Revisionist History on Skilled Immigration

By James R. Edwards, Jr. on August 20, 2012

American exceptionalism and economic achievement would hardly be advanced and could even be placed at greater risk if we did what lots of elites, including leading politicians, keep calling for: "staple a green card to every foreign student's U.S. college or graduate diploma".

This lame claim has been potently countered by many able voices. I recently rebutted this talking point, but it's worth deflating again.

One of the latest versions of this "we need more foreign brainiacs" arrived in the mail in Hilldale College's Imprimis. The July/August 2012 edition features author John Steele Gordon on "Economic Lessons from American History". Imprimis is a great little publication and Gordon makes some interesting points unrelated to immigration — on economics, which seems to be Gordon's strong suit. But what grabbed my eyes was the subhead, "Immigration is a Good Thing".

Gordon's lesson drawn from our history isn't quite as stark as the subheading suggests. It is rather whitewashed. Gordon genuflects to the noble immigrant and the "nation of immigrants" mythology. He skims over four centuries of American migration history in four paragraphs, devoting precious ink to mention Chinese and Japanese exclusion and the salutary (that's my adjective) 1920s immigration timeout. Then he gets contemporary and specific:

In particular, current regulations regarding H-1B visas and visas issued to foreign postgraduate students at American universities often force the holders to return to their native countries after they finish their studies or the particular job for which they were admitted. Many of these highly educated and highly skilled people wish to stay. Instead of letting them, we send them back to work in economies that compete with us. That's nuts.

No, sir, what's really nuts is to keep claiming that H1-B holders, foreign grad students, or other immigrants studying at American universities pose the huge competitive challenge to American prosperity and enterprise that Gordon's statement implies.

Steve Camarota's recent report on immigrant characteristics dispels this romanticism with facts from Census Bureau data. Table 28 shows that, when you compare native-born Americans and immigrants with a bachelor's degree or higher, even these most-educated foreign-born fall short of their American counterparts. College-educated immigrants still earn less and are nearly twice as likely to be poor, lack health insurance, and be on welfare. Immigrants at lower levels of education lag their American counterparts in nearly all of these categories, though the gaps narrow.

The Camarota report finds that immigrants aren't generally more given to entrepreneurship than are the native-born. Self-employment rates are 11.5 percent for immigrants, a little below the 11.7 percent for the native-born. Table 13 shows that about a quarter of Korean and Canadian immigrants start businesses, while 17 percent of British immigrants are entrepreneurs. Immigrants from India, China, and most Latin American nations lag as entrepreneurs, with rates of less than 10 percent. Most immigrants who start businesses run micro-businesses, with 10 employees or fewer in 87 percent of cases. For the native-born, 17 percent of their enterprises employ more than 10 workers. Immigrants who start businesses here have an average annual income of $22,372.

Not even in the high-tech sector are the foreign-born all a bunch of Sergey Brins or Andy Groves (Google and Intel cofounders, respectively). The U.S. Small Business Administration looked at "high-impact", or fast-growing, companies in high-tech and found that, in general, only about 2 percent of all U.S. companies double their sales or add jobs at a significant rate over four years.

In this sector that is the supposed case-in-point for advocates of stapling visas and green cards to STEM diplomas, only 16 percent of such firms had at least one foreign-born founder. In these "fast companies" of high-tech, Indians disproportionately start businesses: 16 percent of these firms. Those native to the United Kingdom founded 10 percent of these foreign-founded tech firms. Foreign-born, high-impact, high-tech company founders from Canada, China, and Japan each represent 6 percent, with all other nationalities at lower entrepreneurship levels.

Don't get me wrong. I agree we'd benefit from raising the human capital qualities of the immigrants we give visas to, across the board. I favor imposing minimum requirements for educational attainment, literacy, English proficiency, and proven skills and job experience on all foreigners we allow to immigrate. It would be worth considering having to have a minimum in tangible assets and requiring some level of collateral pledged as a down payment as a condition for anyone entering the United States. But the point is that most of the smarter and better-educated immigrants aren't bubbling over with innovative ideas and entrepreneurial spirit. We shouldn't base our visa policies on such an ill-founded notion.