How Trump’s Targeting of High-Tech Immigrants Damages the Economy

How Trump’s Targeting of High-Tech Immigrants Damages the Economy

Original Article on TheStreet

As a presidential candidate, Donald Trump often decried immigration as an assault on U.S. workers, public safety and the national character. Though working-class immigrants received the bulk of the Republican’s ire, foreign-born employees working at U.S. tech companies didn’t go unnoticed.

“I will end forever the use of the H-1B as a cheap labor program and institute an absolute requirement to hire American workers first for every visa and immigration program,” Trump said in a statement posted on his campaign’s website. “No exceptions.”

If a leaked White House memo is any indication, President Trump appears poised to issue an executive order that could make it much harder for U.S. companies to hire skilled workers from abroad. High-tech companies have used the H-1B program for years, helping prospective non-U.S. citizen employees obtain one of the roughly 85,000 visas distributed annually by the Department of Homeland Security.

The leaked memo written by Andrew Bremberg, director of Trump’s Domestic Policy Council, is short on specifics but long on the type of broadsides that peppered Trump’s presidential campaign. (A White House spokesman, in an e-mail, wouldn’t confirm or deny the leaked memo, adding only that for the administration, reforming its “broken immigration system is a top priority.”)

The draft executive order lays out steps to “restore the integrity of employment-based nonimmigrant worker programs,” specifically the H-1B visa program. It emphasizes that “officials administer our laws in a manner that prioritizes the interests of American workers and — to the maximum degree possible — the jobs, wages and well-being of those workers.”

The memo seems to be saying that each time a U.S. company hires a non-U.S. citizen to work in the country, he or she is taking a job away from an American worker. And that’s been a criticism of the program for a while.

But such an analysis assumes a zero-sum game, argues William Kerr, a Harvard Business School professor who has studied the impact of immigration on U.S. innovation for the better part of the past decade. The economics of the program aren’t so simple.

Immigrants, Kerr’s research found, make up 15% of the U.S. workforce yet account for 25% of its entrepreneurs, that is, people defined as the first three wage earners in a new business. In other words, high-tech, highly trained engineers and computer programmers also start companies, using an infrastructure of funding and specialists often unavailable in their home countries.

And that figure is steadily rising. Back in the mid-1990s, immigrants accounted for 17% of entrepreneurs.

In more recent years, Kerr found, 35% to 40% of new companies include at least one immigrant entrepreneur. And although companies created by immigrants close at a faster rate than those formed by the native born, those that do succeed for at least six years grow at a faster pace when judged by total employment and payroll.

“U.S. science and engineering, innovation, entrepreneurship have deep connections to the immigration of skilled people to the United States,” Kerr told TheStreet. “Since a lot of our inventors are foreign-born, this program has a disproportionate impact on the size of that workforce and therefore can have serious consequences for U.S. innovation.”

To be sure, the program isn’t without faults or abuses. Critics have long maintained that U.S. companies prefer H-1B visa workers because they can pay them less or fire them more easily. 

Iowa Sen. Chuck Grassley, the Republican chairman of the Senate Judiciary Committee, and Illinois Sen. Dick Durbin, the Democratic whip, reintroduced legislation this month that would give preference to those who have earned an advanced degree from a U.S. university, have secured a job offer and have a recognized unique skill.

 
Leon Lazaroff