Immigration datapoint of the day, entrepreneurship edition

By Felix Salmon
December 20, 2011
this idea from the National Foundation for American Policy, a pro-immigration think-tank.

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I love this idea from the National Foundation for American Policy, a pro-immigration think-tank. Take the WSJ’s list of the top 50 venture-backed companies, complete with the names of all the founders — and then calculate how many of those founders are first-generation immigrants. The results?

46 percent, or 23 out of 50, of the country’s top venture-funded companies had at least one immigrant founder… Through the companies they started the immigrant founders and co-founders have created an average of about 150 jobs in the United States…

37 of the top 50 companies, or 74 percent, had at least one immigrant helping the company grow and innovate by filling a key management or product development position.

As Alex Tabarrok says, letting more high-skilled immigrants into the country is the “no-brainer issue of the year”. Because most of the immigrants on this list are despite rather than because of US immigration policy. For instance:

Zoosk co-founders Alex Mehr and Shayan Zaden met in Iran as students back in the 1990s…

Getting a visa to the United States was not easy. Since America does not maintain an embassy in Iran, Alex and Shayan needed to go to Turkey. With no air travel at the time between Iran and Turkey the two young men had to cross into Turkey on foot…

Along with two other friends, they put together a prototype for a new business software project.. “Up until this point we had ignored the immigration aspects,” said Alex. The “immigration aspects” soon became clear to them: an international student possesses no right to stay in the United States and work…

The attorney advised them: “I think you guys should stop doing this company and get a job.” Alex and his friends were devastated by the news. “It was one of the worst days of my life,” said Alex. “We almost cried.”

The four young men dissolved the company and went their separate ways.

Eventually, Alex managed to win the green-card lottery, “gaining permanent residence through luck where starting a business had failed (due to U.S. law)”. This can’t possibly be good public policy. But the law doesn’t even pretend to make much sense:

How many visas are allocated to people of extraordinary ability from China, a country of over 1 billion people? Exactly 2,803. The same number as are allocated to Greenland.

The most startling fact in the latest paper is that the number of entrepreneurs from China — which is one of the most entrepreneurial countries in the world — is exactly zero. There are quite a few Iranians, and lots of Indians and Israelis — but no one from China or even, for that matter, from Japan or Korea or Taiwan. (There’s movement the other way, however.)

So let’s make America much more welcoming again, especially to the kind of people who will build the country of the future. In this nation of immigrants, I’m always astonished at how immigration-unfriendly the U.S. has become.

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Comments
22 comments so far

Feel free to debate whether DV is good law or bad, but don’t do so by pretending that it’s something different from what it actually is.

The legislation in question is “Diversity Visa” which has taken the informal name of Green Card Lottery. Its goal is very much in line with its name: diversity. As such, not only does China not get a low quota but its share of the DV program is actually ZERO. Countries with more than 50,000 immigrants to the US in the last 5 years are excluded and from those eligible, the visa number is supposed to be divided inversely proportional to each continent’s immigrants to the US… again, with the aim to increasing diversity among immigrants.

Posted by bmozaffari | Report as abusive

In other news, most people in managerial positions on Californian farms are of Mexican origin. Hey, let’s import more Mexicans!

Seriously. The United States has been importing foreign high-tech workers in large numbers for the last 20 years. According to TechServe Alliance, there is a total of 4 million IT jobs in the country (which presumably includes clerks and receptionists). By comparison, since 1991, the State Department issued 2 million H1B visas. I’m pretty sure that almost all of these 2 million workers are still here (some still on H1B, others got their green cards or became citizens).

Pop quiz:

* What was the effect of artificial doubling of the pool of IT workers on the prevailing wages in the industry?
* Is there any connection between this mass importation of workers and the fact that Americans don’t bother with STEM college degrees any more?
* What will happen to the industry if we lift the caps and import another 2 million workers from China and India?

Posted by Nameless | Report as abusive

What Nameless said. Moreover, there are several heartwarming stories of wonderful immigrant entrepreneurs. They are cancelled out about 100X over the mass importation of fresh CS grads to the US from all over the world to squeeze out older workers.

