Jump-start U.S. growth through immigration

March 12, 2009

 Diana Furchtgott-Roth– Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. —

When people think of what to do to help the U.S. economic recovery, admitting more immigrants into America isn’t what usually comes to mind. But a new study by Arlene Holen, an economist and senior fellow with the Technology Policy Institute, could contribute to resolving the current economic crisis.

The study finds that letting in more highly-skilled immigrants would generate more tax revenue, and over time raise labor earnings and national income. (Click here for the study in PDF format.)

Coincidentally, this week the Wall Street Journal reported that bankers are quitting due to onerous conditions imposed by the federal government on banks receiving public funds. Yet the new economic stimulus bill specifically makes it harder for banks to hire foreign workers, thereby limiting the flow of talent to a troubled industry.

If Congress had not imposed a tight lid on green cards, according to Ms. Holen, America in 2008 might have had up to 300,000 more highly educated engineers and graduate students performing path breaking research. They would have added about $23 billion to GDP, and the federal government would have gained about $5 billion more in tax revenues.

Based on Congressional Budget Office estimates, Ms. Holen (who used to be associate director at CBO) said that if comprehensive immigration reform had been enacted in 2007 then GDP would have been $180 billion greater over the next decade, and federal revenues would have been higher by $40 billion.

A similar argument was voiced by Representative Zoe Lofgren, a California Democrat and chair of the House Subcommittee on Immigration, Citizenship, Refugees, Border Security, and International Law in a speech on March 10. She said that “we need to jump start our growth through immigration.”

Ms. Lofgren explained that the billions of dollars allocated to scientific research in the 2009 economic stimulus bill cannot be effectively spent without more H-1B (temporary) visas for foreign scientists, “because all this spending needs people to do research.”

She said that comprehensive immigration reform, which was rejected by Congress in 2007, can pass this year if President Obama supports it.

To invoke a familiar truism, America’s immigration system is broken. Every year, the U.S. Center for Immigration Services issues only 65,000 H-1B temporary visas for skilled workers out of over 600,000 applications from employers.

A similar backlog exists for permanent residence visas sought by individuals both in America and abroad, with applications often close to ten times the number of “green cards” that may by law be issued. In 2006, more than 12,000 newly-arrived workers received green cards to work in the United States, and 53,000 temporary workers already in America were granted green cards.

For fiscal year 2009, the H-1B visa cap of 65,000 was reached in a few days. This is not to say H-1B visas have always fallen short of demand. During the 1990s, Congress temporarily raised the quota to 195,000, a number that did not exceed demand, but the quota reverted to 65,000 in 2004.

This quota represents a small fraction of the U.S. labor force of 154 million. Even if the quota were raised to 150,000 a year, that would still be less than one tenth of 1% of the labor force, hardly a source of the mass depicted by anti-immigration xenophobes.

By limiting visas, America is hurting itself, because the number and percentage of PhDs in science and engineering awarded to Americans and permanent residents have declined dramatically over the past decade. Fifty-eight percent of PhDs in physics are awarded to foreigners in 2007, compared with 48 percent a decade earlier. Foreigners earn 66 percent of PhDs in computer science and 53 percent of PhDs in chemistry.

Columbia University professor Amar Bhidé has shown in his new book “The Venturesome Economy” that it’s efficient for Americans to get advanced degrees in law and business rather than in science and math if they prefer these fields. However, we need to issue more immigrant visas so that we have enough scientists.

Issuing more green cards and H-1B visas can provide effective economic stimulus—and this can happen at little or no cost to Uncle Sam or working Americans.

You can reach Diana Furchtgott-Roth at dfr@hudson.org.

124 comments

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To the extent that the tax earnings provided by increased number of immigrants were to be channeled directly to US High Schools to train new scientist and mathematicians so that over time the dependence on foreign scientist could be balanced with the emergence of US born scientist, then the program makes sense. This could also be acomplished by charging the employers fees for these immigrant scientist and have those monies flow to US Public High School outreach for science and math programs. The argument for increased H1B immigration entries currently excludes externalities related to the costs associated with the maintenance not only of direct family members but also multi generational entries that burden schools, hospital and other state programs which neither the companies or the immigrants pay for, in effect its a subsidy to the companies and a windfall to the immigrants. So tax revenue increases are in fact insufficient to cover the total cost of the H1B immigrant and thus the analysis of its benefit is flawed.

