The U.S. loses a critical component of job creation when immigration policy does not allow highly educated foreigners to stay and foster startups

Olav Bergheim called the noted ophthalmologist Richard Hill to learn about treatment options for a young relative diagnosed with glaucoma. Glaucoma treatments often entail invasive surgeries that result in considerable discomfort. Hill mentioned to Bergheim, a venture capitalist focused on the health-care sector, an idea for a better way to treat glaucoma with something called a trabecular micro-bypass stent. Bergheim liked the idea and contacted Mory Gharib, a professor at the California Institute of Technology. The trio formed a company, Glaukos Corp., and developed the first prototype product in a month. Within a year, surgeons had implanted the first micro-bypass stent on a human patient.

Bergheim was born in Norway. Richard Hill was born in the U.S. Mory Gharib was born in Iran. Their story is not surprising. Increasing bodies of evidence show that skilled immigrants are fueling technological innovation and job growth in America. A study released last week by Stuart Anderson of the National Foundation for American Policy found that immigrants were on the founding leadership teams of 24 of the top 50 privately held, venture-backed companies in the U.S. The highest percentage of these immigrant founders came from India. What’s more, Anderson found that in 76 percent of these companies, immigrants held key positions in engineering, technology, or management.

In another study released in December 2011, Madeleine Zavodny, an economics professor at Agnes Scott College, found that foreign-born adults with advanced science, technology, engineering, and math (STEM) degrees were strong net generators of jobs for native-born American workers. Zavodny found that 100 foreign-born workers with advanced STEM degrees generated 262 jobs for native-born workers, on average. The study, sponsored by the American Enterprise Institute and the Partnership for a New American Economy, echoes earlier research by Professor AnnaLee Saxenian of the University of California, Berkeley, that showed that Chinese and Indian engineers managed 24 percent of the technology businesses started in Silicon Valley from 1980 to 1998. My own research found that in a quarter of the U.S. engineering and technology companies founded from 1995 to 2005, the chief executive or lead technologist was foreign-born. In Silicon Valley, the percentage of immigrant-founded startups was much higher—52 percent.
BIPARTISAN SUPPORT

So the evidence is now overwhelming that foreign-born entrepreneurs and skilled knowledge workers start companies and create jobs. Fortunately, it finally appears that the politicians in Washington, D.C., are listening and starting to understand that if job creation is a national priority, creating a smarter, more flexible immigration policy becomes an obvious task.

Both Democratic and Republican legislators in Congress are supporting a variety of bills now taking shape that would make it easier for foreigners with STEM degrees to remain in the U.S. The BRAIN (Bringing and Retaining Accomplished Innovators for the Nation) Act will provide flexibility in employment. Greater flexibility is essential because current immigration law does not allow non-resident workers here on H1-B or other types of work visas to start their own companies and remain in the U.S. The BRAIN Act joins the Startup Visa Act, which has been gaining attention in Washington and would award work visas to founders of companies.

Over the years I’ve spoken with hundreds of young entrepreneurs who have expressed amazement at the barely concealed hostility they encountered from the U.S. government and its immigration policies. This was all the more astonishing because other countries feverishly court these entrepreneurs. The government of Chile provides a generous stipend, free office space, and funds to hire employees. The government of Singapore matches venture capital backing at a rate of 4 to 1, making it far easier for companies to survive the early period of revenue starvation. In Canada, the government aggressively recruits STEM degree holders and provides subsidies to startups.
DIFFICULT VISAS

Yet the U.S. government, with its currently backward immigration policy, appears bent on job destruction. Take the case of Chia-Pin Chang, the chief technology officer and founder of OptoBioSense. He holds a PhD in computer engineering from George Washington University and has developed an innovative technology to measure the presence of uric acid quickly in a person’s body, a critical health indicator. Chang is having difficulty obtaining the proper visa clearances to remain in the U.S. and may need to move back to his native Taiwan.

This is one issue that economists on the left, right, and center agree on. Allowing talented immigrants to work and start companies in the U.S. more easily is the closest thing to an economic free lunch we will ever get. And it is important to note that this debate is happening against the noisy background of a Presidential election in which job creation is the primary topic of discussion.

Yes, I understand that immigration reform is a politically charged topic. But the kind of immigration reform I am advocating is an obvious win for everyone involved. Smart, innovative people create companies and jobs. Maximizing the number of smart, innovative people who live in your country is the easiest way to ensure future economic growth. And creating an environment in which a venture capitalist from Norway, an engineer from Iran, and a physician from the U.S. can quickly and easily conceive and launch a company that brings an innovative product to market in less than a year is something that benefits the entire nation.

  • Brian

    First off, I saw that you are currently here at UCBerkeley. I am currently a undergraduate junior studying political economics. I hope you enjoy your stay here.

    I would like to add to your piece in sharing the story of a few friends of mine who lost out because of the immigration practices here:
    One of them Japanese, the other Chinese, both were excellent students (graduating with honors) and very entrepreneurially minded. Both of them are already working on starting tech companies. In a place like Silicon Valley, they would have been provided with an environment rich in human and financial capital. Although the competition is not easy, it would have meant two more bright people creating jobs here, or at the very least working inside of America.

    I am sure if they worked a lot harder and jumped through some odd hoops they may have been able to continue living in America and start their companies here. But that is not what happened. They have both made headway in their respective countries. I am sure that with more common-sense immigration for foreign students, these types of things would not happen as much.

    From the perspective of a friend, I am very happy for them. But when we look at how many foreign students this is happening to across our country it certainly puts it into perspective. I’m not sure about the condition of Americans leaving America, but having educated foreigners leaving is essentially a new secondary brain drain.

    • http://www.wadhwa.com Vivek Wadhwa

      Brian, sadly this is happening over and over again. We are losing great people who could be boosting our economy…

    • Joshua

      Brian, were they aware of the O-Visa?  That visa allows an unlimited number of immigrants
      ho possesses extraordinary ability in the sciences, arts, education, business, or athletics  to come to the US.