Journalists have a hard time thinking at scale….

Posted by Dollared | Report as abusive

32 x 150 = 3450 jobs created. that’s great except we import around 65,000+ foreign tech workers every year under the H-1B visa program (many more under the L-1 visa). so, these foreign entrepreneurs need to create another 61,550 jobs per year just to keep up with the foreign worker inflow.

like @nameless said, this is why college students are no longer pursuing STEM degrees

Posted by arrgh | Report as abusive

it would be interesting to see the stats on how many jobs have been created by the 1% over the last ten years and compare it with jobs created by such an immigrant group. Jobs created in China would count negatively of course…

Posted by FifthDecade | Report as abusive

Wait, letting people who want to work here work here is “artificial doubling”? Isn’t keeping out people because of what their citizenship happens to be artificially limiting the workforce?

I agree that there’s plenty to be mad about H1-B visas: they tie workers to a particular employer and make it difficult to bargain at par with citizens and permanent residents, which means that they become cheap(er) labor. The solution, it seems to me, is to make it easier for them to become permanent residents and U.S. citizens.

Posted by jfruh | Report as abusive

“Wait, letting people who want to work here work here is “artificial doubling”? Isn’t keeping out people because of what their citizenship happens to be artificially limiting the workforce?”

Well, since there are upwards of 5 billion people in the world who want to work here, and we only have 300 million people in the country, yes, letting in some fraction of those 5 billion is artificial.

Posted by Nameless | Report as abusive

I think the key word is venture-back enterprises. If one were to look at profitably start-ups, not just high-tech capital gobblers then you might have a different picture.

jfruh, exactly. I mean look what a disaster immigration has been to the US since the 17th century…. Not going to cry a river over IT people of whom 99% are a complete and utter waste of space.

Posted by Danny_Black | Report as abusive

OK, let me re-write that:

“I think the key word is venture-back enterprises. If one were to look at profitable start-ups, not just high-tech capital gobblers then you might have a different picture of the ethnic backgrounds of founders.”. I suspect Chinese start in China because they have better links to capital, or at least used to.

Posted by Danny_Black | Report as abusive

I could be convinced that reforming immigration to increase the amount of talent available to the US job market could, in theory, serve as an economic boost. Right now, I’m not convinced either way, but I think there are valid and competing arguments for both sides of that debate. It is true that better talent for key positions could help companies grow and that growth could increase the overall employment pool. But you could also predict – not unreasonably, given existing trends – that any expansion of working visas would simply push US college students further out of technical fields while encouraging abusive/unfair labor practices and lowering American citizens’ share of the labor pool.

But the United States has a problem right now, and it’s not diversity and it’s not a lack of attention toward technical ventures. The problem is that our economy doesn’t provide mid-level employment for all of its citizens who are seriously looking to work for a decent wage, and the economy thus needs reform. None of the proposals to improve the immigration system have anything to do with that. The tech industry seems to be completely unconcerned with it, at least; business leaders in tech abhor large labor forces and have refused to source from the US talent pool when their plans to recruit genius foreign nationals for subpar salaries didn’t work out. I would hesitate to listen to them on ANY governmental policy, since they’ve also been unable (and fundamentally unwilling) to curb speculation and bubble activity in their own sector. We don’t need the entire US economy running on a tech-like boom/bust cycle, since there would be a lot more on the line than just some white people’s trust funds. And they would subsequently be unable to handle mass starvation, riots, anarchy and regime change.

The sad thing is that if we actually DID prioritize our labor market above the hoarding of wealth by the wealthy, our doors could be wide open to immigration talent with no economic or political repercussions to worry about. We’re supposed to be better than this. And we’re not.

