Contentious Economics– Immigrants Create Billion Dollar Companies: Crisis– H-1B, Outsource, STEM…

Believe it: U.S. is nation of immigrants, and U.S. economy is economy of immigrants.  Many U.S. companies, e.g.; Procter & Gamble, AT&T, Kraft, Colgate-Palmolive, U.S. Steel, Philip Morris, TIAA-CREF, DuPont, Goldman Sachs, Pfizer, Kohl’s, Capital One, Honeywell, PG&E, Nordstrom… just to name a few–  were founded by immigrants…

Not to mention the many high-tech companies that are founded by at least one immigrant or children of immigrants, e.g.; Apple, Oracle, Ebay, Google, Yahoo, Tesla… Other growing fields, like semiconductors and medical devices, are full of immigrant-founded companies as well. The findings are clear: Immigrants drive the U.S. economy…

According to a study; 18% of Fortune 500 companies were founded by an immigrant and over 40% were founded by either an immigrant or child of an immigrant… These companies employ over 10 million people worldwide and generate over $4.2 trillion in revenue annually… Almost by definition, immigrants are risk takers and hard workers and they, in turn, generate jobs for workers that are– less skilled, less risk-takers… The report also cites startups and established companies, both large and small, where immigrants serve in executive roles, such as; CEO, CTO, V.P.s… Immigrants in U.S. start new businesses at a rate that far outpaces their share of the population; from local neighborhood shops to U.S. largest companies…

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However, crisis is brewing: It’s workers skills gap… the new global economy is driven by technology and for U.S. companies to maintain leadership and competitive advantage they must have the world’s best engineers, programmers, mathematicians, scientists… Global competition for talent is very high; foreign nations are increasingly pursuing U.S. trained, highly skilled talent…

Many skilled foreigners graduate from top U.S. universities, but U.S. immigration policy makes it very difficult for them to stay in U.S. In short, U.S. is training many of the world’s most talented workers, but leaving many of them with two options; go work in another country for non-U.S. company, or work for U.S. company in another country… As result, U.S. companies are moving jobs to other countries, while other countries are focused on luring away talented workers who cannot get H-1B visas…

In addition, U.S. desperately needs more STEM (i.e., science, technology, engineering, mathematics) graduates… U.S. must develop a stronger indigenous workforce of experts in technology… According to the U.S. Department of Labor; only 5% of U.S. workers are employed in fields related to technologies, yet technologies are responsible for more than 50% of U.S. sustained economic expansion… Hence, a critical U.S. national priority must be to encourage and provide incentives for more U.S. students to study STEM… But unfortunately, the U.S. is trending in opposite direction; 30 years ago about 40% of  world’s scientists and engineers resided in the U.S.– today that number has shrunk to about 15%…

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In the article Immigrants Are Driving Main Street Business Growth by Ken Gaebler writes: Historically, immigrants play critical roles in the U.S. economy… A report by the ‘Americas Society/Council of the Americas’; discusses rising influence of immigrant entrepreneurs in ‘Main Street’ business, i.e.; businesses that shape fabric of the nation’s local communities. The report shows that from 2001-2013, immigrant entrepreneurs (documented and undocumented) drove all of the nation’s net growth in ‘Main Street‘ business, e.g.; groceries, restaurants, clothing stores…

The efforts of immigrant entrepreneurs in launching and growing Main Street business is important because it helps to revitalize depressed communities, reversing population decline and increasing the economic base in hard-hit neighborhoods… In addition to Main Street business, immigrants occupy a larger place in the high growth small business economy, e.g.; from 2001 to 2013, immigrants were responsible for 48% of the overall growth of business ownership in U.S… Similarly, immigrants accounted for the net growth of ‘Main Street‘ business in 31 of the nation’s 50 largest metro areas… Findings include:

  • Immigrant entrepreneurs represent 28% of business owners–significantly higher than the share of immigrants in the labor force (16%) and the overall share of immigrant business owners (18%)…
  • Immigrant small business owners earned a combined $13 billion in 2013…
  • Immigrants comprise large percentage of Main Street business owners in major metros: Los Angeles (64%), San Jose (61%), Washington D.C. (56%), Miami (54%)…
  • Immigrants own 53% all grocery stores, 45% nail salons, 38% restaurants, 32% jewelry stores, 32% clothing stores…

What is H-1B Visa: The H-1B program allows employers to temporarily employ foreign workers in U.S. on a non-immigrant basis in specialty occupations or as fashion models of distinguished merit and ability. A specialty occupation requires theoretical and practical application of a body of specialized knowledge and bachelor degree or the equivalent in the specific specialty (e.g. sciences, medicine, health care, education, biotechnology, and business specialties…).

