Emma Lazaru’s words at the base of the Statue of Liberty – “Give me your tired, your poor, your huddled masses” – are well known. According to a new study “highly educated” and “entrepreneurial” should be added to the list.
Based on a survey of 28,000 companies, the study led by Vivek Wadhwa, an executive-in-residence at Duke University’s Pratt School of Engineering, found that immigrants in the United States who are creators of companies combine entrepreneurial drive with strong educational backgrounds, especially in the so-called “STEM” areas (science, technology, engineering and mathematics).
The new research is a follow-up of a study published earlier this year by Wadhwa and his team, which had found that immigrants were one of the key founders in more than a quarter of all the engineering and technology companies set up in the United States between 1995 and 2005. Further, it counted $52 billion in annual sales by these immigrant-founded companies, which employed 450,000 workers in 2005.
The researchers say the “startling statistics” they have put together show that the U.S. economy depends upon the high rates of entrepreneurship and education among immigrants to “maintain its global edge.” Wadhwa, in particular, says the findings call for substantial relaxations in U.S. immigration policy. Other experts who have weighed in on the project, however, don’t see that as the logical next step.
Educated and driven
According to the study, 96 percent of the immigrant founders held graduate or postgraduate degrees, with 47 percent holding master’s degrees and 27 percent having PhDs. About three-quarters had their highest degrees in the STEM fields. The largest concentrations outside of that were in business, accounting and finance.
Wadhwa says the Duke project underscores the point that a significant portion of immigrants in the United States are highly educated, fueling a tech boom, leading innovation and creating jobs. The report cites U.S. Census data to say that immigrants from India, the United Kingdom, China, Taiwan, Japan and Germany are better educated than native U.S. citizens.
The results of the study are especially significant for Indian immigrants, according to Wadhwa. “Indians are among the best educated of all immigrant groups,” he says, adding that Indians founded more engineering and technology companies in the United States in the decade up to 2005 than the next four groups combined – those from the United Kingdom, China, Taiwan and Japan. They accounted for 26 percent of all startups, about 117,000 jobs and $14 billion in revenue in 2005.
But that trend could be arrested or reversed by a growing phenomenon: Large numbers of skilled Indian immigrants are returning home. Many of them are heading back, Wadhwa says, because of the six-to-10 years it takes for their green cards – or permanent immigration status – to arrive.
“This is a double loss for the United States. One is that we lose good people. The second loss is that they will become our competitors,” he notes, adding that this is true for many Chinese, Russian and European immigrants too. As a way to curb the outflow of immigrant talent, he suggests that the H1-B (temporary, nonimmigrant) visa be abolished altogether. “Instead, we should expand the number of green cards we issue to skilled immigrants” and allow these skilled immigrants to come in on permanent visa.
H1-B visas are problematic because they distort salaries, “and they do reduce American salaries; the critics are right about that,” says Wadhwa. “If you come on an H1-B visa, your wife cannot work and she cannot get a driver’s license. For six or 10 years, you cannot buy a house, because you don’t know if you are going to be here or not.”
David Hart, professor at George Mason University’s School of Public Policy in Fairfax, Virginia, who has seen Wadhwa’s findings, agrees that “there are a lot of things the need to be fixed in the present immigration system.” But he doesn’t see a strong case for scrapping H1-B visas, because “you may need temporary H1-B visa holders shouldn’t see their prevailing status as “a holding pattern for a green card.”
But Wadhwa argues that H1-B visas enable employers to exploit the vulnerability of skilled temporary workers. “No matter what we say, if you have an employee who can’t leave you, you are not going to pay him more money than you have to,” he says. “You are not going to treat him as nicely as someone who can leave.”
A cautious assessment
“The study raises important questions,” says Hart, whose research focuses on how public policy influences scientific knowledge and technological innovation. Yet, he says he wouldn’t want to take “one study of an important subject like immigration as gospel truth,” and urges follow-up studies. “It’s great that they opened up the subject. I would like to see a vigorous debate on this.”
Wadhwa is leading another research project that looks specifically at the share of immigration patents, and a study that looks at the contributions of Indians and Chinese to that total. Both studies will conclude by August.
Hart, however, says he has “concerns about how strong the evidence is on what are the causes of this phenomenon.” He feels the Duke University team should have engaged a research firm with a specialty in the subject to do the surveys. “It can be sensitive to ask about someone’s immigration status, so it is possible that the response isn’t totally accurate,” he says. “We don’t know which way the bias could have been. There are survey techniques that can minimize those biases.”
According to Wadhwa, there are many who don’t like the study’s findings and try to “explain them away. Our students simply called up companies and asked if their CEO or CTO was an immigrant and what country they were from. How could the question be simpler, and how could there be bias in this? It doesn’t make any difference who asks this question – in fact, I would argue that students have less bias than others.”
Wadhwa notes that his team also conducted two separate surveys – one with 2,000 companies and another with 1,500 companies – and that the results were consistent. “The fact is that legal, skilled immigrants are contributing significantly to the U.S. economy, have created more jobs than all the numbers of such skilled immigrants we have admitted over the last decades, and are helping the United States keep its global lead,” he says.
In anticipation of skeptical reactions, Wadhwa has increased his sample size to “two or three times what we would have needed.” In fact, he feels he could have gotten away with a fifth of the sample he had. “I wanted to have too much, rather than too little, because I knew there would be a lot of criticism.”
Robert Litan, vice president for research and policy at the Ewing Marion Kauffman Foundation in Kansas City, Mo., which funded part of the project, says the study highlights “the importance not only of immigrants informing these high-growth companies, but also of the role of our educational institutions in attracting immigrants.” His takeaway from the Duke project: “We as a nation would be foolish to cut back on accepting immigrants who want degrees in science, technology, engineering and mathematics.”
But Hart says that’s not so clear, noting that oftentimes when people write about such issues, they end up saying that the United States needs more highly skilled immigrants. “It is not obvious that it is the right conclusion to draw, because it could be that native born people are being deterred from entering some of the fields by the number of immigrants,” he says.
Evidence exists to show that for native-born citizens, the payoff for going into science and engineering occupations is not that high compared to, say, law or medicine, Hart adds. “You could go to law school or do a PhD in molecular biology, but the lifetime difference in earnings is about a million dollars. The payoffs of going into science are pretty uncertain. But if you were to come to the United States and the average salary in your country is a fifth of what it is here, it’s a much different set of options.”
