Talented immigrants have always been a major source of our country’s competitive advantage. Because of the inability to reach agreement on a “passable” immigration reform bill, that advantage is being put at risk.
I write this as an immigrant myself who came to the United States from India at the age of 15 to pursue the American dream and was able to achieve it.
That ambivalence stemmed from a variety of factors including: increased opportunities for employment and advancement in India; a stronger sense of nationalism there; concern about the current state of American economy and political affairs; and, a perception that America is no longer an immigrant-friendly nation.
We shouldn’t or can’t do much about those first three factors. We absolutely need to address the final one as quickly as possible. If we don’t, we could lose the next generation of immigrant expertise that is essential to keeping America’s edge in entrepreneurial and innovation arenas.
How important is the immigrant to ensuring a vital and vibrant American economy?
Vivek Wadhwa highlighted the contributions of immigrants to the country’s economic success in his 2011 Democracy Journal article, “Our Best Imports: Keeping Immigrant Innovators Here.”
According to his 2006 study of more than 2000 technology firms started in the previous ten years, “25.3 percent had a chief executive or lead technologist who was foreign born.” The percentage of start-ups in various technology sectors is stunning: semiconductors, 35.2 percent; computers/communications, 31.7 percent; software 27.9 percent; and innovation, 25.9 percent. Wadhwa estimated that “in 2005 immigration-founded tech companies generated $52 billion in revenue and employed 450,000."
The SBA reports that in 2008 immigrant entrepreneurs generated nearly 12 percent of all business income in the United States. Those are impressive numbers but there is evidence that the immigration engine is slowing.
In October 2012, the Kauffmann Foundation released a study which found that the number of high tech immigrant-funded start-ups nationwide has stagnated or declined from 25.3 percent to 24.3 percent since 2005 with an even more precipitous drop in Silicon Valley from 52.4 percent to 43.9 percent. Dane Stangler, director of Research and Policy at the Foundation commented, “For several years, anecdotal evidence has suggested that an unwelcoming immigration system in the United States has created a ‘reverse brain drain’. This report confirms it with data.”
The Kauffmann research was also conducted by Vivek Wadhwa and compares the findings for the period from 2006 to 2012 to those to his similar study covering the period from 1995 and 2005. The study disclosed that immigrant entrepreneurs are still substantial contributors to the economy and that the immigrant founders of engineering and technology companies employed roughly 560,000 workers and generated an estimated $63 billion dollars in sales from 2006 to 2012.
This data is unequivocal. Well educated and skilled immigrants have been a driving force in building the nation’s intellectual, human and financial capital. But, our current immigration system and policies are neither designed nor structured to magnify those contributions. They need to be.
During 2013, Congress spent a considerable amount of time and energy trying to find an approach to immigration reform that is acceptable. The Senate managed to pass a bi-partisan bill.
Since the beginning of 2014, there has been a lot of talk but no action on immigration. It now appears likely that there will not be any piece of important immigration reform legislation passed during this election year. This is a tragedy. It appears that in the search for solutions, we are making the perfect the enemy of the good and that ideology is trumping ideas.
There seems to be much agreement from both sides of the aisle on the need to revamp the immigration system to address the fact that - as Darrel West of the Brookings Institution puts it in his book, Brain Gain: Rethinking U.S. Immigration Policy - it is “tilted too far in favor of family unification over other important national goals.”
One of our most important goals at this point in time should be to use immigration reform to fuel the growth of the economy and to foster job creation. Revamping the current quota system to expand the availability of visas for skilled workers and students with specialized knowledge would accomplish this. Therefore, I recommend that we start by passing a simple and limited bill addressing this issue.
As I have written elsewhere, I would prefer to see a comprehensive and strategic immigration bill. But, as an entrepreneur who understands the importance of business start-ups and forward progress, I would much prefer to see something done now rather than nothing. More importantly, as an immigrant to America, I understand that we are a nation of immigrants and that our nation’s future depends on sustaining and enhancing its immigrant advantage.
Islam is an investor and entrepreneur and the head of the FI Investment Group. He is also co-author of Working the Pivot Points: To Make America Work Again.