Posted by Claudio | Report as abusive

Ananke,

A couple of points:
* Why do you need 5-6 years for an MS degree?
* Why would your costs be $300,000 while an Indian engineer
would need only $30,000 IF both of you are enrolled at
the same US university?
* If you are complaining that cost of education in India
is lower, you are welcome to complete your schooling in
India.

Posted by AK | Report as abusive

Discrimination Is Occurring On A Massive Scale Against Qualified US Citizens.

The Middle Class Has Been Destroyed.

Families Have Been Torn Apart.

The EEOC, the OFCCP, the DOJ-OSC Have Done Next To Nothing To Protect US Citizens Whose National Origin Is USA.

Immigration Law Firms Harm American Workers.

The H-1B Visa guest worker program has “RESERVED” millions of high-value jobs for citizens of foreign countries.

“Fake Job Ads” consistently and routinely DENY, DEPRIVE, EXCLUDE and DISCRIMINATE against United States Citizens during the hiring process.

Here is Cohen & Grigsby, a prominent immigration law firm, displaying their Good Faith Efforts To Recruit American Workers…
http://www.youtube.com/watch?v=TCbFEgFaj GU

When companies have job opening, they place an order with job descriptions to third party recruiters like ManPower, Volt, Adecco, Robert Half… there is a long list of third party recruiters.

However, out in the field, we are not seeing the most meritorious candidates receive job offers.

Instead, what we are seeing are violations of EEO, the law of the land.

The available talent pool in the US workforce is being completely bypassed.

The job descriptions are not advertised publicly so that qualified candidates can apply.

Instead, firms who $ub$cribe to the large third party firms services can see the job descriptions and submit resumes from H-1bs to transfer Corp-To-Corp.

US Citizens and Green Card Holders never know the job openings even existed… this is exclusion / discrimination.

Posted by Margaret | Report as abusive

Furchtgott-Roth: “a new study by Arlene Holen, an economist and senior fellow with the Technology Policy Institute, could contribute to resolving the current economic crisis.”
Comment: There has always been a steady stream of well-financed balderdash studies done by pro-H1B corporate-sponsored “think-tanks” spinning numbers in different ways to try to find something that sounds good. Ms. Furchtgott-Roth doesn’t reveal that the Technology Policy Institute is supported (i.e. bankrolled) by the following companies:
* AT&T
* Cisco Systems, Inc.
* Comcast
* Edison Electric Institute
* Ewing Marion Kauffman Foundation
* Google
* National Cable & Telecommunications Association
* Southern Company
* Telefonica
* Time Warner Cable
* T-Mobile
* VeriSign
* Verizon
* Yahoo!

http://www.techpolicyinstitute.org/about  /supporters

Furchtgott-Roth: “Yet the new economic stimulus bill specifically makes it harder for banks to hire foreign workers, thereby limiting the flow of talent to a troubled industry”.
Comment: Ms. Furchgott-Roth should emphasize that banks that aren’t receiving TARP bailout can use the H-1B program exactly as they had before. She should reiterate that ONLY BANKS TAKING U.S. TAXPAYER MONEY TO SAVE THEIR HIDES are under the new rules.

Furchtgott-Roth: “If Congress had not imposed a tight lid on green cards, according to Ms. Holen, America in 2008 might have had up to 300,000 more highly educated engineers and graduate students performing path breaking research.”
Comment: Love the used car salesman-speak “might have” and “up to”. If we are inclined to believe this one tech-industry-funded person’s analysis in the first place. But even so – if we are to leave the “might have” and “up to” in – that means that there also might have been 0 more highly educated engineers and graduate students performing path breaking research.

Furchtgott-Roth: “America’s immigration system is broken. Every year, the U.S. Center for Immigration Services issues only 65,000 H-1B temporary visas for skilled workers out of over 600,000 applications from employers”.
Comment: The number of H-1B workers entering and working in the country each year usually ends up being about double Ms. Furchtgott-Roth’s number because of the various uncapped categories, and I’m sure she knows this. I believe these are the numbers:
1,400 nationals of Chile;
5,400 nationals of Singapore;
20,000 with master’s and doctor’s degrees from US colleges and universities;
58,200 with “bachelor’s degrees or equivalent experience” from anywhere in the world;
unlimited visas for those employed by non-profit research outfits;
unlimited visas for those employed for local, state and federal research;
unlimited visas for those employed by US colleges & universities.

