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Greg Siskind on Immigration Law and Policy

HARVARD BUSINESS SCHOOL REPORT: LINK BETWEEN H-1Bs FOR SCIENTISTS AND ENGINEERS AND NUMBER OF INVENTIONS

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Harvard Business School has released a report showing a correlation between rises and decreases in the H-1B cap and the amount of innovation (measured in patent applications). The paper is very technical, but I know there are a lot of technical folks who read this blog so I'll leave it readers to give their thoughts in the comments.

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  1. George Chell's Avatar
    Actually a friend of mine at the University of Colorado reviewed this paper. This reasearch is an advancement on the research done by folks at the University of Colorado and the World Bank back in 2005 which came out in the Review of International Economics in August 2008....

    http://unpan1.un.org/intradoc/groups/public/documents/APCITY/UNPAN022363.pdf

    https://nber15.nber.org/c/2006/si2006/iti/maskus.pdf
  2. Tundra/Desert's Avatar
    I'm a long-term reader of the blog. I wrote this a while ago. I hope it's appropriate, apologies to Greg if it's not.

    People keep talking about immigrants like they're fungible and disposable, so I thought I'd talk dollars. Americans tend to understand dollars.

    I have been fortunate to work in a sub-industry that doesn't normally involve ultracomplicated projects, so it's fairly straightforward to estimate the economic impact of "me" in the immigration framework. Which the following attempts to do.

    I am originally from another country. I went to a U.S. school, undergraduate, then got a graduate degree, then worked for seven years at a company in the Bay Area. Not software, and not exactly what one would think when one hears high-tech, so I won't call it that; niche stuff, not many people qualified to do it in the whole world, and they don't make too many of these people anywhere anymore, especially in, say, India or China. The engineers at my company were literally from everywhere, we had all of the world's major languages represented. No national-security stuff, just things that make decent money for people who make them.

    While at the company, I was cranking out a design every 1.5 years, on average. These products sell for an average of 20 years, and the sales for mine were about U.S. $60,000 per year, each. For the four designs, that is $4.8M for lifetime sales; close to half of the sales is typically profit (I did say the business wasn't typical), so that means I brought, or will have brought, at least $2M to the company, or say $300k for each of the years I worked there, for even count. That's about average journeyman engineer productivity in many industries, I'm no genius. It would be reasonable to expect that I'd be productive at least at the same rate for all the years I got until retirement, which number at least 30. I should mention about $20k/year in income taxes, then there are payroll taxes and all---but I'm not sure how to figure in the relative impacts of these, I'm no economist---so I'll just stick to comparing corporate profits. (And for sure an engineer is not the only one in a company who's working, there are sales people and production and others who work just as hard, but profits in my industry do tend to scale proportionally with the size of the company, and if there weren't engineers there wouldn't be products, nor jobs for these people to do.)

    After these seven years, the green card didn't work out for reasons that would be obvious to Greg but much too obscure for common consumption, so I won't mention them. Disappointing for sure, but mostly not for material/financial reasons; I got used to the hills in the Bay Area, leaving that was hard. And so I went to the mother country, and was recruited to start up some R&D in a related industry; faster pace, but same fat profit margins. And it isn't the best place in the world for R&D, but it's going OK; productivity is noticeably less than in the States for varying reasons, but then we pay engineers a lot less, too. And I ended up with a 4-person R&D lab; jobs created, check; and here's what the impact is.

    We're currently looking at U.S. $1M/year in sales for the four of us, half of that is again profit. That's after a year of work. Our units sell for half the price of what similar units, designed in the States by a major company, sell. And we're making a killing so far, crisis or not. That's $2M/year in sales lost for that American company in this market. Product lifetime is less, say 3 years, so for my own impact I get $3M split four ways, that's $750k in sales, for this year of work; half is company profit, so that makes $375k. The market's quite inefficient, it'll be less fat once things become more competitive, but still I'd think my impact is gonna be $300k per year to the company, give or take, for all of them 30 years that I'm going to stick around. And this isn't a U.S. company.

    An immigrant-basher would be quick to say a native-born American must have been sure to fill the job I left in the States, but this isn't what happened. In over a year the company couldn't hire anyone. And that's simply because there is a limited supply of people with the right skills, as easy as that. And conversely, the development in the home country wouldn't have happened had I not been available, there aren't that many people with U.S. experience to go around and the experience was critical to getting the department organized so that it's competitive.

    Let us summarize.

    I get a subsidized education from a good public school in the U.S.

    Then I work, pay U.S. taxes, and bring a $300k/yr profit to a U.S. company.

    And then the green card doesn't work out. Through absolutely no fault of my own.

    I work, don't pay U.S. taxes, I bring $300k/yr in profit to a company in my country, and this is going to be going on for 30 more years.

    I have contributed to creating 3 other jobs, again not in the U.S.

    And a U.S. company (companies, actually) loses $2M/year in sales.

    There are a lot of approximations in these numbers, but they are essentially correct. Maybe these U.S. companies didn't really lose $2M but only $1M directly to us because half was going to be taken by the Chinese anyway, but the idea remains valid.

    And suppose things change and I do get the green card at some point in the future; that may well happen; then the corporate-profit part is reversed, but the lost sales are still there, for a long time to come. These three other guys I hired will keep turning out designs for a while.

    Now during the few months that I was fighting for the green card before giving up, the U.S. company and I did try to talk sense into some U.S. government people using the above numerical approximations, but all I heard from them was "no jurisdiction" and "not authorized". So I gave up.

    I figured the U.S. doesn't need me.

    And I figured, well, fine, they must either (1) really not care or (2) hate them ferriners so much that they're willing to forego profits just to show us our place. Kinda like cutting off your ear to make your sister picked on for having an ugly
    brother.

    In either case, it appears the U.S. doesn't deserve me. I'm not bitter, just picking my battles.

    And I can make it just about anywhere, just won't be as happy. And there at least several thousand, or more likely, tens of thousands of people like me.

    Questions?
  3. Greg Siskind's Avatar
    Tundra/desert - Great comment and thanks for posting. What a loss for us. I hope at some point the US has an opportunity to get you back.
  4. mecho's Avatar
    Great story! Brain-drain for US is another country's brain-gain. Due to the paralyzed Green Card process in the US some other, equally developed countries are opening-up to accept qualified candidates for their Permanent Residence programs...market efficiency?!
    They say Man is a Resourceful, Evaluative and Maximizer of his available options...great goin'!
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