Green cards and red flags

Last Updated: Fri, Nov 16, 2012 19:50 hrs

The US’s policy of limiting the number of immigrants is traumatic for visa seekers and bad news for its economy. Indira Kanan reviews a new book that proposes a solution.

The United States welcomes immigrants. Immigrants love the United States. They start companies, lots of them, and create thousands of jobs in the US. Everybody wins. That’s the winning formula now in serious jeopardy due to a broken immigration system.

This is, partly, the argument provided for the new book, The Immigrant Exodus: Why America is Losing the Global Race to Capture Entrepreneurial Talent. Its California-based author Vivek Wadhwa, a serial tech entrepreneur and researcher, is vice-president of academics and innovation at Singularity University, and also teaches at Stanford, Duke and Emory universities.

We read about Anand and Shikha Chhatphar, creators of tech startups in the US, who had their green card petitions denied. Hardik Desai, who built a startup while still studying in the US, had several H-1B petitions rejected, and finally had to close his startup and get his H-1B visa as an employee of another company. Physician Puneet Arora was in immigration limbo for 16 years before getting his green card or permanent residency.

The author blames the current state of the American immigration system for creating a “visa hell” for potential entrepreneurs from other countries, mainly India and China. Wadhwa begins by using his own example to argue his case.

India-born Wadhwa’s first experience of the US was a bite of the Big Apple from age six to ten, when his father was posted to the Indian consulate in New York during the mid-1960s. After getting a computer science degree from Australia, Wadhwa promptly received permanent residency and a path to citizenship Down Under. But he jumped at the chance to return to the US instead in 1980. A mere 18 months after starting at Xerox, he had his green card. An IT job at the Wall Street bank First Boston followed. The technology his team worked on was a success that led to a spin-off company, Seer Technologies, and a big IPO. After a second startup based in the research hub of North Carolina, and a heart attack, Wadhwa moved to teaching and research.

What he found in the course of his latest research led him to conclude that if he were to choose today, “I would have been a fool to leave Australia”. Wadhwa writes, “If I had landed in the United States on an H-1B visa today, my wait for a green card could be a decade or longer.” During this time, he would not be able to change jobs, or start his own company. His wife would not be able to work, and might not even be able to get a driver’s licence. And if he got laid off while waiting for a green card, he would have to leave the US immediately.

The book warns that increasingly, immigrants are choosing to leave on their own, and returning to their homelands to create companies and jobs. Wadhwa argues this is bad news for the US, citing data showing immigrants are more than twice as likely as native Americans to start a business. According to a 2012 report by Partnership for a New American Economy, immigrants were only 13 per cent of the US population, but founded 28 per cent of the country’s startups. And with new businesses accounting for two-thirds of all net new jobs in the US, a drop-off in immigrant startups is a huge blow to an economy already in the doldrums.

Wadhwa cites his own studies and that of fellow researcher Anna Lee Saxenian to document contributions of immigrants to the US economy. Their 2007 survey showed over half of Silicon Valley startups had immigrant founders. Indians outpaced Chinese and Taiwanese immigrants as founders of tech startups in Silicon Valley.

The Indian dominance was the logical outcome of their influx into Silicon Valley from 1990 to 2000. In that decade, the population of Indian scientists and engineers in the region grew by a staggering 646 per cent, even as the total population of scientists and engineers in the area grew 103 per cent.

Wadhwa had also found that the median interval between skilled immigrants arriving in the US and starting their own company was about a dozen years, so the influx of Indians during the 1990s should have led to a surge in startups just about now. Instead, a follow-up survey this year found the proportion of immigrant-founded startups had declined, from 52 per cent to 44 per cent.

Wadhwa identifies two key factors for what he calls the immigrant exodus. One is faster growth in countries like India and China, traditionally two of the largest sources of skilled, job-creating immigrants. A 2010 survey found a huge majority of Indians and Chinese now said startup opportunities were better or much better back home.

The second reason for the exodus, Wadhwa argues, is American immigration policy. The US can’t do anything about the former, he says, but must fix the latter urgently to retain, and attract, job creators.

Wadhwa proposes reforming the H-1B and green card programs to fix the problems. He points out that Indian and Chinese immigrants are particular victims of the green card bottleneck, as they constitute the lion’s share of H-1B holders and green card applicants. But there’s a 7 per cent cap on green cards given to applicants from each country, creating a huge backlog for Indians and Chinese. Among an estimated 1.2 million applicants waiting for green cards are around 400,000 Indians, according to Wadhwa.

The author proposes seven fixes, which he argues will cost US taxpayers nothing, but will drive economic growth in the country. The main suggestions are:

  • Increase the number of green cards available to skilled immigrants
  • Allow spouses of H-1B visa holders to work
  • Untether the H-1B worker from the employer
  • Institute a startup visa
  • Remove the country caps on green cards

Wadhwa cautions that other countries like Australia and Canada are competing with the US to attract skilled immigrants. China is rolling out the red carpet for those wishing to return. Only India, “perhaps the biggest competitor to the US for entrepreneurial talent”, does not have a specific programme to lure people back home. But, he says, it doesn’t need one, as “it offers an exploding market and a culture that its people want to return to.”

With his passion in pointing out the importance of immigrants to the US economy, Wadhwa is a sort of Paul Revere in reverse, who, instead of warning, “the British are coming”, is sounding the alarm “the immigrants are leaving”.

“Entrepreneurs are what make India what it is”
So, is the immigrant exodus from the US good news for India?
It’s definitely good news for India because it’s getting a lot of very highly skilled, talented, experienced workers coming back who would normally not be returning home. Entrepreneurs are what make India what it is. So getting more entrepreneurs back with Western training and a Western mindset will help India.

You write that the slowdown in startups is a worrying trend. Is this true only for immigrant-founded startups, or for all startups?
The number of startups across the board is stagnant. It’s not going anywhere. But the fact that the immigrant proportion has dropped means it’s a loss. If immigrants were starting more companies, the pie would have been bigger. We’ve made the pie smaller.

Are immigration problems the main reason for this slowdown, or could it also be due to the sluggish economy, or concerns about regulation?
Funding is not a problem because it doesn’t cost that much to start companies any more like it used to. And most of these skilled workers, they make six-figure salaries. So money is not an issue for them. Entrepreneurship is strong over here and this is a great place to start a company. The visas are the problem.

How feasible are your proposals to reform the H-1B programme, given the concerns about abuse of this visa?
Right now the reason why abuse happens is because the H-1B worker is tied to the employer. So what I’m saying is, untether it, remove the connection so that the workers being abused can leave that employer. Right now they’re really indentured servants to their sponsor.

What’s holding up reforms of the sort you’ve proposed in your book?
On the per country quota for green cards they’re getting close to a consensus on that. Nobody is arguing about skilled immigration. The issue is about unskilled, undocumented workers, that’s where the battle is being fought. The legals are being held hostage to the plight of the illegals.

Author: Vivek Wadhwa
Publisher: Wharton Digital Press
Price: Rs 274

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