Closing the Door: Irresponsible Changes in Immigration Policy

The recently passed “American Recovery and Reinvestment Act of 2009,” aka the stimulus bill, includes a provision that restricts companies receiving federal bailout funds from hiring immigrant workers on H-1B visas. This provision was added by senators Charles Grassley, from Iowa, and Bernie Sanders, from Vermont. Considering that engineers, scientists, and immigrants with advanced degrees are generally falling over themselves to get to those two hubs of technological innovation and economic growth, one can understand the motivations of these lawmakers. They clearly have an informed perspective that most others lack.

The Last Refuge of a Scoundrel

One would hope that the Messrs. Grassley and Sanders had done their homework, but that would be giving them too much credit.

Their basis for this provision is an Associated Press story that claimed that banks that had accepted federal bailout money had tried to hire thousands of workers from overseas, at a time when they were cutting U.S. workers. Stuff like this is like a red flag to a bull — especially when the bull might be looking at a tough reelection and has a need to burnish his pro-American credentials. Never mind that the story was grossly inaccurate or just flat-out wrong. The reporter counted up visa applications from a dozen banks and found more than 21,800 over six years. Trouble is, he never bothered to find out how many of the visas were approved, much less how many immigrant workers were ever hired.

Further investigation revealed that none of the 12 largest banks receiving bailout funds had actually hired substantial numbers of foreign workers. An analysis by the Kansas City Star revealed that one of the largest banks — Bank of America — hired just 66 such workers, of which 51 were for its global equities arm. With a workforce of 210,000 that represents 0.03 percent being immigrant workers. Details, details.

To give the two gentlemen their due — this was political grandstanding at its finest.

The measure was tabled as a separate motion and approved by a voice vote. It would take special courage for a senator to be caught on camera voting against a measure labeled “Employ American Workers Act.” The esteemed lawmakers and others of their ilk have been known to claim that it is intent that counts — that the banks and other employers, if allowed to do so, would hire as many immigrant workers as possible at low salaries, to save a buck.

There have been abuses of the H-1B program but there is no evidence that these are pervasive. Rest assured if there was even a hint of widespread abuse by any large employer or industry then some state attorney general or U.S. Attorney would be investigating it. Immigrant workers make up less than 3% of the professional labor force. Hiring one is cumbersome, expensive, and difficult. An employer that does so has usually exhausted other options. Anyone who thinks otherwise should file an H-1B petition themselves and experience the pleasures of dealing with the bureaucracy responsible for approving work visas.

Risking our Future

This highlights a fundamental problem that is developing in U.S. immigration policy. We are increasingly frustrating the efforts of highly qualified talent from reaching us. This may seem to be a contrarian view in the midst of a deep recession, but this type of legislation is incredibly short-sighted and can have serious negative consequences. There’s also the question of who exactly is supposed to benefit from it? The vast majority of immigrant talent that gets hired on an H-1B visa includes scientists and IT professionals. As of the end of January the Bureau of Labor statistics reports an unemployment rate of 4.8% for employees in those categories. That doesn’t quite show that there’s an abundance of talent available.

I’ve written about this in the past, but the point needs to be made again that our needs for talent will continue to grow, as will those of other countries that are not sitting idly. The White House’s just released economic forecast along with the budget predicts that the U.S. will see economic growth of 3.2% next year, climbing to 4% by 2013. To put that in perspective: for that to occur the economy will need to be adding over half a trillion dollars in GDP every year by 2013. Whether that actually happens remains to be seen, but the growth is not going to come from Vermont and Iowa. Last time I checked, milk and corn were not high-growth industries. Our centers of technology and innovation will suffer disproportionately from the reduction in visas.

One may think that domestic supply will easily make up the difference, but that would be the wrong conclusion to reach. There is not an abundant supply of talent — domestic or foreign — to fuel the development of new and high-growth industries such as bio-technology and alternative energy. If we put up barricades, then the talent will simply go elsewhere. If Intel founder Andy Grove or Yahoo founder Jerry Yang had not come here they could have built their companies in other countries — and increasingly there are plenty of other countries that would welcome them.

There is some recognition that sanity needs to prevail. Senator Chuck Schumer has publicly vowed to overturn the H-1B restrictions. Some cynical types have claimed that he was influenced by the fact that a lot of banks receiving bailout funds were contributors to his campaign war chest, but I’m sure the gentleman’s motivations are pure. To suggest otherwise is insulting to the man.

But the fundamental issue remains that our immigration policy is deeply flawed. It has not fundamentally changed since the 1950s and does nothing to attract high quality talent. The process to obtain a visa or green card is a convoluted mess, tangled up between various governmental agencies — none of whom has any view of the big picture or any incentive to make things better. While our legislators pass laws on transporting chimps (the primate safety act), other countries focus on streamlining immigration procedures and simplifying the requirements for professional talent to reach them. Without major changes we stand to lose our edge in innovation, and jeopardize our future.