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  • Winning the Race for Global Talent

    The industriousness of a nation’s people has always been a principal driver of economic vitality and a key ingredient in national competitiveness. As the global economy is growing more digital, we’re seeing a secular shift away from reliance upon tangible capital, including physical equipment & buildings, and toward intangible capital, meaning intellectual capital largely in the form of software and patents. Human talent is the primary source of these intangible assets, so talent is becoming increasingly important to economic growth and innovation.

    At the same time, national security and national power depend more than ever on economic and technological success. Obviously, the weapons of war are becoming more dependent on cutting-edge technology. But more importantly, economic warfare has become the primary arena of international competition in the 21st century and the race for technological supremacy has become its most contested front.

    High-end technological sectors, such as artificial intelligence, 5G and quantum science, can offer decisive benefits for the security and geopolitical positioning of any country that leads in their development. As a result, the nation that shapes the technologies and technology standards of the future will benefit enormously.

    Highly skilled immigrants to the United States have excelled in scientific research for at least the past 100 years and continue to be disproportionately represented in STEM fields. In the process of innovating, high-skilled immigrants have embraced the country’s entrepreneurial spirit, starting businesses, including Fortune 500 powerhouses, at an astounding rate.

    These immigrants have proven to be a major source of invention and innovation while making those around them more innovative. Today, immigrants represent roughly 14 percent of the U.S. population, up from around 7 percent in 1950. And relative to their share of the population this so-called “pool of global talent” consistently contributes disproportionately to scientific discovery in the United States. As a result, immigrants as a group dominate American research institutions and technical fields. For instance, since 1901, foreign born researchers have received one-third of the Nobel Prizes in chemistry, medicine, and physics awarded to residents of the United States. And they have been even more prevalent since 2000.

    Furthermore, international students fill our STEM classrooms; for instance, two-thirds of graduate students in AI-related fields were born abroad. College-educated, foreign-born workers are also more likely than their native-born counterparts to be in employed in technology, science, or engineering occupations. In 2013, Matthew Slaughter, dean of the Tuck School of Business at Dartmouth University, and Gordon Hanson, now at Harvard University, found that 60% of all U.S. workers with a STEM doctorate working in a STEM occupation were immigrants. And in the key STEM fields of computer science, computer programming and software development, over 50% of U.S. workers with a master’s degree were immigrants.

    As a result, the United States depends more than ever on immigrants to advance scientific discovery and the technological research that make innovation possible!

    Foreign-born entrepreneurs have also made outsize contributions to the highest levels of business. As of 2019, 20 percent of Fortune 500 companies were started by immigrants, with another 24 percent started by children of immigrants. From American icons such as Levi Strauss to Silicon Valley stalwarts such as Google, cofounded by Moscow-born Sergey Brin, these public companies span across sectors, and their headquarters dot the country.

    Furthermore, immigrants have started 50 of the 91 privately held startups valued at over $1 billion which, in 2018, were collectively valued at $248 billion.

    But it’s not just big companies to which immigrants have contributed their talents. The founders of 18 percent of small businesses nationwide were foreign-born. And while less-educated immigrants tend to be the most entrepreneurial, those with at least a college degree still start new businesses more often than their U.S.-born counterparts.

    This prevalence of immigrants in STEM fields and in entrepreneurship has positioned immigrants as a critical source of invention and innovation throughout our nation’s history. From 1880 to 1940, the 10 most inventive states (measured by the number of patents filed) had nearly 12 times as many international migrants as the 10 least inventive states; they also had six times as many inventors per capita and had eight times as many patents per capita. From 1976 to 2012, according to scholars at the Stanford Graduate School of Business, immigrants accounted for 16 percent of inventors in America, 23 percent of new patents, and 30 percent of aggregate innovation.

