Tag Archives: immigrants

Why to Boost Visas for Foreign Entrepreneurs

Immigration has become a toxic subject. In the U.S., President Trump is trying to ban or block the entry of refugees and of people from Mexico and parts of the Middle East. Other nations, from the U.K., France and Germany to Australia and Thailand, face political pressure to curb numbers of incomers.

Anger at the erosion of national competitiveness is the root of the rage in the U.S., in my view. Increasing financial inequity, changing racial and ethnic demographics and a widening knowledge gap between technology haves and have-nots are other factors. Immigrants and global trade have become the scapegoats.

Blaming foreigners is not new; it happens when people feel disenfranchised. Throughout U.S. history, each wave of immigrants has forced preceding generations to compete. Newcomers often achieve great success, and face resentment. Chinese engineers helped to build U.S. railways in the nineteenth century, but faced riots and even massacres because they were hired on cheap wages preferentially over whites. The Italian immigrants who came after them were blamed for everything from domestic radicalism to organized crime. Then it was the Poles, the Japanese and the Germans who faced abuse.

The U.S. has gained tremendously from foreign-born inventors. From Alexander Graham Bell, the Scot who invented the telephone, and Nikola Tesla, the Serbian who invented the laser and radio remote control, to Albert Einstein and the wave of scientists fleeing Nazi Germany, immigrants have made the U.S. the world’s leader in technology. Indian and Chinese entrepreneurs fueled the dot-com boom in the late 1990s. A South African, Elon Musk, founded Tesla Motors and the aerospace firm SpaceX.

But in the past decade, skilled immigration has stalled. Flaws in the U.S. visa system make it hard for well-educated and experienced immigrants to stay. Rather than set up companies and create employment in the U.S., foreign-born scientists and engineers have been returning home, taking their ideas and inventions with them. As a result, innovation has become global and the technology playing field has leveled across the world (see go.nature.com/2kmqmjq).

Now, as dark clouds of nativism swirl around Capitol Hill, the country’s leaders face an important choice. They can play the populism card, close the doors and watch U.S. global competitiveness fall — or they can welcome the world’s best and brightest to boost innovation and create jobs. Technology will advance with or without the U.S. The nation needs to decide whether it wants the innovators on its side. Other countries seeking to limit immigration should ask themselves the same question.

Global innovation

Today, internet companies in China, such as Alibaba, Baidu and Tencent, are among the most innovative and valuable in the world. Facebook has mimicked features of their products; Apple has been accused of copying Chinese innovations in the iPhone 7; and search engine Baidu’s artificial-intelligence system is more advanced than Siri. Chinese scientists will soon lead the pack on applying CRISPR–Cas9 gene-editing technology (see, for instance, Nature 539, 479; 2016). India has sent an orbiter to Mars and launched a record-breaking 104 satellites from a single rocket. Its new platform for digital currencies, India Stack, may allow its financial system to leapfrog that of the West. Chilean scientists have built cheap technologies that sanitize water by temporarily changing it into a plasma phase. South Korea has built autonomous cars that it aims to have on its roads before the Pyeongchang Winter Olympic Games in 2018.

See also: Why Trump’s Travel Ban Hurts Innovation  

One measure of globalization is the number of “unicorns,” technology startup firms valued at $1 billion or more. As recently as 2000, nearly all of these were in the U.S.; other countries could only dream of creating a Google, Amazon or Facebook. By February 2017, of the 213 unicorns in the world, China had given birth to 55 and India 10. The U.S. is home to only 110 (Global Entrepreneurship); half of those have at least one immigrant founder. The U.S. share of unicorns is shrinking, and Silicon Valley is facing unprecedented competition.

Gone are the days when, owing to the high costs of the core technologies, U.S. and European research labs held a monopoly on large-scale innovations. Whereas early generations of supercomputers cost tens of millions of dollars, today’s smartphones, which outperform them, cost as little as $30. Sensors, artificial intelligence, robotics, genomics and 3D-printing technologies are globally available and inexpensive. Anyone, anywhere, can use these to build world-changing products. Government-built walls of visas and travel restrictions are no barriers to innovation, only to economic growth.

Brain drain

The contributions of immigrants to tech companies are well-documented. In 1999, regional economist AnnaLee Saxenian at the University of California, Berkeley, found that Chinese and Indian executives were at the helm of 24% of the businesses started in Silicon Valley between 1980 and 1998. That proportion doubled the following decade. My research team worked with her to show that between 1995 and 2005, foreign-born innovators founded 52% of technology companies in Silicon Valley and 25% nationwide. We also showed that immigrants generated $52 billion in revenue and employed 450,000 workers in 2005. They filed the majority of patents at technology companies such as Qualcomm (72%) and Cisco (60%), and more than 40% of U.S. government-filed international patent applications had foreign authors.

