MPI Study: Immigration Plays Key Role in U.S. Economic Competitiveness

Americans still reeling from the economic dislocations of the past few years might be hard to convince, but immigration continues to be crucial to our economic growth and competitiveness, according to a recent study released by the Migration Policy Institute (MPI), a non-partisan Washington think tank. (See The Role of Immigration in Fostering Competitiveness in the United States, by Demetrios G. Papademetriou and Madeleine Sumption, Migration Policy Institute, May 2011.) The most obvious impact of immigration, says MPI, is the economic growth caused by an expanding population and workforce. Still more important, from an economic perspective, are the advances in technology, as well as the long-term growth in productivity, consumption, and income brought about by immigration, the MPI study contends.

According to the MPI study, it is difficult to quantify precisely the economic impact of highly skilled immigrant workers in the United States, but several indicators point to the magnitude of their contributions:

“Commonly cited statistics include the fact that noncitizens make up an estimated one-quarter of all international patent applications from the United States, for example, and college-educated immigrants have been found to be twice as likely to register patents as their U.S.-born counterparts (largely because they are more strongly concentrated in the sciences). Indian and Chinese immigrants and their descendants are also thought to be overrepresented among inventors, accounting for 14 percent of U.S. patents. More broadly, the foreign born make up 27 percent of the U.S. workforce with a doctoral degree, and are strongly concentrated in occupations associated with high skill levels – medical scientists (43 percent), physicists (25 percent), or economists (29 percent), to name just a few examples.”

These foreign-born workers have played a pivotal role in building the major technology centers in the United States – such as Silicon Valley – helping us to establish and maintain our place as the world’s hub of technological innovation, MPI argues. Although top-tier foreign talent has less difficulty in emigrating to the United States – making use of “first-preference” worker visas for outstanding researchers, those of “extraordinary ability,” and high-level intracompany transferees” – significant immigration bottlenecks prevent U.S. companies from bringing in larger numbers of talented workers in various tech-based “specialty occupations,” under the H1B program, the MPI study maintains.

The H1B application process can be cumbersome and expensive for employers and foreign workers alike, but the program’s biggest problem is structural, the MPI study notes: H1B visas are capped on a yearly basis, and last for a maximum of 6 years. Moreover, foreign-born workers seeking permanent residence in the United States – the coveted “green card” status – face a system that heavily favors family-based immigration, leaving “economic-stream immigrants” with “only about 15 percent of visas for legal permanent residence,” roughly half of which are allocated to family members of employer-sponsored immigrant workers, MPI says.

The status quo is not defensible, MPI argues, if the U.S. hopes to maintain its competitive edge, especially in high-tech fields like information technology (IT); U.S. policy has largely stood still while other countries have changed their immigration policies to facilitate more recruiting of talented workers from the global labor pool. Overall, MPI contends that our immigration system needs to be more flexible, to meet changing labor market demands, as well as more tightly focused on recruiting the best possible foreign-born workers, perhaps by implementing a ranking system that assigns a higher priority to applicants with the skills most desperately needed by our economy.

So what would a better system look like? MPI recommends the following policy remedies to fix our current employment-based immigration system:

• A faster, streamlined process for workers on temporary visas to gain permanent residence without requiring employers to sponsor the same worker twice.
• Greater differentiation between applications at the skilled and highly skilled levels to ensure that the highest-value applications are always satisfied. This could include permitting employers to ‘pierce’ numerical limits when hiring the most talented and/or higher-earning job candidates or upon payment of an additional fee. It could also include more selective eligibility criteria for prospective workers (including, perhaps, a limited points system that maintains the principle of employer sponsorship).
• More flexible numerical limits (temporary and, particularly, permanent) to avoid stampedes for visas and the rapid exhaustion of visa limits in years of high demand.

As good as MPI’s ideas are, one wonders at times whether anyone on Capitol Hill is listening. Some may hope – rather optimistically – that Congress at least will make an effort to fix the immigration problems that confront the American business community, assuming that this could be done in a way that kept the more controversial illegal immigration issues off the table. The issues are not so neatly separable as to make a partial “business-only” solution possible; comprehensive reform is the only solution, but it’s exactly the one that is hardest to get right now. Perhaps after the next election …?