Published in Texas CEO Magazine on July 19, 2013
A Commentary by James Thompson
Many pundits, trade groups and corporations have called for an increase in the number of H-1B visas for skilled non-U.S. citizens to work in this country. The U.S. Senate must have been listening because the immigration bill it passed proposes to do that. This is a wise move as it will help the American economy, although the bill is a long shot for passage in the House.The demand for H-1B visas was apparent during the first week of April when the annual limit was filled in only five days, an indication that a talent deficit (especially in technology) exists in our economy — and this has repercussions.
As it stands, the Senate bill smartly provides provisions for the H-1B process to respond to the demand for labor, so U.S. companies can bring in more qualified foreign workers when those positions aren’t filled by American citizens, but decreases the number of visas available when demand lowers.Comprehensive immigration reform will have a profound impact on American business in general and the technology sector in particular. After all, we are a nation of immigrants. The United States continues to be the world’s beacon for hope and prosperity and we have a history of immigrants contributing immeasurably to our economy and culture. Think of how different America would be today if Sergey Brin (co-founder of Google), Pierre Omidyar (founder of eBay) and Peter Thiel and Max Levchin (co-founders of PayPal) hadn’t been allowed to come to this country.
The 2013 Ewing Marion Kauffman Foundation report “Give Me Your Entrepreneurs, Your Innovators: Estimating the Impact of a Starter Visa” uncovered many benefits from allowing more skilled workers into this country. From 107,819 engineering and technology companies founded in the past six years, the study examined a random sample of 1,882. Of that sample, 458 had at least one foreign-born founder. Texas is profiting from this influx of immigrant entrepreneurs, having the third highest rate of immigrant-founded firms in the country.
But the report found that the number of immigrant-founded technology start-ups has stagnated or is on the verge of decline, slipping nationwide from 25.3 percent to 24.3 percent since 2005. Silicon Valley experienced a bigger drop, from 52.9 percent to 43.9 percent.
While pending immigration reform of H-1B visas is good news for the future of American business, it also speaks to potentially troubling issues. If we have to import technology talent, then are we doing a good job of training our students for the demands of the global information economy? A Kauffman Foundation follow-up report (“Education, Entrepreneurship and Immigration: America’s New Immigrant Entrepreneurs, Part 2”) tracked educational backgrounds of immigrant entrepreneurs who were key founders of technology and engineering companies from 1995 to 2005 and showed a strong correlation between education and entrepreneurship:
- 75 percent of the highest degrees granted among immigrant entrepreneurs were in STEM (science, technology, engineering and mathematics).
- 53 percent of immigrant founders of U.S.-based technology and engineering companies completed their highest degrees in U.S. universities.
- In 25.3 percent of technology and engineering companies started in the U.S. between 1995 and 2005, at least one key founder was foreign-born. Nationwide, these companies produced $52 billion in sales and employed 450,000 workers in 2005.
Our economy is at risk of becoming too dependent on getting talent infusions from overseas. Wouldn’t the best scenario be continuing to get talent from immigration as well as having a citizenry that is trained and ready to maintain our global competitiveness? American schools should be training the technology entrepreneurs and leaders of tomorrow; however, U.S. students are losing interest in STEM subjects as they close in on graduation. A joint study by STEMconnector, a STEM database, and the website My College Options found that 60 percent of American students start high school with an interest in STEM subjects and/or careers but a large number change their minds before finishing school. We may put our economy and with it the American way of life in peril if we don’t take action to maintain U.S. competitiveness by having a future workforce that can thrive in the global information economy.
Let’s hope that Congress can pass a comprehensive immigration reform bill that works. Then let’s pressure our local and state leaders for education reform because that is where is has to be done.
James Thompson is the CEO and president of The InSource Group, a Dallas-based technology staffing and placement firm.