    The relationships between immigration and innovation are well established. As Harvard Business School Professor William Kerr observed, “Highskilled immigrants are clearly an essential piece of American innovation.” And they also boost the innovative output of their new American neighbors. In research for the George W. Bush Institute, Pia Orrenius, vice president of the Federal Reserve Bank of Dallas, determined that “greater innovation among immigrants appears to boost innovation among natives, too.”‘ The Stanford researchers cited earlier agree saying, “More than 2/3 of the contribution of immigrants to U.S. innovation has been due to the way in which immigrants make U.S. natives substantially more productive.”

    This all means that skilled immigrants disproportionately drive scientific research, technological development, business building, and entrepreneurship, which are the building blocks of innovation. This pattern of immigrant supported innovation has been central to the U.S. economic makeup for over a century and this value exceeds mere economic measures.

    Nowhere is that clearer than in the national response to the COVID19 pandemic. Highly skilled immigrants have leading roles in health care and biotechnology. And the medical professionals on the front line of treatment are disproportionately foreign-born. Furthermore, two of the companies that led development of the coronavirus vaccines-Moderna and Pfizer-were founded by immigrants.

    What’s the bottom line? Because we’re increasingly dependent on knowledge-based workers and entrepreneurs, America needs to jealously guard and enhance its ability to attract and retain top global talent.

    Looking ahead, the good news is that the worldwide pool of highly skilled immigrants is expanding. In the past three decades, the worldwide population of immigrants grew from 153 million to 272 million, while their education and skill levels have increased even faster. Specifically, from 2000 to 2015, the number of immigrants coming to OECD countries with at least a university level education increased by 20 million, while the number of lower-educated migrants increased by five million.

    The bad news for America is that several other countries across the developed world have recognized the growing worldwide supply of talent and their own need to attract highly skilled immigrants. As a result, they have taken steps to attract a larger share of the top talent.

    Those countries, which have long relied heavily on immigrants to supplement population growth, labor supply, and economic expansion, have recently modified their policies to attract more entrepreneurs as well as those with high-tech skills.

    For instance, Canada recently incorporated a startup visa program that immediately provides eligibility for permanent residency to immigrants with funding for startups from Canadian venture capital firms or other investment groups.

    In recent years, Australia has implemented new programs to attract global talent; these include programs encouraging individuals with entrepreneurial ideas and cutting-edge skills to apply for visas without employer sponsorship as well as programs which involve recruiting foreign entrepreneurs to launch seedstage startups.

    Germany has also modified its already moderate immigration policies.

    And even countries with historically restrictive policies, such as Japan and China, have relaxed their stances and overhauled their policies to support highly-skilled immigration.

    In such a context, the United States cannot simply assume it will always get the elite human capital it needs to remain on top. Yet, despite this growing competition, administrations (of both parties) have failed to take meaningful steps to appeal to, support, and retain talented foreigners.

    If anything, it has gone in the opposite direction. Progressives seem more interested in admitting future gardeners and food stamp recipients, while populists often confuse the implications of admitting engineers and computer scientists with those of admitting potential fast-food workers. As a result, during the Trump years, America implemented policies that made it more difficult for the most talented foreign workers and students to come to America and to stay in the country. And more recently, the restrictive immigration policies the Biden administration has pledged to undo mainly deal with low-skilled immigrants, qualified only to fill jobs for which a surplus of native-born Americans already possess the required skills. So far, the administration’s alleged compassion for future welfare recipients and minimum wage workers is apparent, but it’s unclear what, if anything, it will do to recruit the world’s “best and brightest” to the United States and to ensure that we retain them.

    To fully understand this trend, it’s important to understand that America’s relative attractiveness to global talent is shaped by a host of factors, including

    - global competition;
    - U.S. immigration policy;
    - broader domestic cultural trends; and
    - domestic policies involving innovation, labor, and entrepreneurship.

    Admittedly, these various dimensions defy comprehensive analysis, but even a cursory review of the evidence reveals worrying trends.

