But didn't the press report that 36 percent of the top technology companies were founded by immigrants?
Yes it did. The figures came from a presentation by Mary Meeker. That presentation includes this slide making that very claim. Naturally, Ms. Meeker followed that slide with the obligatory call for more cheap foreign workers on H-1B visas.
Like Ms. Meeker I, too, have read How to Lie With Statistics. You are supposed to see her figures showing 36 percent of companies are founded by immigrants and think that means only 64 percent are founded by natives — a huge disparity given the number of immigrants. However, Ms. Meekers has used a trick with numbers; she counts as "founded by immigrants" any company that has at least one of its often multiple founders who was born abroad or who had at least one parent born abroad.
But that trick works both ways. All you have to do is flip her numbers around; instead of ignoring the native-born Americans, ignore the immigrants.
For example, Texas Instruments had four founders: John Erik Jonsson (born Brooklyn, N.Y.), Eugene McDermott (born Brooklyn, N.Y.), Patrick Haggarty (born Harvey, N.D.), Cecil Green (born U.K.). Ms. Meeker ignored Jonsson, McDermott, and Haggarty in favor of Green and called Texas Instruments a company founded by immigrants. Do the opposite and ignore Green. Then Texas Instruments becomes a company founded by native-born Americans.
Doing the same reversal for the rest of the companies produces this result (bolded companies native-founded).
- Texas Instruments
Twenty-two out of the top 24 (92 percent) of top technology companies started in the United States were founded by natives.
This list has one fewer entry than Ms. Meeker's. I dropped Cognizant because Cognizant was not founded in the United States. It was started in India by Dun & Bradstreet as a means to offshore American jobs. Four years later, in 1994, the headquarters was moved to New Jersey. Cognizant remains a leader in America job destruction. In other words, Cognizant represents precisely the type of entity that America should keep out of the country. In any event, calling Cognizant an immigrant-founded company is a stretch.
The statistical lie is only the first misstep in the argument. Next comes the non sequitur. The fact that Sergey Brin came to the United States as a child and years later became a cofounder of Google does not support the argument that American needs more H-1B guest workers.
Outsiders who recognize this statistical lie in a study frequently ask me to do one from the opposite side. But I just cannot bring myself to assisting in lowering the debate this way. While the cheap labor lobby sees the need to denigrate native-born Americans, I see no need to diminish the contributions of immigrants. I just show, as here, why this kind of analysis is nonsense.
Along with regression analysis without causation and correlation, this form of statistical lie is one of the most common tricks used to support more cheap, foreign labor. My colleague David North has written about this previously (see here and here). The inflation trick used here for founding companies also works for patent production. Also notice the broader you define a founder, the greater the distortion this trick creates. Some studies using this trick have used "key contributor" to define a founder, so that early employees get included.
The cheap labor lobby will continue to use this technique as long as they can get the complacent American media to print their bogus numbers.