Vivek Wadhwa writes about his pet issue yet again, with this article including the key point about his evidence, "I tell Desai’s and others’ stories in my book," and at least this time a reference to an study by the Kauffman Foundation
Get ready for the key statistic from the report: "The proportion of immigrant-founded companies nationwide has dropped from 25.3 percent to 24.3 percent since 2005. While the margins of error of these numbers overlap, they nonetheless indicate that immigrant-founded companies’ dynamic period of expansion has come to an end." Okay, so the change in percentage is within the standard error of measurement; a percentage change of that kind would be seen even if there were more immigrant-founded companies than ever, as long as more native-born Americans than ever found companies; and there is NO indication that Silicon Valley's flood of innovation has ceased.
What is the problem here? Quantitatively, what is the proof that any policy change is needed?
AFTER EDIT: Responding to the offense taken by the replies kindly posted below, let me explain my position. My PERSONAL position on immigration to the United States as a matter of policy is that I would be happy to see it go back to the way it was in the 1870s, when anyone could immigrate from anywhere with hardly any regulation of immigration at all. All of my ancestors arrived in the United States by those rules--all of my ancestors were in North America well in advance of the building of the immigration processing station at Ellis Island in New York City.
I am intimately familiar with United States immigration law, having formerly worked as an immigration lawyer (as described in my user profile here on Hacker News) and being the husband of a first-generation immigrant to the United States from Taiwan. I have lived abroad for six years of my life (in two separate three-year stays), so I have a pretty good idea of how one country treats foreign residents from America. The clients for my current occupation, teaching mathematics lessons through a local nonprofit organization, included first-generation immigrants from China, India, Russia, Romania, the Philippines, Korea, Ghana, Indonesia, Pakistan, Turkey, and other countries I may be forgetting at the moment. I like immigrants, and I like America to be full of immigrants--that makes life here more interesting.
But to persuade the legislative process in the United States to change the rules requires more convincing evidence than the anecdotes that Vivek Wadhwa repeatedly brings forward. Another comment here astutely pointed out that the recent trend line in immigration from Taiwan is that entrepreneur immigration to the United States is decreasing. That's because Taiwan has democratized, liberalized, and prospered during my lifetime. Now people who were born in Taiwan can pursue their advanced education in many different countries, being well prepared by the generally excellent primary and secondary education there, and then can decide for themselves where to settle to establish a career. They can go back to the country where they grew up and where their relatives and childhood friends live if they like. I think it's great for people to have choice like that. I don't think it is any problem for the United States at all if people from Taiwan develop their entrepreneurial businesses in Taiwan. The same is true of India and China. People from India and China continue to come to the United States in large numbers, as I can personally observe. Some study here and then go back to the countries of their birth. No one has made a case that United States policy has to change much to influence the numbers one way or another.
That's a fair criticism of the study, but you're misunderstanding the point Vivek is making. Policy change has ALWAYS been necessary. In fact, it is now a little bit easier than a few years ago to be an immigrant entrepreneur [1]. The point is that soon these entrepreneurs will just stay in their home country or move to a more entrepreneur-friendly country instead of going through all this trouble.
I'm an entrepreneur from Germany and I can't help but feel slightly offended by your comment. You seem to think either a) I should go back to Germany for some reason or b) it's cool for me to stay here, but only if I jump through a series of ridiculous hoops. If you don't feel that way, you should support a change in legislation.
[1] For example, you can get an EB2 NIW visa as an entrepreneur and I've heard of many cases where O3 was granted even though the person wasn't really "notable"
I have seen several pieces by Wadhwa in Techcrunch [1]. The point usually seems to be "Microsoft and Google can't hire all the developers they want at the price they're willing to pay; we should increase H1-B quotas".
This isn't to say that immigration is bad or that MS and Google aren't having trouble hiring, it's to say that MS and Google might very well be able to find more people within the US if they paid more.
Look at it in the context of six top tech companies being caught colluding to keep domestic employee wages down through no-poach agreements [2].
Seriously. Microsoft, Google, etc, are in no position to lobby for more H1B until they address the rampant anti-competitive employment practices in the industry.
I like to point out that Google has higher revenues per employee than Goldman Sachs, but a mid-level banker at GS makes several times as much money as a mid-level engineer at Google.
I did some quick Googling (ha!) and found that GS net income per employee for last quarter on an annualized basis was about $119,000, less than half Google's average
I think why this happens is this: if you're on a trading desk of 10 people that makes $10m, it's easy to quantify your contribution and use that as leverage to get a big bonus. If you're on one of 10 product teams that each have 10 people and in total generate $100m in revenue, it's hard to quantify your specific contribution and use it to negotiate a large bonus, even though you're bringing in the same revenue on an averaged basis.