    First, despite an increasing supply of applications by highly skilled immigrants, the caps on H-1B visas for educated and specialized workers and I-485 employment-based green cards have not changed significantly since 1990. After a brief spike in temporary workers, visa caps were set at 65,000 in 2004, and Congress approved 20,000 more visas for recipients of advanced degrees from U.S. universities. With these tight limits in place, denial rates for new and existing temporary work visas have grown in recent years, as have “denial” and “pending” statuses for immigrants seeking employment-based permanent residence. From 2015 to 2019, the denial rate for new H-1B visa applications jumped from roughly 6 percent to over 20 percent. The denial rate of petitions for continued employment also increased from 3 percent to nearly 12 percent. Green card applicants likewise saw petitions denied or delayed at far higher rates.

    Second, policy and regulatory changes also appear to be making the visa and green card application processes more onerous. Processing times for employment-based green card applications more than doubled in the past four years, from 6.8 months to over 14. This surge in case-processing times has hurt businesses’ ability to hire and train workers, hindered international student enrollment in U.S. universities, and, more simply, made it more painful to come to, work in, and stay in America.

    Third, the growing global competition for talent from other OECD countries coupled with high domestic barriers is diminishing the ability of American colleges and universities to attract the best international students. In 2019, most U.S. schools reported a decrease in new international students. This drop came on the heels of successive down years; new international enrollment fell by 3.3 percent in 2016, 6.6 percent in 2017, and 0.9 percent in 2018, according to the Institute of International Education. The pandemic further diminished international student arrivals, though the long-term impact of COVID-19 on recruitment and enrollment remains to be seen. All told, America’s share of international students has decreased in recent years, from 28 percent in 2001 to 21 percent in 2019.

    Simultaneously, China’s share increased from 3 percent to 9 percent, while both Australia and Canada assumed more prominent positions.

    Policy uncertainty and evidence of growing anti-immigrant sentiment, coupled with concrete rule changes to inhibit visa and green card approvals, have had a chilling effect. Leading technologists, executives, and academics worry the U.S. is becoming less competitive for talent. This is not to say America is about to lose its “pole position” in the global talent race. It still has the largest share of the worldwide international student population, with over one million international enrollments, and by all measures, it remains a top destination for those seeking work and opportunity.  However, there are clear warning signal that America’s big lead is fading.

    This begs the question, “Are we doing all we can to sustain America’s winning team?”

    The broader debate on immigration is rife with complex economic, security, political, and cultural considerations that have served as obstacles to consensus and progress. With regard to admitting high-skilled foreigners, the two biggest concerns are that

    - they could be agents of hostile powers or
    - they could deprive native-born workers of career opportunities.

    However, there seems to be little doubt on either side of the aisle that as human capital has becomes more important to America’s success, the United States has a distinct need to attract highly skilled immigrants.

    No other country has gained so much from global talent nor stands to do so in the future. Therefore, we must take the right steps to ensure that we get the mix of talent that benefits Americans the most, while minimizing risks.

    If handled correctly, this is an area in which our political leaders can make meaningful near-term progress with enormous medium-to-long-term benefits.

    Given this trend, we offer the following forecasts for your consideration.

    First, policymakers will have to carefully manage and mitigate the risks to national security associated with highly skilled immigration. Obviously, researchers and students have been recruited to illicitly export IP, corporate secrets, research data, and other proprietary information. Foreign-born students have also been enlisted to conduct influence operations on campuses, including through Confucius Institutes. Such behavior threatens our security, compromises academic integrity and stifles campus speech. However, serious as these acts may be, they are perpetrated by a small number of bad actors, and they can be mitigated through effective and increasingly aggressive law enforcement, without resorting to blanket bans.

    Second, over the coming decade a 50% increase in highly-skilled immigration will produce large benefits for Americans up and down the economic scale by boosting innovation and entrepreneurship. Critics warn, with good reason, that bringing in foreign workers can displace American citizens and limit their opportunities. However, as we’ve long-argued in Trends , highly skilled immigrants account for a small portion of annual migration, while the businesses and inventions they enable create a disproportionate share of American wealth and employment. Only 54,000 of the roughly one million individuals who were granted permanent resident status (with a green card) in 2019 were classified as skilled workers. Combined with the 85,000 temporary work visas allotted annually, we are looking at a very small percentage of the American workforce. This relatively small cohort cannot significantly displace American workers. And where they do, this modest harm can be addressed through targeted regulatory solutions. - Today, U.S. companies in many high-tech industries report a deficit of skilled workers. And research indicates that additions of highly-skilled migrants actually boosts employment for locals in most places by eliminating bottlenecks.