Posted by Ginnington | Report as abusive

What Americans have to face up to is the fact that their students do not have the math skills to compete in a global economy. Just notice all the foreign students entering math classrooms and out competing American students. There was even an article from last year stating that American math students can no longer compete against Asian students. Of course the majority of Americans deny this, I don’t blame them, but reality is reality. Accept it and just take advantage of your economic and social power by enticing geniuses from abroad.

Posted by Mark | Report as abusive

Stop these biased articles. We need to improve this country on our own, not on some other country immigration. It is experts like the above, causing this country to go downhill.

Visa frauds cannot be stopped fully. Minimally, have the following changes to H1/L1/L2 visa immediately for future Visas:

- H1/L1/L2 Candidates work directly (and ONLY) for the company (no staffing firms, head hunters, etc). This will reduce the undue interference of staffing firms/hiring managers on the the hiring process. That means, if a any_micky_mouse.inc applies for H1, the job has to be their requirement not some client requirement.

- Allow free movement of visas to change emmployers without any restriction till the expiry of their Visas.

- Do not allow green card processing during the H1/L1/L2 processing. Give them a choice. Either they can stay outside the country, apply for GC or come to the country and stay on H1/L1/L2.

- Increase the fine for Visa frauds, and jail terms for the senior executives of the company.

- Have a ETS type examination (similar to GRE). This will filter out cooks, tailors, policeman coming to this country as IT skilled laborers fradulently on H1/L1/L2 to this country. Yes, I am not exagerrating. There are several DBAs, testers, SAs in US who were once tailors and policemen in Hyderabad and Bagalore ;-), and supposedly they paid 5 lakhs (about $12k) to get them visa.

- Go to immigrationvoice.com and see for yourself, what kind of deperation these visa folks are undergoing, They are being manipulated by the very system that brought them here. The only winners are companies and the Head hunters/staffing firms.

- Have the employer send the candidates year end W2 to Immigration authorities. Let the immigration authorities then send it to the candidate for tax filing. This way, Immigration authorities can make sure the wages are not comprimised in the process.

- Make sure, any company cannot have more than 10% employees on temporary visas.

Posted by Anonymous | Report as abusive

“If Congress had not imposed a tight lid on green cards, America in 2008 might have had up to 300,000 more highly educated engineers and graduate students performing path breaking research. They would have added about $23 billion to GDP, and the federal government would have gained about $5 billion more in tax revenues.”

This is total fantasy, who or what is going to hire 300,000 engineers and pay the capital expenses to fund the research? Much like the general population, engineering unemployment is also at 20 year highs.

For all you entrepreneurs out there who can not find enough talent, why not try raising the wages, when supplies are short, prices go up! The thing is, I would not recommend to my son to go into engineering because there are more rewarding, reliable, profitable careers that do not require the 7-9 year investment engineering requires.

Posted by Garth Parson | Report as abusive

I recently built a research team.

I only looked at the best universities, and of those phd and masters resumes, 99% are students from India, China, & Europe. Quite frankly, most Americans don’t pursue studies in Phd level math & sciences. I prefer to hire someone born here because they socialize well, improving teamwork and their own growth. But I can’t hire them because they often lack the math & technical skills. Math & technical skills need to be learned before the job, so those that work for the PhD, be top of the class, I will gladly hire them!

Don’t kick the immigrant students out so they can go home and start cheaper competition. At very least, get some income taxes and innovation out of them.

Posted by manager | Report as abusive

Government can only control the policy, not the market. And the market always finds the most suitable option. In present situation, the most suitable option is outsourcing (Not H1b). When u can do same work at 5th of a cost, why would you spend higher amount?

Checkout IBM, 125000 employee in india and still rising. Why do u think all manufacturing is moved to china, the same issue.

The author has a good point, If you allow the legal immigrants and start giving green cards to them, you will at least delay they outsourcing, and also get the educated engineers. (However it is your choice, you can always choose uneducated illegal immigrants)

Posted by efyin | Report as abusive

I am in a fury that this is still being discussed as though it was a viable option in the US.

I want to hire more H-1B journalist to replace these ‘lazy, uneducated’ journalist who can’t report the truth to save their lives. Go back to supplicating yourself before your corporate masters and stop pretending that this is “NEWS” and not your right wing agenda to bankrupt what is left of the American Middle Class.

BTW I was one of those so called ‘lazy Americans’ who was laid off in the current ‘foreign two-for-one sale’ that corporate America is having for itself right now. I am highly educated, extremely intelligent and I work extremely hard for my employers. But as I was told when I was laid off, that ‘we can have two of them, for one of you’…I guess, I just had to go (Happy Birthday to me, since they were classy enough to lay me off on my Birthday).

