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Survey Says! US Needs More Immigrant Entrepreneurs

Aug27
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Survey Says! US Needs More Immigrant Entrepreneurs

Over 74{b6b8f04f7bd4b863c4cfed8339fd19419bda3e071c79bc5ac8c810cb9c52e30f} of companies surveyed by the National Venture Capital Association (NVCA) in 2012 believe that “Current U.S. immigration laws for skilled professionals harm American competitiveness.” Opposition to expansion of work visas fears more employment based visas would lead to outsourcing, but “numerous companies say it is the current restrictions on H-1B visas that push jobs offshore.” Business is all about the bottom-line and projecting into the future to determine the value of present decisions. The current employment-based immigration system makes it difficult for many public or private venture-backed companies to plan for their future in the United States.

The NVCA recently issued a report updating data from 2006 on immigrant founded publically and privately traded companies. Immigrant founded companies account for 33{b6b8f04f7bd4b863c4cfed8339fd19419bda3e071c79bc5ac8c810cb9c52e30f} of initial public offerings (IPOs), up from 20 percent in 2006. According to NVCA, “If immigrant-founded venture-backed public companies were a country, then the value of its stock exchange [total market capitalization of $900 Billion as of June 2013] would rank 16th in the world, higher than the exchanges of Russia, South Africa, and Taiwan.” In 2012, “Immigrant-founded venture-backed public companies employ[ed] approximately 600,000 people worldwide, the majority in the United States,” including Intel, Google, Sanmina, and eBay. Similarly, 33{b6b8f04f7bd4b863c4cfed8339fd19419bda3e071c79bc5ac8c810cb9c52e30f} of privately traded companies were founded by immigrants. Among private companies surveyed, 41{b6b8f04f7bd4b863c4cfed8339fd19419bda3e071c79bc5ac8c810cb9c52e30f} of immigrant founders entered the United States in some form of employment based temporary work status, such as an H-1B status.

The limited number of H-1B visas cuts deep into the pockets of not only immigrant-founded, but US worker founded companies in the United States. Since the 1980s, only 65,000 H-1B visas are available annually, with a 20,000 visa exemption for foreign nationals who earn an advanced degree in the United States, and a carve out for Free Trade Agreement visas to Chile and Singapore. Multinational companies often base recruitment decisions on the availability of temporary worker visas in the United States. In the NVCA survey, “Fifty-seven percent of the companies replied that ‘projects had been delayed because of the lack of H-1B visas.’”

Even with the exemptions for advanced degrees earned in the US, foreign students still find it difficult to obtain temporary employment authorization after graduation. Sixty-five percent of Ph.D. graduates in electrical engineering in the United States were foreign born in 2012, while 50{b6b8f04f7bd4b863c4cfed8339fd19419bda3e071c79bc5ac8c810cb9c52e30f} of graduates with a Ph.D. in computer science were foreign born. One executive interviewed in the NVCA survey offered the following analogy: “Imagine if a Major League Baseball farm system trained prospects and when they were ready for the Major Leagues they gave those prospects away to another team in its own division.” Since 2008, the economy has been improving, and each year the H-1B cap has been hit sooner and sooner. This year we experienced yet another “lottery” on April 1, 2013. The result left many companies who had hired interns on Optional or Curriculum Practical Training in non-STEM industries with little or no options for continued employment; a waste of money and talent.

Fears that expansion of employment based immigration would lead to more outsourcing are misplaced. According to the companies surveyed by NVCA, many report that in the wake of current H-1B Cap announcements, many companies have turned to outsourcing if for no other reason than to retain the more talented employee. One company went as far as to create an office in India to retain talented employees and another decided to expand their facility in India instead of their New York or Philadelphia offices because it was not possible to import the necessary talent. According to economists, “An increase in foreign STEM (science, technology, engineering and math) STEM workers of 1 percent of total employment increased the wage of native college educated workers (both STEM and non-STEM) over the period of 1990-2000 by 4 to 6 percent.” Another economist reports that “Each additional 100 approved H-1B workers being associated with an additional 183 jobs among U.S. natives.”

The American Dream was built on small businesses. However, executives in the NVCA survey bemoaned the current costs of hiring foreign national workers in the United States, which prohibit smaller companies from competing in the global labor market. One executive noted that “The H-1B process is prohibitively costly and arduous for small companies.” And unfortunately, the proposed bills both in the Senate and the House of Representatives do little to improve the availability of H-1Bs to small companies. While both the House and Senate propose legislation to encourage foreign entrepreneurs and innovators to invest in and immigrate to the United States, the proposed legislation for H-1B visas overlooks the US Citizen entrepreneur who may depend on foreign innovation to grow and expand a new business in the United States. The US, business owner who proposes to introduce the next best thing from Outer Mongolia, may not be able to hire the talent necessary to train US workers. The NVCA proposes that four changes are necessary to reform the employment based immigration system: (1) a more reliable way to retain foreign-born entrepreneurs; (2) decrease the wait time for employment based green cards; (3) Increase the available annual quota of H-1B visas; and (4) reduction in the cost of sponsoring foreign-born workers.

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