    Third, despite political friction, U.S. policymakers will formulate a set of policies that will enable us to realize huge benefits from highly skilled immigration while minimizing ancillary damage. At this point, policymakers have a menu of options which are worthy of serious consideration. Here are just a few commonsense options intended to minimize risks and maximize benefits:

    1. Policymakers could boost law enforcement’s investigative and enforcement resources related to IP theft and espionage. Universities could be specifically charged with doing their part by adhering to basic principles of academic freedom and transparency in funding sources. The Donald Trump administration rightly stepped-up enforcement and that policy needs to continue in the Biden administration.

    2. Washington could establish a national security visa for vetted applicants who would work in fields related to the national security innovation base. This would not only incentivize top talent to contribute directly to America’s military and technological strength but also bolster the country’s ability to compete for global leadership in innovation. The idea has gained traction already, including through a provision in the 2020 National Defense Authorization Act. We should put the national security visa in place now and so we can quickly realize the benefits.

    3. Policymakers can also reduce the applications backlog and remove arbitrary barriers that clog up the existing visa and green card processes by reducing delays, increasing application throughput, and ensuring process transparency. They should also be careful to reduce system abuse by domestic and foreign employers; the more complex the process, the more it hinders the free flow of talent and favors large, established employers over smaller firms which may need the talent more.

    4. Policymakers could implement a set of modest reforms to increase opportunities for global talent to come to, work in, and stay in the United States. As a first step, Congress could boost caps on employment-based green cards, particularly for those at higher skill levels (such as the EB-1 or EB-2 classifications).

    And it could shorten the time required to move from temporary work to permanent residency for certain occupations or skill levels. It could also remove limits on immigration from specific countries or regions while sup-porting applicants from countries that tend to send fewer migrants. Counterintuitively, immigrants from less common countries tend to innovate and start businesses at a disproportionately high rate.

    5. Policymakers could also give priority to the socalled “heartland visa” designed to draw talent to non-coastal centers that need it most. This would help distribute human talent, and therefore capital, around the country to boost areas traditionally underserved by highly skilled immigration.

    6. The government could offer long-term visas or even green cards to international students receiving advanced degrees in certain STEM fields. For example, in AI-related research, this would help the U.S. retain students and researchers and compete against our rivals’ talent strategies. Not every U.S.-educated foreigner will stay here, but it is unwise for U.S. universities to educate and train some of the world’s foremost engineers and scientists only to watch them leave not based on their own desire, but for lack of opportunities. And,

    7. Policymakers could consider more fundamental changes to how the country manages access to this country, particularly for skilled global talent. One consideration is whether the visa and green card system, with numerical caps and opportunities for abuse, is the best way to attract and retain top talent. Another is finding ways to prioritize those with education or work experience in priority STEM areas. The United States could abandon numerical caps on visas and green cards or replace them with a standards-based model that welcomes all who meet certain criteria. Republican lawmakers have repeatedly proposed a points-based system that would prioritize migrants with certain skills, occupations, and educational backgrounds. More narrowly, the country could mandate that employment-based green cards apply only to workers and create a separate program for families to come, thereby allowing more workers to stay permanently. And,

    Fourth, the United States will realize its full potential during the Golden Age of the Digital Revolution only if it implements a strategy for fostering homegrown talent and maximizing the opportunities for Americans to flourish. Any plan to embrace highly skilled immigration is but one component of a much-needed talent strategy to attract, retain, and educate the future workforce. Highly skilled immigrants, though valuable, are limited in number and impact. A true strategy to maximize American competitiveness would prioritize homegrown talent and maximize opportunities for Americans. It would provide greater funding, digital infrastructure, data access, and other resources to support STEM education at all levels. It would entail working with states, schools, and businesses on workforce development, job training, and continuing education. Most of all, it would prioritize reforming K-12 education. Too many children never get the opportunity to succeed due to the poor state of some of our schools. Ultimately, the work we must do at home on education, training, mobility, and equality of opportunity is more important and existential than promoting immigration. However, it is also much more complex and requires long-term solutions. In the meantime, we can-and should-address changes to highly skilled immigration policy, ASAP.

