, we are unlikely to see action from this White House. But there are other ways to avoid a dangerous two-year delay. In the short term, increasing H-1B quotas is less important than opening the green-card chokepoint—with more agents and streamlined approvals. Longer-term solutions include retraining unemployed STEM-trained U.S. citizens and protecting them from the age discrimination that is rampant in tech.

Mr. Wadhwa estimates that the U.S. has five years before the tech brain drain starts to be felt in overseas competition. “We’ve been dithering on this for 20 years,” he says, “and we’ve now run out of time.”

Mr. Malone writes often for the Journal about technology. His latest book is “The Intel Trinity: How Robert Noyce, Gordon Moore and Andrew Grove Built the World’s Most Important Company” (HarperBusiness, 2014).

For more information, go to:  www.beverlyhillsimmigrationlaw.com