I've always wondered why compensation in software engineering is lower compared to revenues than similar professions. A lot of the things that are either facially true or commonly held beliefs: software has low capital costs, good programmers are much more productive than bad ones, a lot of revenue can be brought in with a relatively small team, are the things that make banking, law, consulting, and even accounting more relatively lucrative for workers as opposed to shareholders. But I think there is this holdover perception of treating software engineers like other engineers, even though the dynamics of those fields is very different (massive teams coordinating to build pyramids with huge capital costs).
Commodity programmers have externally limited individual leverage (aforementioned 'teams building pyramids' strategy [1]) and systematically limited measurement (because their measurable output is blended with that of the supporting organization). On top of all that, any commoditized worker is going to have extremely limited leverage in salary negotiations due to the ease of replacing them.
pg's "How to Make Wealth" [2] does a great job of explaining the interplay between leverage, measurement, and wealth:
To get rich you need to get yourself in a situation with two things, measurement and leverage. You need to be in a position where your performance can be measured, or there is no way to get paid more by doing more. And you have to have leverage, in the sense that the decisions you make have a big effect.
Measurement alone is not enough. An example of a job with measurement but not leverage is doing piecework in a sweatshop. Your performance is measured and you get paid accordingly, but you have no scope for decisions. The only decision you get to make is how fast you work, and that can probably only increase your earnings by a factor of two or three.
An example of a job with both measurement and leverage would be lead actor in a movie. Your performance can be measured in the gross of the movie. And you have leverage in the sense that your performance can make or break it.
But then why isn't, say, academia incredibly lucrative? It's got both measurement and leverage in the form of research grants, and leverage as well in publications.
Academia can be incredibly lucrative for rockstar grant writers, leaders in scientific fields, and authors.
These folks typically don't command astronomical salaries (though they do get paid much, much more handsomely than you'd imagine). Rather, some of them publish bestsellers (and demand the university's help in getting access to leading magazines, publishers, press, etc.). Some of them start their own labs, companies, or institutions that are funded by the schools. Some of them clean up on the lecture circuit. Some researchers -- especially in biomedical fields -- make fortunes (for both their universities and themselves) by selling or licensing patents to private enterprise.
For instance, I'm a writer by hobby. As such, I tend to hang around a lot of other writers (note: I don't recommend this). A common complaint among writers is that writing doesn't pay well. And, on average, that's true. But the world of writing isn't a neat, Gaussian distribution of income. It's a power-law distribution. Most writers are lucky to clear $50k a year in academia, or working for a large and respectable publication. But Malcolm Gladwell earns well north of $10 million a year. Michael Lewis probably makes even more. And don't even get me started on fiction. The woman who wrote "50 Shades of Grey" makes, on average, $3 million a week. J.K. Rowling is a billionaire. Stephen King is probably a near-billionaire. That guy who crapped out "The Da Vinci Code" could just about afford to purchase the Mona Lisa from the Louvre, were he so inclined.
Writing, like academia, is an all-or-nothing sport. There tends to be a very small slice of outsized winners, and a very large slice of abject losers. I don't mean "winners" and "losers" in a pejorative sense. I mean it in the sense that the pie is divided very, very, very unevenly. The average is very low, but the high end is quite high.
This is in stark contrast to, say, i-banking -- wherein a small proportion make an outlandish amount of money, but everyone else still makes a really large chunk of money.
- Research universities aren't generally for-profit organizations and so the simple calculus of profit generated versus salary paid isn't directly applicable.
- Professorship in many disciplines (i.e. liberal arts) is a glamour job, that is one with an effectively bottomless supply of qualified aspirants that do not have easy access to higher-paying alternative jobs.
- "Rainmaker" grant writers pretty much can write their own ticket within academia, but they won't necessarily be able to capture a lot of the grant money as salary. They should still be able to set their own hours while running projects with top-shelf employees and equipment. There's no guarantee that the most interesting, respectable research will be appealing to the types of people who fund research though. (n.b.: I am only guessing on this last point.)
That's not the right question. How many highly qualified Google or Facebook engineers would jump for the chance to work at Microsoft if it meant that their salary would double or triple overnight? Suddenly Microsoft doesn't have a tech hiring problem.
Edit: Also, more of our "best and brightest" would choose tech majors (thus qualifying themselves to work at major internet companies) if they paid as much as traditional white-collar professions.
I don't think many (any?) engineers from Google or Facebook would jump to Microsoft for higher pay. If money was the one motivating factor then surely said engineers would be working in finance rather than at Google or Facebook.