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Current U.S. laws limit the annual number of qualifying foreign workers who may be issued a visa or otherwise be provided H-1B status to 65,000 with an additional 20,000 under the H-1B advanced degree exemption… also there is a H-1B Cap-Exempt, which allows employers that are not subjected to the annual H-1B visa numerical limitations… Employers that fall under the ‘Cap-Exempt’ category, include: Not for profit institution of higher education; Not for profit entity related or affiliated to an institution of higher education; Not for profit research organization or governmental research organization; Certain for-profit (e.g.; consulting/contracting) firms…

Research shows that U. S. faces significant challenges in meeting the growing needs of an expanding knowledge-based innovation economy, and H-1B workers must compliment U.S. workers to fill employment gaps in many STEM (i.e., science, technology, engineering, mathematics) occupations…

The arguments that immigrants are freezing out native-born workers are rebutted by the reality of  the evidence, e.g.; unemployment rates are low for occupations that use large numbers of H-1B visas, and most STEM occupations have very low unemployment compared to the overall national unemployment rate… According to Bureau of Labor Statistics:

  • Estimates indicate increasing H-1B visas could create an estimated 1.3 million new jobs and add around $158 billion to U.S. GDP by 2045…
  • Conversely, research show that U. S. has missed out on opportunities to create new jobs by limiting the number of H-1B visas to 65,000 per year, i.e.; estimates show that had U.S. not rejected large numbers of H-1B visa applications in computer related fields, many more tech jobs would be created for U.S.-born workers… 
  • Although nearly two-thirds of requests for H-1B workers are for STEM occupations; there is high demand for workers in– healthcare, business, finance, life sciences…

In the article Myth of H-1B Job Creation by Michelle Malkin writes: Every day brings new headlines of U.S. workers losing livelihoods to cheap H1-B visa replacements… Yet, it remains an article of faith among ‘big business flacks and beltway hacks’ that H-1B not only protects U.S. jobs, but also fuels miraculous job growth… The myths are recycled and regurgitated that foreign-born STEM workers complement U.S. workforce, and they don’t take U.S. jobs…

According to statement by Bill Gates; study shows that for every H-1B a technology companies hire, then five additional jobs are created around that person…

According to Madeline Zavodny, Mark Zuckerberg and others; 2.62 more jobs are created for U.S.-born workers for each foreign-born worker in U.S. who has a U.S. STEM graduate degree… However, many experts take exception to these claims, e.g.; the study Gates cited regarding the H-1B job generation– shows nothing of the kind, instead it finds a positive correlation between these visas and job growth… these visas could be an indicator of broader hiring at the company, rather than the cause… While industry lobbyists have employed dubious and convoluted means to show H-1B creates jobs, it’s brutally simple to show that H-1B workers take U.S. jobs…

Lost amidst the national debate on immigration reform is the critical fact that U.S. needs to attract or develop ‘skilled’ workers to sustain growth of economy… According Scott Clemons; getting immigration   right is an economic imperative for 21st century, as well as, expanding STEM education… The capacity of any economy to expand over time is a function of growth in the labor force plus the productivity of that labor force…

A few simple dynamics determine growth in labor force, and they include; fertility, mortality, participation, education, immigration…  These issues are routinely thought of being demographic or social issues but the economic implications are an imperative…

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Economic capacity is defined by– how many people are born, how long they live, how well they are educated, extent to which they participate in the formal economy, and whether or not the nation can ‘borrow’ population growth from other countries through immigration…  Many global economies struggle with– stagnant and negative population, labor force growth, inadequate education… which illustrates how difficult it is to generate sustainable economic growth when ‘skilled’ workers are in short supply…

The difference between a functional and dysfunctional immigration policy is the difference between a dynamic economic future, or one mired in malaise; U.S. economy needs highly skilled human capital and whether it’s– grown at home or immigrated from abroad… is almost relevant, because without it– it’s a crisis…