Then things changed. A backlog of applications built up for employment-based visas that allow permanent residency (green cards). With sociologist Guillermina Jasso of New York University, we analyzed this backlog. As of Oct.1, 2006, there were almost half a million applicants (more than one million when family members were included). Because only about 120,000 visas are available each year, getting a green card can take a decade. We forecast that this wait would increasingly frustrate highly skilled workers, leading to a reverse brain drain.

Indeed, by 2012, my team found that immigrant entrepreneurship had stalled. The proportion of companies founded by immigrants fell nationwide to 24% and in Silicon Valley to 44%. We believe from anecdotal evidence that highly skilled workers are returning to their home countries in even larger numbers today.

Canadian-born chemist Michelle Zatlyn co-founded the US Internet company CloudFlare.

These are the people who set up the unicorns in countries such as China and India. Each of those companies has one or more U.S. returnees in senior leadership positions, and restrictive U.S. immigration policies put them there.

Two decades ago, it was the norm for students who came to the U.S. from China and India to want to stay. No longer. On graduating from engineering courses, most overseas students say that they will work for a short time to gain experience, then return home. Human-resource directors of companies in India and China tell me that they are flooded with CVs from students from U.S. universities. Working for an exciting start-up such as Baidu or Alibaba is more enticing than being locked into a menial U.S. position for a decade awaiting your green card.

When I visit technology centers in China and India, and increasingly in places such as Mexico City or Santiago in Chile, I see a beehive of startup activity. As well as social-media and Internet applications, overseas entrepreneurs are designing wearable medical devices, robots, drone-based delivery systems, microsatellites and agricultural-automation systems. They are building self-driving cars, solar technologies and 3D-printing systems to solve global problems.

See also: Is U.S. Losing the War for Talent?  

Meanwhile, the U.S. visa backlog is climbing. I estimate that there are more than 1.5 million skilled workers in immigration limbo in the U.S. today. Each one is a lost opportunity and a waste of talent.

Everyone loses. The precarious position of foreign-national staff leaves them open to mistreatment by their employers. Rules prevent employees from changing jobs while waiting for their green cards — even to other jobs in the same company. H-1B visas for temporary stays allow employers to replace U.S. workers with people who are paid less than they should be, given their skills. This is one of Silicon Valley’s darkest secrets — and it is why tech companies lobby for more H-1B visas rather than more green cards. Skilled people become frustrated as their careers stagnate. The jobs that would have been created in startups go overseas.

Unless it changes its immigration outlook, the U.S. will forgo economic benefits and jobs in a misguided effort to protect both. It will have to watch as the rest of the world leaps ahead. It doesn’t have to be this way.

Embrace outsiders

The U.S. needs to expand the number of permanent-resident visas and clear the backlog. These people are already working in the country legally and have the experience and skills needed. Retaining them will boost the economy. Accelerated granting of permanent residency could be contingent on buying a house, making investments or starting companies that create jobs. Imagine the benefits of 10,000 new technology startups.

“The U.S. needs to decide whether it wants the innovators on its side.”

We need to make it easy for entrepreneurs abroad to bring startup firms to the U.S. One solution is to provide a “startup visa” as a path to permanent residency. This would perhaps be valid for five years, with an upgrade to permanent residency dependent on the firm’s employment of U.S. workers. The Kauffman Foundation in Kansas City, MO, has estimated that such a visa would create 1.6 million jobs within 10 years and boost the U.S. economy by $224 billion a year.

See also: What Trump Means for Best Practices

The solution to the mistreatment of foreign workers is easy: untether the H-1B visa from the employer. Let people change jobs, and let the market decide what their salaries should be. This would remove the financial incentives for companies to replace Americans with cheaper foreign workers and would encourage them to hire the best talent.

By becoming the best place in the world for entrepreneurs to study and work in, the U.S. could again be in the driving seat of technology innovation. Then we can share the resulting prosperity in a more equitable way to mitigate the anger of the electorate.

Immigration Reform On The Horizon: What It Means For Medical Tourism And Workers' Compensation

Five years ago, members of a risk management discussion group I belong to on Yahoo Groups raised the question of whether or not illegal immigrants (i.e., undocumented immigrants) were entitled to workers’ compensation benefits. The answer most of the respondents gave was yes, but with some restrictions depending upon the state. One respondent in particular even provided the group with documents from the Independent Insurance Agents & Brokers of America, Inc. (IIABA) that gave the pros and cons in the debate on whether undocumented immigrants were entitled to benefits or not.

The purpose of this article is not to rehash the debate points, but to explore what impact impending immigration reform, which has been promised by the Obama administration in the upcoming second term of the president, will have on workers’ compensation and the likelihood that injured newly legal immigrant workers, especially from Mexico and other Latin American countries, will avail themselves of the benefits of medical tourism to their home countries as an option if injured on the job.