Thought experiment for you: what fraction of current salary would it take to get a current Googler to flee the company? Would they still do the work for $30k rather than $150+stock?
No company with with an HR department is going to their average employee over $100k without a business reason.
I think the offense you've taken results from the way two almost unrelated issues are completely merged in the debates around specialized visas for STEM workers. An extremely simplified version of the discussion goes like this:
A: "There is a shortage of stem workers, therefore, we should facilitate immigration for stem workers"
B: "No, there is no evidence of a shortage of stem workers, therefore, we should not facilitate immigration specifically for stem workers"
A: "I'm amazed that you wouldn't support legislation that would make it easier for highly skilled and productive people to stay in the US."
The problem for me in this debate (which I'm still hoping can be a discussion) is that I think that the "shortage" of STEM workers is generally a rational response to market conditions when you consider the other opportunities available to highly educated workers. I also think that targeting specific professions through immigration programs (while restricting mobility in others) can end up distorting the market badly and deterring US Citizens from entering these fields, something that could badly harm the US economy in the long term.
To me, this is almost completely unrelated to the question of whether we should make it easier for high skilled immigrants to come to the US in a more generalized way (like Canada or Australia's points system). To that question, I'd answer "yes".
In general, I think this is an honest misunderstanding, but I do think that some of the PR machinery behind the lobbying for specialized visas does take deliberate advantage of the ambiguity.
I agree with you. And I also feel a bit offended with the parent comment. If you're not an immigrant trying to overcome all the hoops and doing ridiculously steps to try to stay "legal" in order to pursue your goals then you probably don't get it... And your goals will (although probably not directly) translate to improve the economy.
I just don't get it. We as immigrants pay as much taxes as anyone else, however we have far less benefits and probably much more obligations. This freaking country was founded by immigrants, unless you tell me that all the senate is constituted by native americans, don't bring the crap that immigrants will somehow fuck the economy. I would actually like to see evidence that having more flexible immigrant laws will harm the economy.
Also, having your health system tied to corporate America, and not something universal is just stupid: how is it reasonable to tie something as important as health to your employer?
Anyway, I don't see anything changing anytime soon. So we should just stick to complain every now and then and keep doing what we know best (everyone knows what that is for them).
I would argue that immigration as a solution to economic growth is a zero sum game, and we need to look at different answers.
Gifted, driven, talented entrepreneurs tend to succeed wherever they end up, but there is a finite natural supply.
What Western nations should concentrate on is growing and exploiting their not-quite-natural-born entrepreneurs. yC seems to be quite good at this but a wider government policy is the most likely way to see sustained growth - not inviting the cream of Indias crop to nip over and pay taxes for twenty years. Delhi is not stupid, and there will be a race to the bottom.
I agree with your broader point, but if the United States has a comparative advantage in entrepreneurship, it's not actually zero-sum.
That is, if the American legal system, venture funding, etc., combine to offer a foreign entrepreneur a better likelihood of building a successful company there than in her home country—and there's some evidence that that's often the case—then letting her emigrate to the United States should be a net gain for the global economy.
True, but for every non-us company that creates broad democratic institutions and enforceable contracts, then that countries comparative disadvantage shrinks, probably towards a meaningless point.
Look at India - democratic, enforceable contracts, and vast internal Market. Sound familiar?
Go to New Mexico, or southern California you will find tired, poor huddled masses.
I think a more salient point lies later in that same paragraph:
Missing are the Taiwanese—their proportion dropped from 5.8 percent to 1.1 percent. This is probably because, as Taiwan became a developed nation and improved its universities, fewer Taiwanese have been coming to the U.S. to study and work.
The article is concerned about the 4.1% reduction in the number of people from other countries starting companies in the US, but dismisses the 81% (not 427%, thx denniedarko) drop in companies founded by Taiwanese immigrants. Essentially, the author's saying that the people living in India and China haven't built universities that can attract students and professors better than American universities can, so the people born there are leaving.
How about the title of the linked article? When speaking to immigrants, what does keep your entrepeneurs mean? I can see if you were speaking to another country, but to immigrants? And if they are immigrants doesn't that mean they are already here?
I think one issue that people tend to forget in the debate is that immigrants are also additional customers for existing and new US businesses. They may or may not work in a job that an American could do, but they will always be customers of businesses in the United States. Given that the overwhelming majority of GDP is based on US-produced goods and services, that means that the overwhelming majority immigrant income is contributing to the growth of the US economy (foreign manufacturing only a couple % of GDP).
Immigration around the ~1870s was effectively the greatest "importation of customers" this country has ever seen.
