(Photo by Courtney Hedger on Unsplash)
On Monday, the president signed an order that froze visas for foreign workers until the end of the year. Over 219,000 workers could be impacted as a result of the order. With massive unemployment, at 13.3% as of early June, it might seem logical to promote an “America first” approach to reviving jobs.
However, policies designed to curb immigration end up hurting American workers and also inhibit American dominance in the global economy.
Last year, an incredible candidate on an F1 visa was wrapping up her master’s degree at Johns Hopkins University and reached out to volunteer at my company; immigration law prohibited her from getting a paid internship or part-time employment. Her background was in data science and her skill set was unlike that of anyone else we had worked with. After she graduated, we tried to work with the school to see if there was a path for gainful employment, but we had missed the window for the H-1B program for that year. She recently reached out to us to follow up for this year — and now, the administration has suspended all H-1B visas.
These programs play a crucial role in helping to keep American companies competitive in a global landscape. Here are six reasons that break down why curbing immigrant workers, especially in tech, is bad for America and our workers:
1. It will slow down innovation in the U.S.
Nearly half of Silicon Valley tech and engineering companies had immigrant founders in 2016. If we focus purely on unicorns (tech companies with over $1 billion in valuation), that number jumps to 51%.
We might not care about Silicon Valley if we live in other parts of the country such as the Rust Belt or Appalachia. After all, most of the high-tech jobs have been drained from the middle of the country to the coasts. However, with COVID-19 and the surge in remote work, these jobs are now trending out of big cities and back into the American heartland. Eventually, the innovation jobs ecosystem will stabilize itself and be less concentrated on the coasts.
This isn’t just bad for workers, it’s bad for American national security. The cold war between the U.S. and China as manifesting in the battle over Huawei’s role in the global launch of 5G networks largely revolves around technology. It’s not just about software-based companies but drones, biotech, IoT, blockchain, etc. American tech companies are now at risk of facing severe labor shortages right when American tech dominance is being challenged.
2. It will enhance racial inequality in the U.S.
Let’s assume for the sake of the argument that cutting back on immigration will enhance the positions of domestic workers in tech. We shouldn’t presume that will necessarily be a good thing. Tech companies already have problems with diversity, especially around hiring African Americans as workers in leadership roles. This challenge is exacerbated by the fact that only 1% of venture funding went to Black founders.
Diversity in tech is not only the right thing to do — it’s important for innovation. A 2018 study from North Carolina State University showed that companies with strong levels of diversity launch two times more products than other companies, and are “more resilient in terms of innovation during the 2018 financial crisis.”
3. It will drive startup founders overseas.
Immigrants currently on H-1Bs are now faced with an uncertain future. Rather than trying to push through, many will be returning home in record numbers. I already spoke above about the importance of immigrants in founding U.S. businesses, especially in the tech industry, even more so in Silicon Valley, and most acutely in unicorns.
What will happen to these highly skilled talented workers when they go back? They won’t stop innovating, they’ll just take their innovations to other countries. A great case study of this is Kunal Bahl who couldn’t secure a visa here in the U.S. so he ended up going back home to India and founded SnapDeal, a unicorn worth over $1 billion, that competes directly with Amazon. If Bahl had stayed in the U.S., it’s quite possible that he could’ve created his own startup here, creating jobs, tax revenue, and helping America become more competitive.
If the U.S. cannot attract and keep tech talent, that talent will go overseas and continue to innovate in other countries, continuing to hurt American workers and competing with American companies.
4. Jobs won’t come back to the U.S.
Tech companies need highly skilled workers at a good price. It’s not just about cheap labor — Shanghai is 35% cheaper than Boston but so is Detroit at 34%. Overseas tech hubs have: (1) a large pool of skilled workers, (2) sizable innovation infrastructure, and (3) a rich ecosystem of suppliers and competitors. Thus, instead of training workers here in the U.S., tech companies are more likely to expand offices in places like Bangalore or Shenzen.
5. It will help tech hubs grow — outside the U.S.
Due to tax law, it would be cheaper for tech companies to reinvest their profits in overseas offices rather than building all of that R&D tech infrastructure from scratch back here in the U.S. where costs are higher.
“U.S. firms are doing more R&D abroad, and they are doing dramatically more R&D in emerging markets like China, India, and Israel” — that’s from Lee Branstetter, professor of economics and public policy at Carnegie Mellon University’s Heinz College of Information Systems and Public Policy, who led a recent study on the topic.
By removing an important labor pool for tech companies here in the U.S., they will simply expand their overseas offices — creating jobs and tax revenue in other countries at the expense of the U.S. and our workers.
6. It puts America’s national security at risk in the long term.
At the global level, the U.S.’s tech advantage is a national security advantage. Technologies like 5G, artificial intelligence, drones, 3D printing and biotech will not just disrupt jobs for workers around the world but could also tip the balance of power throughout the world. While the U.S. is currently the leader in AI based on patents, investments, and academic research, China is number 2; when it comes to biotech, the U.S. spends 2% of GDP on it whereas China spends 4% of GDP.
If the U.S. doesn’t continue to invest in attracting top talent from around the world, other countries will pick up the slack — to their advantage and our loss.
Rather than cutting back on immigrant workers, we should be streamlining the process, especially for those in the hard sciences and tech sectors. Make it easier for such workers to come to the U.S. for school, get jobs, get married and start families. Some of them will go on and found companies; a handful will found companies of incredible value. These companies will help America become more competitive in the global economy and in turn create better jobs for the rest of America.
Bonus: Famous tech founders who came on H-1Bs
- Mike Krieger (Brazil) — Founder of Instagram (sold to Facebook for $1 billion in 2012)
- Rahul Vohra (UK) — CEO of Superhuman, previous founder of Y Combinator company Rapportive (sold to LinkedIn)
- Matt Turck — Partner at Firstmark, former managing director of Bloomberg Ventures and cofounder of Triplehop (acquired by Oracle)
I was on an H1B visa for 10 yrs. Started a company with co-founders also on H1Bs. Hired American employees, served US customers. This was our American dream.
But today the same company could be started anywhere. Why would the next generation bother if they can’t get a visa?
— Matt Turck (@mattturck) June 23, 2020
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