Last week, immigrants from the subcontinent reached an odd kind of watershed moment in their long history in America. Raj Rajaratnam, a naturalized Colombo-born American citizen of Tamil heritage, was sentenced to prison for the white-collar crime of insider training. The prosecutor on the case was a Punjabi-born American, Preetinder Bharara. When Americans born on the subcontinent are simultaneously meting out and receiving justice in one of decade’s most closely followed criminal cases—and no one in the US press finds their heritage worthy of mention—you know assimilation into the US is more or less complete.
Down in Washington, however, the urgent topic was precisely the opposite: the de-assimilation, if you will, of Indians in America. In the massive, angular Rayburn House office building, another Indian-born American, Harvard and Duke University professor Vivek Wadhwa, was testifying before a Congressional committee about immigration policies that are driving US-educated Indians (among others) to return home, rather than seek careers and start companies in the US. “The US is giving an unintentional gift to China and India by causing highly educated and skilled workers, frustrated by long waits for visas, to return home. We are exporting our growth and competitiveness.” Wadhwa referred to the trend as “reverse brain drain”. Discussing those same policies with a business group the week before, New York City mayor Mike Bloomberg chose more colourful language. “To put it bluntly,” he said, “this is about the dumbest thing we could possibly do.”
No one questions the contributions of foreign-born business leaders to the American economy, Indians in particular. In a 2006 study, Wadhwa found that roughly one in four US tech companies had either a CEO or chief technology officer who had been born somewhere other than the US. Foreign-born employees accounted for a 25% of patents secured by US companies. In Silicon Valley, the heart of the US technology industry, immigrants had founded more than half of the companies started in the previous 10 years. Indian immigrants accounted for more than a quarter of those startups—more than the next four countries of origin (Britain, China, Taiwan and Japan) combined.
Most of those foreign-born technologists came to the US as students and they stayed to help create companies that produce $5.2 billion in revenues (Rs 2.5 trillion) and employ 450,000 workers. “The great majority of US-educated professionals from places such as India and China remained in this country to work at research labs, universities and private companies,” reads a new report from the entrepreneurship-focused Kauffman Foundation, The grass is indeed greener in India and China. “Most stayed in the US for the rest of their careers because the economic and professional opportunities here were better than in their home countries.”
All that is changing rapidly and the change has American economists worried. Six years ago, when Wadhwa would ask his foreign-born students whether they planned to stay in the US, almost all would raise their hands. “Now when I do the same thing, my students look at me funny, saying ‘Professor, what do you mean?’” Wadhwa said. “It’s like they don’t understand what that concept means any more. To them, staying in America means staying for two or three years and getting an American company on their resume so it enhances their market value back home.
At the heart of the problem is an outdated and highly politicized immigration policy that throws up virtually insurmountable obstacles to professionals who want to work in the US. The immigration restrictions are two-fold: Only about 140,000 employment-based permanent residency permits (or “green cards”) are issued each year. No more than 7% can go to any single country, so that India receives the same consideration as such tiny places as, say, Iceland, or Costa Rica. The result is that the waiting list for Indian applicants for the EB-3 visa, the most common for skilled workers, is 70 years, according to calculations by the National Foundation for American Policy (a separate visa, called H-1B, allows US employers to bring in workers with specialized talents, but only 65,000 of those are issued every year). These policies serve no one’s interest, says Steve Case, founder of AOL and the head of Start-Up America, an Obama administration designed company to foster the growth of new companies, in an interview with Inc.com. “We attract the world’s most talented young people here, give them a world class education and then send them home to compete against us,” he says. “It makes no sense.”
At a time when US unemployment is running at 9.1% and Washington is desperate to encourage the creation of new companies (and jobs), the absurdity of turning away a rich source of entrepreneurial talent is plain. Two weeks ago, Case led a contingent of US corporate leaders to Washington to plead for relaxed residency and immigration rules. Among the proposals floated to the Congress, one would grant college graduates residency without question—or as republican congressman Jeff Flake put it in introducing a similar law, it would “staple a green card to every diploma”, as long as the diploma was in science, computer technology, engineering or math. Another proposal would waive immigration restrictions on business leaders who’ve started a company in another country and plan to do the same in the US. The rules enjoy solid support from members of the Congress as diverse as Silicon Valley democrat Zoe Lofgren and Texas republican Lamar Smith.
So what’s the problem? The problem is: reform of the rules regarding immigration by skilled workers has become entangled with the highly emotional issue of illegal immigration. A tough stance towards undocumented workers, largely from Latin America, has become an essential characteristic for Republicans eager to please their nationalist constituency (in televised debates, republican presidential aspirants seem to compete over who would build the highest and most electrified wall between Texas and Mexico). Democrats generally favour more welcoming policies towards all immigrants, but they are reluctant to anger Latino voters by resolving the skilled immigration issue without simultaneously reforming policy towards illegals. Democrats also understand that any law liberalizing rules for illegals has no hope of republican votes unless it also relaxes skilled immigration quotas and they have resisted addressing H-1B and EB-3 visas except as part of “comprehensive” immigration reform.
While Washington manoeuvres, the opportunity to keep Indian-born entrepreneurs in America is rapidly slipping away. Like the students in Wadhwa’s classes, Indian entrepreneurs are increasingly willing to apply their talents back home. The Kauffman report noted that 72% of entrepreneurs who had returned from the US to India said that the opportunities to start their own business were better back home than in the US. More than half said the quality of life in India was at least as good as they had enjoyed in the US.
They bring home what may be even more valuable than the degrees they earn from Yale or Stanford (although those don’t hurt, either): the entrepreneurial mindset. Wadhwa finds that the Indian business environment has increasing tolerance of risk-taking and failure in the past decade, a cultural attribute that traditionally gave the US an edge in entrepreneurialism.
America’s broken immigration policy may have inadvertently planted the seed for a vibrant start-up scene in India. Lately, American speechmakers have grown fond of warning that unless Congress reforms its hostile policy towards foreign-born business talent, the next Steve Jobs could arise in China or India. That thought may galvanize American lawmakers. The only problem is it’s probably too late. The next Steve Jobs is already at work.
Eric Schurenberg is financial editor at large, AARP The Magazine, and former editor of Money.
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