Posted by BrianVan | Report as abusive

Felix, in concept I agree with you. That said, I’ll first point out that the United States has a long history and tradition of offering all the same opportunity, no matter what your background. We fail at that in numerous ways, but as an ideal it’s not half bad. My grandparents were rock farmers in the old country, and thanks to our policies I have the privilege of an upper middle class life as one of those high-skilled professionals. Do we really want to become a country known for letting high-wealth people “buy” citizenship? (I’m looking at you, Canada)

Second, I don’t think there’s any way of determining which prospective immigrants are really going to make a difference. I would bet a dime that the large majority of high tech H1Bs are brought in by services firms (IBM Global Services and the like), and in fact toil at jobs that could reasonably be done by citizens. Letting in more such high-skilled people seems counterproductive. If you have a reliable way of identifying those who will become successful entrepreneurs, I’m all for it, but I’m pretty sure you don’t.

Posted by Curmudgeon | Report as abusive

Nameless, don’t flatter yourself: the rest of the world does not want to become American, the rest of the world does not want to work in America. Most people want to continue living where their roots, culture and family are. At most maybe 5 in 100 consider the possibility, but probably only one or two of those apply, half of those are rejected, and half of what’s left returns not having liked the experience.

America may be portrayed to you by your opinion makers as such, but it is no beacon of wealth and freedom as it once was; that’s just propaganda to keep you from demanding better from the 1%.

Posted by FifthDecade | Report as abusive

Well…another chance to bash the H1b’s…tech workers etc with the usual tried and tested fallacies….”anyone” below refers to people who use their prejudice and not their brains.

If we made it easier for H1B’s to become residents easily, will it not make it easier to demand more? Why do you think a class of people would want to work for less??

Has anyone given ANY thought to the hugh number of jobs being Offshored both in software and in traditional manufacturing because of the asinine “Industrial policy”? These jobs had they been kept in the USA will have prevented the hollowing out of the middle class.. Did you know that Apple can still make a heafty profit by producing their lovely devices here and not in China in “sweatshop” like conditions…
No.No..wait…Steve Jobs can do no wrong… its not Apple’s fault…its the workers who are accepting a low wage…lets bash them

Has anyone proved that H1b’s work for less than citizens do? Is there ANY data to prove that?

Lets realize that most of the time its easy for the 0.1% to use our prejudices so that they get away….remember…

First they came for the communists,
and I didn’t speak out because I wasn’t a communist.

Then they came for the trade unionists,
and I didn’t speak out because I wasn’t a trade unionist.

Then they came for the Jews,
and I didn’t speak out because I wasn’t a Jew.

Then they came for me
and there was no one left to speak out for me.

Posted by pot | Report as abusive

Any immigration policies have to be extremely thought out. Here in the UK the Labour party opened the floodgates to immigrants and the country has changed beyond all recognition and very much for the worse. Its imperative the focus is on quality rather than quantity.

Sadly in the UK the criteria was for many years non-existent and the effect on the country has been devastating where in London for instance there has been overcrowding which has fuelled the increase in property prices to ridiculous levels and a general feeling of a loss of cultural identity.

Posted by joe22 | Report as abusive

Silicon Valley is looking for engineers. The non-brilliant need not apply. Allow the engineers to immigrate and they will pay US taxes, don’t allow them to immigrate and they will pay some other government taxes. Either way, we want the best in the world to be working for us not the cheapest. It would be nice if they could live here too, but it’s not an absolute requirement.

Every time a brilliant engineer is denied entry into the US, that person creates amazing things somewhere else.

Posted by k9quaint | Report as abusive

I wonder if Felix “Open Borders Now!” Salmon would be so enthusiastic if we allowed thousands of “high-skilled” immigrants into the United States to compete for journalist/blogger jobs?

There are thousands of “high-skilled” immigrants who can perform the same “cut and paste” journalism at a much lower price!

Posted by Nichols7 | Report as abusive

Someone should explain to Nichols7 that the internet exists outside of the US. Those thousands of high-skilled bloggers can already compete with Felix. You don’t need to reside inside the US to post in a blog. ;)

Posted by k9quaint | Report as abusive

“don’t flatter yourself: the rest of the world does not want to become American, the rest of the world does not want to work in America. Most people want to continue living where their roots, culture and family are.”

This is only true for people who live in other developed countries. That is why I said 5 billion, not 6. Among people in third-world countries like India, who sustain themselves on $2/day, the vast majority would take the opportunity to move to America if it was offered. They don’t even care if it’s America or Australia or France, all they want is to get out of the hellhole where they were born and to find a decent place to raise their children.

