Why is America Turning Off Skilled Migrants?

You do not have to look far to find new with important IPE implications. Take, for instance, this Associated Press article I originally found on the Yahoo! homepage:

The number of petitions from employers trying to bring foreigners to work permanently in the U.S. has declined dramatically over the last two years, an Associated Press review of government data has found.

With the nation facing a deep recession and high unemployment, the government has received about half the number of employer-sponsored applications for work-based green cards in fiscal years 2008 and 2009 than it did in each of the previous years. There were almost 235,000 applications submitted in fiscal 2007, almost 104,000 the following year, and fewer than 36,000 through the first eight months of fiscal 2009, according to data obtained by the AP.

In addition to the weak job market, long waits for immigrant visa availability, deep job cuts in sectors that have traditionally lured large numbers of applicants [i.e., information technology] and more competition from American job seekers have led to the sharp decline, experts say. "It mirrors the recession. Employers aren't hiring as much," said Kristi Barrows, deputy director of the Texas Service Center...

To bring in a foreign worker, employers must prove that they couldn't find a staffer in the U.S. who met the minimum requirements for the job, that they're financially healthy and that they will pay the prevailing wage. The potential worker must have specialized skills, be able to fill a job Americans aren't or have extraordinary abilities, such as those of musicians or pro athletes.

As always, there are various complementary and competing explanations:

1. The shrinking US economy cannot support as much labor whether native or foreign (as with the AP article);
2. American politicians have used foreign workers as convenient scapegoats, discouraging many would-be applicants (see my previous post on Obama's flap over Indian IT workers and proposed legislation to deny granting H-1B and L-1 visas to firms with foreigners constituting over 50% of their workforces);
3. In line with (2), policies asking for more extensive documentation bordering on the invasive prior to awarding H1-Bs are killing off applications.

For the third point, Computerworld has a fascinating article. Whereas the H-1B application quota of 65,000 used to filled within mere days of opening in year past, fiscal year 2009 is drawing to a close without even filling that quota. That's a fairly large change. As the article notes, this may be the first time when withdrawals and rejections are running faster than acceptances:

For what may by the first time, the number of H-1B petitions withdrawn by applicants or rejected by U.S. authorities is exceeding the number of new petitions for the visas.

The numbers have resulted in a slight decrease over the past two months in the H-1B visa petition count on the scale of a rounding error. The drop may be little more than a short-term phenomenon, but it is inviting theories as to its cause, ranging from increased U.S. scrutiny of the H-1B petitions to the general economy.

The U.S. has received approximately 44,900 visa petitions toward its 65,000 H-1B visa cap, one of two caps, since it began accepting petitions on April 1. But the number of visa petitions reported in mid-May by the U.S. Citizenship and Immigration Service (USCIS) was 45,500 visas. There has been a net decline of 600 visa petitions from May to June...

In the past year, the USCIS has increased the requirement for a wide range of documents to support visa applications to the point that the American Immigration Lawyers Association (AILA) says the requirement is " bordering on harassment."

The small H-1B decline reported by the USCIS may well be nothing more than a counting error, but Vic Goel, an immigration attorney in Reston Va., said it has more to do with cases being denied or withdrawn. Goel said he has had clients withdraw pending H-1B cases because they couldn't get the large amount of material sought by authorities in time to meet government deadlines, or because the USCIS was seeking new documentation. In the later instance, USCIS officials have asked IT consulting firms to obtain letters from clients with detailed descriptions of the duties performed by H-1B workers, their salaries, hours, benefits, and the length of the assignment, among other things, which has not been a normal business practice, he said.

Thankfully, there is a publication that can help us make sense of what is going on. The Kauffman Foundation expressing alarm over this turn of events, publishing a new piece you can download simply entitled America's Loss is the World's Gain. Arguing that current migration policies limiting foreign workers discourage innovation and economic growth, it delivers the goods on why America's already dismal future will look even more so with these sorts of policies gain more traction. Here is part of its blurb, although the rest of it is well worth reading (a more recent Computerworld entry also tackles this question):

The Ewing Marion Kauffman Foundation released a study today that indicates placing limits on foreign workers in the U.S. is not the answer to the country's rising unemployment rate and may undermine efforts to spur technological innovation.

For the study by Harvard professor Vivek Wadhwa titled America's loss is the world's gain: America's New Immigrant Entrepreneurs, Part IV, researchers surveyed highly skilled immigrants who had studied and/or worked in the United States and subsequently returned to their home countries.

"A substantial number of highly skilled immigrants have started returning to their home countries in recent years, draining a key source of brain power and innovation," said Robert E. Litan, vice president of Research and Policy at the Kauffman Foundation. "We wanted to know what is encouraging this much-needed growth engine to leave our country, thereby sending entrepreneurship and economic stimulus to places like Bangalore and Beijing."

What a strategy: keep out the world's best and brightest and prop up perpetual losers like GM with its demonstrated money-losing talents. As the Kauffman report suggests, other places will gladly pick up the slack--such as with the EU introducing the Blue Card. Keep guaranteed money losers like GM artificially alive and keep away those who can help America innovate its way out of a subprime morass--this surely sounds like the road to hell to me. It is change isolationists and protectionists alike can believe in.