A simple rule like anyone with assets in excess of $300k and work that pays $50k+ per year can move here with no restrictions would be great for the country. Bonus points if we allow everyone that already works remotely and internationally to come here ASAP if they want to (i.e. people with jobs they are bringing with them)
Allow the world's 1%ers to come here freely and you are essentially importing domestic growth for everyone already living in the US.
"The clients for my current occupation, teaching mathematics lessons through a local nonprofit organization, included first-generation immigrants from China, India, Russia, Romania, the Philippines, Korea, Ghana, Indonesia, Pakistan, Turkey, and other countries I may be forgetting at the moment"
Just to be clear I'm understanding correctly: first-generation immigrant means born outside the USA and now living in the USA, right?
So you teach math to first-gen immigrants from Russia? Are these adults or children? If children, I guess there must be a couple of kids who went thru the Russian education system that are bad at math. :)
You asked a clarifying question. The clients are the parents, persons born abroad and usually educated abroad through their undergraduate degrees. They arrived to the United States after being born abroad, so they are first-generation immigrants (as is my wife). The students are elementary-age pupils, typically born in the United States, whose parents seek supplementary mathematics lessons for the children when they observe how weak the mathematics instruction is even in schools in the United States that are in desirable school districts in one of the states of the United States with the highest level of academic achievement. There is a lot of "ceiling" above the best curriculum provided to bright students in United States schools that can only be reached with supplemental programs such as the one I have helped organize here (which is based on a program that originated in Michigan, among the Indo-American community there). Native-born American parents who are alumni of MIT and a variety of foreign-born parents have all recommended my program to their friends from various countries.
P.S. I used to use a book that was written in Russian (by Estonian authors before the break-up of the Soviet Union) and then translated into English as one of my course textbooks.
The Russian mathematics textbooks are often very good indeed, and much more clear and more challenging than typical textbooks in the United States. You might find it interesting to read a link I learned about from another HN participant, "Word Problems in Russia and America," by Andrei Toom,
which is full of interesting information about the differences in approach between mathematics lessons in Russia and mathematics lessons in most United States schools. The contrast between schools in China and the United States
http://www.kauffman.org//uploadedFiles/Then_and_now_americas...
of which he was the principal author.
Get ready for the key statistic from the report: "The proportion of immigrant-founded companies nationwide has dropped from 25.3 percent to 24.3 percent since 2005. While the margins of error of these numbers overlap, they nonetheless indicate that immigrant-founded companies’ dynamic period of expansion has come to an end." Okay, so the change in percentage is within the standard error of measurement; a percentage change of that kind would be seen even if there were more immigrant-founded companies than ever, as long as more native-born Americans than ever found companies; and there is NO indication that Silicon Valley's flood of innovation has ceased.
What is the problem here? Quantitatively, what is the proof that any policy change is needed?
AFTER EDIT: Responding to the offense taken by the replies kindly posted below, let me explain my position. My PERSONAL position on immigration to the United States as a matter of policy is that I would be happy to see it go back to the way it was in the 1870s, when anyone could immigrate from anywhere with hardly any regulation of immigration at all. All of my ancestors arrived in the United States by those rules--all of my ancestors were in North America well in advance of the building of the immigration processing station at Ellis Island in New York City.
I am intimately familiar with United States immigration law, having formerly worked as an immigration lawyer (as described in my user profile here on Hacker News) and being the husband of a first-generation immigrant to the United States from Taiwan. I have lived abroad for six years of my life (in two separate three-year stays), so I have a pretty good idea of how one country treats foreign residents from America. The clients for my current occupation, teaching mathematics lessons through a local nonprofit organization, included first-generation immigrants from China, India, Russia, Romania, the Philippines, Korea, Ghana, Indonesia, Pakistan, Turkey, and other countries I may be forgetting at the moment. I like immigrants, and I like America to be full of immigrants--that makes life here more interesting.
But to persuade the legislative process in the United States to change the rules requires more convincing evidence than the anecdotes that Vivek Wadhwa repeatedly brings forward. Another comment here astutely pointed out that the recent trend line in immigration from Taiwan is that entrepreneur immigration to the United States is decreasing. That's because Taiwan has democratized, liberalized, and prospered during my lifetime. Now people who were born in Taiwan can pursue their advanced education in many different countries, being well prepared by the generally excellent primary and secondary education there, and then can decide for themselves where to settle to establish a career. They can go back to the country where they grew up and where their relatives and childhood friends live if they like. I think it's great for people to have choice like that. I don't think it is any problem for the United States at all if people from Taiwan develop their entrepreneurial businesses in Taiwan. The same is true of India and China. People from India and China continue to come to the United States in large numbers, as I can personally observe. Some study here and then go back to the countries of their birth. No one has made a case that United States policy has to change much to influence the numbers one way or another.