Posted by Nameless | Report as abusive

@FifthDecade,

Nameless “gets it”. YOU don’t.

The “point” is that ENOUGH of “…the rest of the world… want[s] to work in America…” to “bury us” (as the Soviet Union leader Khrushchev threatened to do in the mid-fifties). The economic potential for an American legal immigrant is so great that they focus instead on bringing their family, roots and culture here.

If “…5 in 100 consider the possibility…”, of a country with a population of millions, that’s still 50,000 per million! With quotas being what they are, only the “best and brightest” need apply. Yes, many do not quality because of immigration quotas.

Please provide a verifiable credible source that half that make it here legally “…returns not having liked the experience.” America remains the best available “…beacon of wealth and freedom…”.

That 1% the unmotivated, unqualified, unsatisfied, unemployed OWC has-beens invented is a myth. America is going through an economically difficult period, as is the rest of a world feeling it’s way from an industrial age into an information age. There will be winners and losers. In case you don’t know you’re one of the latter that is, at most 20%.

The rest, the 80% of America, is currently assaulting the malls and spending like crazy. Whether Americans are employed, retired, on unemployment, on food stamps, at the food bank, etc., there is a chicken (or better) in every pot and there are between one and three cars in every garage that isn’t too full of other possessions to use it in the manner intended. But sour grapes make good stuffing.

Posted by OneOfTheSheep | Report as abusive

joe22 – No ‘floodgates’ were opened in the UK, although the claim that there was helped the xenophobes to gain some political power. It’s always easier to take pot shots at immigrants rather than focus on ones own mistakes and shortcomings. It’s always easier to control the ignorant through fear.

No, it wasn’t floodgates that brought in economic migrants, it was an economic boom, and when the boom ended, most moved on or went back home.

The reason why they could enter the country was the same reason that Californians are allowed to go and work in Columbus, Nebraskans in New York, or Texans in Tennessee. It’s what allows Brits to work in Belgium, Scots in Scandinavia, Glaswegians in Germany, and any Brit to retire to anywhere warm (or cold) in the EU. It’s called Freedom of Movement and is an economic benefit to the places that allow it.

As for ‘over-crowding’ in London, the current population of 7 million is 30% less than when it was the world’s largest city. Perhaps if the govt didn’t spend more money on transport in London than the rest of the country combined…
http://www.bbc.co.uk/news/uk-england-162 35349
…economic growth would spread out a bit and give those parts of the country that have millions of empty homes, and communities without jobs, some share of the economy that is more than that provided by govt spending on welfare benefits or transplanted govt employees.

As for house prices, blame the green belt and nimby’s for that, plus the selling off of council housing in the 1980s where the proceeds were prevented from being used to replace the housing stock. That was no more than selling the family silver to pay for day to day costs. That wasn’t done for economic reasons either, it was purely ideological.

As for loss of cultural identity, that began when Hollywood films were first shown in the cinemas of the UK. But which culture did you mean? Welshness? Scottishness? Irishness? Yorkshire, Lancashire, Cumbria or Geordieness? Cornishness, East Anglianess, Kentishness or Man of Kentness? For heaven’s sake, Britain’s National Dish is now Chicken Tikka Massala (invented in Glasgow) – and it is that because people LIKE it.

Diversity is good: get used to it, joe22.

Posted by FifthDecade | Report as abusive

I don’t advise the UK on its immigration policies. Is Felix even a US citizen?

Posted by billyjoerob | Report as abusive

In the 1960s, there were 100 slots open for immigrants from China. Of course, there weren’t all that many entrepreneurial Chinese during Mao’s Cultural Revolution.

I have nothing against immigration, but it has nothing to do with improving the economy or solving our economic problems. That can only be addressed by increasing regulation and raising taxes. Still, consider that there was a major immigration shut down from the 20s through the 70s, a period of serious income growth and rising living standards, and that this growth ended around the same time immigration was increased.

FifthDecade: Fish and chips was another immigrant food introduced to England by eastern European Jews.

Posted by Kaleberg | Report as abusive
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