    Resource List:
    1. US Senate Committee on Homeland Security and Governmental Affairs. November 18, 2019. Permanent Subcommittee on Investigations. Threats to the U.S. Research Enterprise: China’s Talent Recruitment Plans.

    2. Bridgewater Associates. February 7, 2019. Greg Jensen et al. Peak Profit Margins? A US Perspective.

    3. Georgetown University, School of Foreign Service, Center for Security and Emerging Technology. December 2019. Remco Zwetsloot et al. Keeping Top AI Talent in the United States: Findings and Policy Options for International Graduate Student Retention,

    4. Compete America Coalition. May 2013. Gordon H. Hanson and Matthew J. Slaughter. Talent, Immigration, and U.S. Economic Competitiveness,

    5. New American Economy. July 22, 2019. New American. Fortune 500 in 2019: Top American Companies and Their Immigrant Roots.

    6. National Foundation for American Policy, October 2018. Stuart Anderson. Immigrants and Billion-Dollar Companies.

    7. National Immigration Forum, July 11, 2018. Dan Kosten. Immigrants as Economic Contributors: Immigrant Entrepreneurs.

    8. National Bureau of Economic Research. January 2017. Ufuk Akcigit, John Grigsby, and Tom Nicholas.The Rise of American Ingenuity: Innovation and Inventors of the Golden Age.

    9. Stanford Graduate School of Business. November 6, 2018. Shai Bernstein et al. The Contribution of High-Skilled Immigrants to Innovation in the United States.

    10. Harvard Business School. May 2019. William R. Kerr. The Gift of Global Talent: Innovation Policy and the Economy.

    11. Catalyst. Spring 2016. Pia O J Tenius. Benefits of Immigration Outweigh the Costs.

    12. United Nations, Department of Economic and Social Affairs, Population Division, International Migration. May 27, 2019. Bernstein et al. The Contribution of High-Skilled Immigrants to Innovation in the United States.

    13. Organisation for Economic Co-operation and Development. February 2020. Rohen d’Aiglepierre et al. A Global Profile of Emigrants to OECD Countries: Younger and More Skilled Migrants from More Diverse Countries.

    14. Institute of lnternational Education. Center for Academic Mobility Research and Impact. Fall 2019. Jodie Sanger and Julie Baer. International Student Enrollment Snapshot Survey.

    15. Georgetown University, School of Foreign Service, Center for Security and Emerging Technology. September 2019. Zachary Arnold et al. Immigration Policy and the U.S. AI Sector.

    16. Federal Bureau of Investigations. July 7, 2020. Christopher Wray. The Threat Posed by the Chinese Government and the Chinese Communist Party to the Economic and National Security of the United States.

    17. Hoover Institution. 2019. Larry Diamond and Orville Schell. China’s Influence & America’s Interests: Promoting Constructive Vigilance.

    18. Wall Street Journal. January 21, 2020. Kate O’Keeffe and Aruna Viswanatha. U.S. Turns Up the Spotlight on Chinese Universities.

    19. American Compass. December 16, 2020. Oren Cass. Worker Power, Loose Borders: Pick One.

    20. Council on Foreign Relations. September 2019. James Manyika, William H. McRaven and Adam Segal. Innovation and National Security: Keeping Our Edge.

    21.Kansas City Stm. July 23, 2019. Ronald Reagan. Ronald Reagan: Immigrants Recognize the Intoxicating Power of America.