Immigration Reform Means More High-Tech Jobs
by Stephen Moore
Stephen Moore is director of fiscal policy studies at the Cato Institute.
Added to cato.org on September 24, 1998
This article appeared on cato.org on September 24, 1998.
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Congress will soon decide the fate of a bill that would increase the number of visas for highly skilled scientists and engineers. The bill would increase the quotas from a piddling 65,000 today to 115,000 by 2001. A fascinating subplot to this issue is that also at stake is a political battle for the hearts and minds of Silicon Valley.
Virtually every high-tech CEO -- from Scott McNeely of Sun Microsystems to Andrew Grove of Intel -- insists that bringing more talented immigrants to the United States is vital to America's continued global domination of high-tech industries. Unemployment rates are less than 2 percent in many high-tech fields -- which means an acute talent shortage.
Stephen Moore is director of fiscal policy studies at the Cato Institute.
The irony is that Bill Clinton is threatening a veto -- despite his and Al Gore's cozy relationship with the high-tech community. When it comes down to a contest between unions (who oppose employment-based immigration) and Silicon Valley, Clinton sides with the union bosses every time. Back in 1992, after pouring funds into Bill Clinton's campaign coffers, high-tech firms said they cared most about three issues: 1) protection from frivolous shareholder lawsuits, 2) a capital gains tax cut, and 3) an increase in skilled immigrants. In his first term Clinton vetoed items 1 and 2. If immigration reform is rejected by Clinton, Silicon Valley may finally declare three strikes and you're out to the Clinton-Gore pro-high-tech fantasy. If the industry doesn't, its CEOs are even more forgiving of Bill's betrayals than is Hillary.
But will Republicans in Congress ever send Clinton a bill at all? The GOP now has an opportunity to do the right thing for the U.S. economy and the smart thing politically -- if it can overcome its own demons.
...[H]igh-skilled immigrants create jobs; they don't take them. Some studies have found that every additional high-skilled newcomer adds about four new Silicon Valley jobs for Americans.
There is little question that the U.S. economy would benefit tremendously from increasing the number of visas for high-skilled workers. In a recent study for the Cato Institute and the National Immigration Forum, I calculated that every additional high-tech worker brings to the United States about $110,000 of free human capital. An additional 50,000 H1-b immigrant visas is the equivalent of a $5.5 billion transfer of wealth from the citizens of foreign countries to the citizens of the United States. High-tech immigration is like reverse foreign aid. Or, as Bill Gates puts it, America's ability to recruit inventive minds from the rest of world is "one of America's greatest advantages in the global high-tech marketplace."
So where's the opposition coming from? Some GOP restrictionists still worry about immigrants' stealing jobs from Americans. House Rules Committee chairman Gerald Solomon frets that firms "are just looking to replace qualified Americans with a cheaper work force."
What Mr. Solomon doesn't understand is that high-skilled immigrants create jobs; they don't take them. Some studies have found that every additional high-skilled newcomer adds about four new Silicon Valley jobs for Americans. In fact, since about one-third of all scientists and engineers in Silicon Valley are foreign born and about one in five of the firms were founded by immigrants, this high-tech corridor simply would not exist as it does today without immigrant talent. The 10 largest U.S. firms founded, or cofounded, by immigrants today employ more than 50,000 American workers and account for some $20 billion in U.S. output -- see table. So much for immigrants stealing jobs or depressing the economy.
As for wages, it costs firms in the tens of thousands of dollars in legal and regulatory costs to recruit an H1-b immigrant. U.S. firms would have to be financially insane to spend that kind of money to recruit foreign talent in order to try to save $2 or $3 an hour on wages.
Today, most nations -- Russia, India and China, for example -- worry about a brain drain. The United States is a brain magnet. For 200 years this has been a secret to our economic success. H1-b immigrants are not the world's "tired, poor huddled masses" or the "wretched refuse" Emma Lazarus's torch welcomes. They are the best and the brightest from the rest of the globe. What is unique and exciting about Silicon Valley is that it combines the top brainpower from the rest of the globe with our own homegrown talent. And what a combination! From pharmaceuticals to semiconductors to software, U.S. firms now have commanding leads over European and Asian competitors. T.J. Rodgers, president of Cypress Semiconductors, a $500 million chip maker, says, "Take away the top 200 immigrant scientists and engineers from Silicon Valley and you would drive the U.S. semiconductor industry to its knees."
Which brings us back to the White House. Few politicians have courted Silicon Valley as masterfully as Bill Clinton and Al Gore. But the new Democratic techno-babble doesn't match the reality of the Clinton record. If the GOP were to establish itself as the pro-immigration party, it could start to wrest political support in Silicon Valley away from Clinton and Gore. Those two are too beholden to labor bosses to command the high ground on immigration. The question is whether the GOP is too hostage to outdated nativist fears to seize this opportunity to define itself as the pro-high-tech party.
America's Foreign Assets
High-Tech Firms Started by Immigrants (1996)
U.S. Employees Annual Revenues
(Billions)
Intel 29,000 $11.5
Sun Microsystems 11,000 $6.0
Computer Assoc. 9,000 $2.6
Solectron 4,500 $1.5
Lam Research 3,600 $0.8
LSI Logic 2,600 $0.9
AST Computer 2,200 $2.4
Wang Laboratories 2,000 $1.0
Amtel 2,000 $0.6
Cypress Semiconductor 1,500 $0.6
Total 67,500 $27.9
Data for 1996.
Source: National Immigration Forum, 1998.
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