According to the IIABA White Paper, which cited a Pew Hispanic Center report published in 2006, there are probably 11 to 12 million undocumented immigrants in the US, depending upon how many have “self-deported” recently due to the current US economic slowdown. Demographically, this represents 5.4 million men, 3.9 million women, and 1.8 million children. In addition, there are 3.1 million children who are US citizens, having been born here (64% of all children of the undocumented) from one or more parent.

President Obama’s Executive Order last year gave many of these children a reprieve from deportation while they are attending college here and until more comprehensive reform can be achieved for all undocumented immigrants. Undocumented immigrants account for almost one-third of all foreign-born residents of the US, and about 80% of these are from Mexico and other Latin American countries.

The report also states that out of the total number of 9.3 million undocumented adults, 7.2 million (77%) are employed and account for around 5% of the US workforce. They comprise a disproportionate percentage in some industries, such as 24% of farm workers, 17% of cleaning workers, 14% of construction workers, and 12% of food preparers.

These industries typically account for much of the claims filed under the US workers’ compensation system. Within a particular industry, undocumented workers comprise a higher percentage of more hazardous occupations. For example, 36% of insulation workers and 29% of all roofing employees are estimated to be undocumented.

In my blog post, The Stars Aligned, I briefly touched upon the issue of immigration reform’s impact on medical tourism for workers’ compensation in regard to Mexican workers in the US. But since President Obama and Florida Senator Marco Rubio have recently outlined different reform plans, which I will discuss here in this post, it is important to mention first how undocumented workers are treated under the various laws each state has established to govern their workers’ compensation systems.

A document I mentioned in that blog post was a chart of the laws governing workers’ compensation and undocumented workers that one of the respondents had forwarded to the discussion group.

Undocumented workers are entitled to workers’ compensation benefits in thirty-eight states; however, six states have statutes that allow or restrict benefits for various reasons such as:

  • if the employment was obtained under false pretenses (Florida);
  • if disability benefits were payable or they were unable to work because of the injury (Georgia);
  • if they were entitled to medical, but not disability benefits because of a commission of a crime under the Immigration Reform and Control Act (IRCA) of 1986 signed by Ronald Reagan (Michigan);
  • if vocational rehabilitation benefits were covered since the worker could get employment outside the US (Nevada);
  • if disability payments were recoverable at US wages rather than those of the home country or if the employer was aware or should have been aware of the undocumented status (New Hampshire); or,
  • if disability benefits were not payable if the worker was unable to work due to his status and not the injury (North Carolina).

Three states — California, Georgia and Nebraska — have statutes that indicate that undocumented workers are not entitled to benefits in certain situations. California case law establishes that undocumented workers could be refused vocational rehabilitation benefits. Georgia case law establishes that disability benefits are not payable if the worker is unable to work due to his status and not his injury. And, Nebraska case law established that a worker named Ortiz could be refused vocational rehabilitation benefits because he could not legally work in the US and did not plan to return to Mexico to work.

Only Wyoming has a statute that expressly includes only “legally employed … aliens.” And case law in 1999 confirmed that undocumented workers were not entitled to benefits. Eleven states — Alaska, Delaware, Indiana, Maine, Missouri, Rhode Island, South Dakota, Vermont, Washington, West Virginia and Wisconsin — were listed in the chart as unknown as to whether or not undocumented immigrants are entitled to benefits.

As we begin the second Obama Administration, immigration reform has risen to the top of the list, only to be preceded by the debt crisis and the fiscal cliff. As I mentioned above, both President Obama and Florida Senator Marco Rubio have outlined their own versions of what immigration reform would look like. Senator Rubio’s plan would rely more on skilled workers such as engineers and seasonal farm workers while tightening border enforcement and immigration law. Senator Rubio’s plan would not provide blanket amnesty to those already here.

On the other hand, President Obama’s plan, as outlined in a recent New York Times article, would seek to give undocumented workers a path to citizenship. Sen. Rubio’s plan would focus more on merit and skill as prerequisites for entry into the US, much like earlier immigration laws passed in the 1920s and other decades. The president’s plan would be broader and more immediate, and would probably have less of an impact on the economic stability of those industries that currently rely on undocumented workers.

Whatever form immigration reform will take, the opportunities to offer medical tourism as an option to injured undocumented workers, once they achieve some legal form of citizenship, will no doubt increase. The likelihood that something will be done this year has already been the topic of many news programs and even has been discussed by congressional leaders such as Harry Reid, the Senate Majority leader.

Once the currently undocumented can legally remain in the US and continue to work in the industries they occupy, it is more likely that they will opt to go to their home country for medical treatment should they get injured on the job. With the benefits of doing so, such as not having language barriers, cultural barriers, and being able to be visited by friends and family living there, they will be more open to receiving treatment at facilities they normally could never get into. And as many of these countries are fast becoming “rising stars” as medical tourism destinations, the more likely they will want to get treated at the best hospitals in their countries, which will have a huge impact on their recovery, their well-being and their standing with friends and family. And the financial burden of not having to look for a job back home and being able to return to the US will convince them to opt for medical tourism as injured workers.