I will never, ever, take money to betray my own people like you do, Diane. You are a traitor to the PEOPLE of this country and you should know that is what we think of you. So, despite the fact that your corporate masters still see fit to give you a paycheck to promote their agenda, we would like you to understand that we ‘get’ what you are pushing, this is not ‘news’ to us and we know what you represent.

Posted by Kiki | Report as abusive

What part of American jobs for Americans FIRST does this government and its corporate leeches not understand?
We do NOT care what kind of profits their tax dollars provide our corrupt politicians.
We have millions of people out of work, out of their homes and with no prospects for anything better. People are HUNGRY.
The current policies in place for immigrants is treasonous!! To actively work against the best interests of this country and its citizens is TREASON!! To give American jobs to people of other nations when our citizens are in dire need is TREASON.

I hope these fraud experts stop this non sense articles and help US Citizens get back their jobs.

Posted by Great Response by Kiki | Report as abusive

My previous comment was deleted. Let me try again and see, if the author really honest in accepting other people’s views:

Most H1 (about 85%) and L1/L2 (about 95%) are very ordinary and can be easily found/trainable in USA.

Visa frauds cannot be stopped fully. Minimally, have the following changes to H1/L1/L2 visa immediately for future Visas.

- H1/L1/L2 Candidates work directly (and ONLY) for the company (no staffing firms, head hunters, etc). This will reduce the undue interference of staffing firms/hiring managers on the the hiring process. That means, if a any_micky_mouse.inc applies for H1, the job has to be their requirement not some client requirement.

- Allow free movement of visas to change emmployers without any restriction till the expiry of their Visas.

- Do not allow green card processing during the H1/L1/L2 duration. Give them a choice. Either they can stay outside the country, apply for GC or come to the country and stay on H1/L1/L2.

- Increase the fine for Visa frauds, and jail terms for the senior executives of the company.

- Have a ETS type examination (similar to GRE).

- Go to immigrationvoice.com and see for yourself, what kind of deperation these visa folks are undergoing, They are being manipulated by the very system that brought them here. The only winners are companies and the Head hunters/staffing firms.

- Have the employer send the candidates year end W2 to Immigration authorities. Let the immigration authorities then send it to teh candidate for tax filing. This way, Immigration authorities can make sure the wages are not comprimised in the process.

- Make sure, any company cannot have more than 10% employees on temporary visas

Posted by Anonymous | Report as abusive

Like most economists who are unwilling to ever again consider the ramifications of population growth, since the field of economics was branded the “dismal science” following Malthus’ theory, Ms. Furchtgott-Roth doesn’t understand the relationship between population density, per capita consumption and unemployment. So, like the other economists, she mistakenly believes that population growth is a good source of economic growth when, in fact, such growth is cancerous, adding to the labor force faster than their productive output can be consumed.

And considering the challenges presented by unemployment, reducing our dependence on foreign oil and cutting carbon emissions, the very last thing we need is to import more laborers, more oil consumers and more carbon emitters.

Pete Murphy
Author, “Five Short Blasts”

In my opinion, the H-1B visa and employment-based green card programs pose the greatest threats to the careers and livelihoods of white collar Americans. As Professor Norman Matloff (of UC-Davis) has written, the “prevailing wage” regulations for the H-1B visas and EB green card programs are riddled with loopholes that allow employers to underpay the foreign professional workers with respect to their American counterparts. The foreign workers are more than willing to accept these lower pay rates in exchange for the chance to be sponsored for an EB green card, which conveys legal permanent residence.

The vast majority of U.S. – based employers are classified as “H-1B non-dependent”. These employers can legally fire or layoff their American workers and replace them with (lower-paid) H-1B workers, even if the American workers are performing well in their jobs.

For proof of this, refer to the U.S. Department of Labor Strategic Plan for 2006-2011, which is available at:

http://www.dol.gov/_sec/stratplan/strat_ plan_2006-2011.pdf

On page 35 you will find the following passage:

“… H-1B workers may be hired even when a qualified U.S. worker wants the job, and a U.S. worker can be displaced from the job in favor of the foreign worker.”

This applies to all “H-1B non-dependent” employers. Since most U.S. based companies are classified as “H-1B non-dependent”, this means that the vast majority of firms in the U.S. can legally discriminate against American workers in favor of lower-paid alien workers.
Therefore, I believe that as the economy continues to contract, Americans are in even greater danger of being displaced by foreign workers on H-1B visas.

