Richard Florida
by Richard Florida
Thu Feb 12th 2009 at 8:00am UTC

Looming Talent Protectionism

On top of Buy American provisions, certain U.S. political actors are now trying to restrict immigration on the grounds of protecting American jobs. The Grassley-Sanders bill in the Senate is the product of the strange politics of our times – a Republican and a socialist-leaning independent – is a veritable Smoot-Hawley for the talent-based economy. A very big mistake, for reasons this Business Week report points out.

But placing limits on this mechanism for bringing foreign workers to the U.S. is not the answer to the country’s rising unemployment rate and may undermine efforts to spur technological innovation…

Increased numbers of H-1B visas strongly correlate with increased numbers of patents applied for in the U.S. by immigrant inventors …The researchers also found no evidence that increasing H-1B visa awards decreased innovation by U.S.-born researchers in the form of patent applications, a decrease that is often described as “crowding out.” To the contrary, their analysis identified a weak but still positive impact (often called “crowding in”) on the numbers of patents filed by non-immigrants in regions where the number of H-1B visas awarded were highest.   Even more telling … in periods when H-1B visa numbers went down, so did patent applications filed by immigrants. And when H-1B visa numbers went up, patent applications followed suit. …

When American workers who have the skills to file patents and develop new technologies get laid off, they often start new companies. And these companies generate employment and help the economy recover. When workers on H-1B visas get laid off, they usually have no choice but to return home and start their companies abroad. So they are planting the seeds for future economic growth in their home countries, seeds that could easily have been planted in the U.S.

So the critics of skilled immigration may get their wish. We will scare away the world’s best and brightest who have always flocked to our shores. But the next Silicon Valley won’t be in located the U.S. It will likely be in Hyderabad or Shanghai.

Or say Vancouver, Toronto, or Waterloo.

11 Responses to “Looming Talent Protectionism”

  1. Dave Reid Says:

    I was worried something like this would pop up because of the economic downturn. Can’t we just look at the 90s and see how good it was to boost immigration.

  2. Brock Says:

    We need to get moving on Tor-Buff-Rochester. When the heck are there going to be floating MagLev trains between Montreal and Detroit already!!!!???!?!?!

  3. Michael Wells Says:

    Bernie, How could you?!!!? Hopefully this got lost in conference. Where’s the line-item veto when we need it?

    Sanders is from Vermont, Grassley from Iowa. Neither one states with much at stake in immigration (unless Sanders wants to keep out Canadians). I learned recently that Hawley was from Oregon and Smoot from Utah. In the 1920’s both were low population, mostly rural states with little at stake. Their ill advised law has been credited with starting both the Depression and WWII.

    This amendment to the stimulus package prevents businesses who receive stimulus funds from hiring foreign H-1B workers for one year. Hopefully if this passes the one-year limit will prevent lasting damage.

    Here’s Friedman’s piece on the need for immigration for economic revival.

  4. Scott Says:

    If the USA doesn’t want bright, entrepreneurial migrants, Australia does…send them south :)

    I am, however, all jokes aside, concerned about the potential of this bill. Innovation and growth comes from new ideas, and often by foreigners because they do things differently to domestic people in any country.

    Isolate the world into blocs again, and fear and ignorance are the result.

  5. Lee Says:

    This is old data from WashTech (I think) recited from memory, but something approaching 80% of H1-B visa holders in the computer industry are in the bottom quartile of compensation. And, although one must nominally demonstrate that there are no American workers who can do the job, H1-B visa holders increase the supply of workers. The reason companies bring foreign knowledge workers into the US is to lower labor costs, not to promote diversity. That is why WashTech and the CWA have opposed increasing H1-B visas and, I’m betting, why Bernie Sanders is a sponsor of the amendment. BTW, VT has a large IBM facility that draws employees from all over the world, not just Canada.

    H1-B visa holders are frequently graduates of American universities who want to convert their student visa and the hiring company assists them in getting the H1-B visa. Oh, and IBM recently announced that Americans who are laid-off here are invited to apply for work with the India subsidiary (no moving and living allowance though).

    None of this is to suggest that there aren’t terrific benefits associated with an international work force, but when you’re trying to get Americans back to work, reducing competition from abroad maybe isn’t such a bad idea.

    Oh, and to be clear, Smoot-Hawley was about trade tariffs not immigration; globalization has components: movement of capital, of labor and of goods and services. They all have very different characteristics that shouldn’t be oversimplified.

  6. Mary Adams Says:

    I can’t help but think that the changing conversation about diversity in our country will wash over into the discussion of immigration. The sooner the better. But if I were Obama, I would wait awhile to bring it into the national conversation.

  7. Jim H Says:

    Just another example of more government involvement doing absolutely the wrong thing at the wrong time. We need more immigrants, not less. A recession is besides the point.

    If for nothing else we are not replacing ourselves enough (reproducing) to sustain our current population.

    Not to mention all the abortions happening to future liberal babies who would someday vote democrat. (Gasp) who will read the Daily Kos? Sorry, couldn’t help myself :)

  8. Wendy Says:

    In addition to the H1-B holders, there are thousands (millions?) of immigrants in America (and Canada) doing jobs that most native-born won’t do — at any wage.

    As comedian Robin Williams says about the prospect of an impenetrable wall along the US-Mexican border:

    “It won’t work unless they invent self-cleaning houses and self-picking fruit.”

  9. Michael Wells Says:

    I just did a little background on this, Grassley (and Sanders sometimes) has been pushing H-1B legislation for a couple of years. This iteration as an amendment to the stimulus package would only apply to companies getting TARP money, in other words banks. Don’t know if it survived conference and final votes, but the impact in banks on the rest of the economy would be small compared to if it applied to high tech or other industry or research.

  10. Wendy Says:

    Hmmm… if Michael is right, and it’s just Banks etc. receiving TARP who can’t get H1-B visas to import talent, maybe that will leave more for other industries who need the brain power to do the R&D for the next great products and services. This could be good news.

  11. Ed Says:

    The H1-B Visa was created to supplement a SHORTAGE of high tech skills. How can anyone argue that there is a shortage of skilled workers during this recession. THOUSANDS of American IT workers have been laid off. There is only one reason for the existence of H1-B Visa – to lower wages for companies.