Why Not Keep the Talented?

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As we head into the New Year, there are signs that Congress may finally allow an increase in legal immigration. Specifically, it now appears that Congress is becoming increasingly aware that it is folly to kick out foreign students who achieve science, technology, engineering, and math (STEM) degrees.

In fact, both Republicans and Democrats have now sponsored bills to reform immigration laws to encourage STEM workers to immigrate here. And a very recent report by the Information Technology Industry Council, the Partnership for a New American Economy, and the US Chamber of Commerce provides ample evidence that the time is ripe for reform.

The report, “Help Wanted: The Role of Foreign Workers in the Innovation Economy,” looked at three questions: Is there a STEM worker shortage? If so, how bad is it and in what fields is it the worst? Does hiring foreign STEM workers take jobs away from native-born workers?

Take the issue of whether there is a general STEM worker shortage. A number of the report’s findings indicate there is indeed such a shortage, and that it is pervasive across the various STEM fields. Remember that economists typically hold that an overall unemployment rate of about 4% represents essentially full employment (with people who are out of work being mainly in transition between jobs in a fluid market). Our current national unemployment rate has hovered around 8% for four years, which is high by recent standards (those of the 1990s and 2000s).

Well, the report notes that the unemployment rate for American citizens with STEM PhDs is only 3.15%. For those with STEM MS degrees it is only 3.4%.

As to whether foreign-born STEM workers are taking jobs from American-born workers, the data the report surveyed show no such effect. While only 6.4% of non-STEM workers with PhDs are foreign-born, 26.1% of STEM workers with PhDs are foreign-born. (For workers with Master’s degrees, the figures are 5.2% of non-STEM versus 17.7% of STEM.) But even though a higher percentage of STEM than non-STEM workers are foreign-born, STEM workers still have a lower overall unemployment rate.

The job market is not a zero-sum game. There is no set-in-stone number of jobs, so that if an immigrant takes one, there is one less for you or me.

In some STEM fields, the figures are especially dramatic. While 25% of medical scientists are foreign-born, medical scientists generally have a 3.4% unemploymnent rate. In fact, the unemployment rate is lower than the general STEM average of 4.3% in 10 out of the 11 STEM fields with the highest percentage of foreign-born workers.

Moreover, the data indicate that immigrant STEM workers on average earn $3,000 per year more than equivalent native-born workers, putting paid to the myth that they “drive down wages.”

The reason none of this should be surprising is that the job market is not a zero-sum game. There is no set-in-stone number of jobs, so that if an immigrant takes one, there is one less for you or me. No, talented immigrants create jobs, by starting new companies, creating new products, or making our industries more competitive than foreign ones.

In this regard, the study argues that every foreign-born student who graduates from an American college and stays here creates an average 2.62 jobs for native-born workers. At the top 10 patent-producing American universities, more than three-fourths of all patents awarded last year were invented or co-invented by an immigrant.

Why can’t the Republicans and Democrats at least agree on removing the obviously counterproductive caps on foreign students who graduate from American colleges with STEM degrees and who want to remain here to work?

In short — why send the most talented and innovative students home — to start businesses that will only compete with ours?

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