The H-1B and employment-based green card programs should be shut down.

Posted by Ms Weiss | Report as abusive

In many ways, the EB green card program is an even bigger scam than H-1B is. If a company wishes to sponsor a foreign national for an employment-based green card, then federal law states that the firm must make a “good faith” attempt to hire Americans first. However, there are many ways around this requirement. In fact, many so-called open jobs are not really open at all, but are actually filled with H-1B workers who are desperately trying to get that green card sponsorship. Americans who apply for these so-called “open” positions will be summarily rejected with absolutely no transparency in the hiring process. For evidence of this you can view the following videos:

http://www.youtube.com/watch?v=TCbFEgFaj GU

http://www.youtube.com/watch?v=SqGBIHmv7 jo

http://www.youtube.com/watch?v=Fx–jNQYNg A

America is the only country which allows discrimination against its own citizens in the workplace. These programs and practices should be ended immediately.

Posted by Ms Weiss | Report as abusive

Does this commentary sound as backward to you as it does to me? So we should let foreign scientists into our country to do research and create revenue for our country? I thought the foreign scientists came to our country to be educated by our American Scientists, ALONG WITH THE AMERICAN STUDENTS! So we have positions for foreign scientists but not American scientists. Is she saying American scientists won\’t generate revenue or can\’t conduct research. Hmmm….last time I checked I thought we were the ones exporting technology and leading in research. She must think our scientists don\’t know how to do research! I grow so tired of people claiming Americans won\’t work or are not intelligent enough to do cutting edge work. Either Americans won\’t do labor intensive work, so we should hire uneducated illegal immigrants, or we won\’t do high tech work so we should hire foreign scientists. Which is it, and why are we the greatest producers in the world? Americans teach these people for God sakes.

It appears to me that Diane has done a very cursory job of research on this matter. I have worked in industry since the early 70s and seen the US engineer and the foreign engineer working side by side. For the most part the US engineer out performs the foreign ones time and again. Yes, there are too many US based who under perform but they are in the minority. As to the PhD foreign engineer and scientists; my experience while I was in college, was that many were here on scholarship from their country while the US student had to pay his/her own way. Also, the foreign academic program is designed around testing so the foreign student is good at taking tests but many times does not perform as well in day to day activities and certainly not as good in innovation. This may sound very prejudicial, which it is not intended to be, but it has been my experience and the experience of many of my fellow managers. I’ve worked in high tech aerospace and in the highly competitive automotive field and observed the same in both fields. Of course, there are many outstanding foreign scientists who have contributed significantly but that does not justify the outsourcing of the entire technical base of the US to off shore companies which companies like IBM and Microsoft have done in order to insure top executives meet their bonus goals. Too bad this is happening and still be done in an irrational fashion. The chickens are already coming home to roost right now and, Diane, you won’t be immune from the fallout.

There are plenty of qualified Americans without jobs. I was recently trying to find a job in mid-west. I have solid 15+ years of experience in IT with experience in most current technologies in a multi billion company (in a senior role). When I applied for a job, I received immediately with in few days more than 100+ responses from various companies (even in this market). About 90% of the responses are from Indian Head Hunters. I am not exaggerating (nor it is a lie).

BTW, I am from India but an American Citizen. The moment they found out that, I am an American Citizen and do not need any sponsorship, the head hunters/staffing firms lost all interest. One of the staffing firm even had the audacity to tell me, that I am overpaid for my skills in my present job!!

I did not realize the impact of my proud Citizenship till I tried to test the waters in the job market.

Now, after testing this job market, I have lost all confidence. Before, I always used to feel that my talent is enough to get a job anywhere but not any more. It is sad, but true…

Posted by Anonymous | Report as abusive

For the lot of you that seem to think that America is not a place for a talented immigrant let me remind you that Albert Einstein was once a very talented and very smart immigrant.
Remember that this economic debacle was initiated by very greedy minded individuals who thought of themselves ahead of anybody else; the American “Brain Drain” was initiated when it was fashionable to go to Business and Finance Ivy League Schools instead of devoting oneself to scientific research and critical thinking in the same universities.
If it will take immigrants like Albert Einstein to re-educate America like in the 1940′s and 1950′s, so be it. Long term goals and general concern for REAL Science Education and Science Curriculum it’s what needed in this country, it’s what kept us ahead of the world; and it’s what our children need to have a place on the Future Wold.

Posted by Athena | Report as abusive