Why Immigrant Entrepreneurs Are Leaving the U.S

Perspective from a highly educated, legal immigrant family:

I came here with my parents, who emigrated from the former USSR via the student visa route in 1992. This is one of the hardest paths to permanent residency in the US because a great deal of student visas either explicitly foresee a return of the student to their native country for some period of time (owing to various reciprocal treaties to that effect), or are implicitly structured to discourage permanent immigration per se.

Somehow, my parents defied the odds, frequently hopping between various F, J and H-class visas, begging for employer sponsorship through these processes in an already grossly unfavourable job market (humanities academia). In at least one case, I remember that making changes to visa status before the existing visa expired required short-circuiting the INS bureaucracy and going to the US consulate in a Mexican border town to get the job done--ironically, much faster.

It wasn't even until 2002--a decade later--that we had a greencard. Up until that point, if my dad had been dismissed by any of his employers or lost his student for any reason, we would have had to return to our country immediately, from where trying to seek new opportunities along these lines--especially in the 1990s--would have been impractically difficult. Worse yet, a petition for a greencard from many classes of visa means that if for some reason the petition is denied, you forfeit your existing visa and also must leave. And of course, employer sponsorship was required.

We finally became naturalised US citizens in 2008, 16 years later, well after I had spent close to 3/4ths of my life here. And many commentators who work with people in our situation have remarked that this was brisk and efficient.

While I am definitely speaking from the vantage point of a particular visa classification and method of entry, I don't gather that our situation is that uncommon. The number one problem that I see with American immigration from an economic perspective is that it's simply too hard to immigrate here (legally)[1], and most especially as a highly educated or highly skilled person. Marrying an American or obtaining a refugee status of some description is a much more efficient path to permanent residency, for example. Meanwhile, a person with an existing PhD like my dad had to essentially get another PhD to become employable here[2], while persuading employers all throughout to argue that there no equally suitable American candidate was found for his job, etc, etc. I have not seen janitors face such hurdles.

I will freely grant that it's not nearly as hard to immigrate to the US legally as it is to say, Western Europe, but it's also not as easy as Canada or some other Western countries whose immigration systems admit an explicit preference for high qualifications. And as the author points out, with domestic economies becoming more and more attractive, it just isn't worth the effort to fight with this immigration system like it used to be.

EDIT: To relate this back to Vivek Wadhwa's article: We come from Moscow. In the early 1990s, following the dissolution of the USSR, Moscow was a pretty miserable place to live. Coupled with the enthusiasm to leave the Soviet context in general, the appeal of America was pretty clear. Nowadays, Moscow is not a particularly miserable place (although the reasons for that, and the question of whether they are good, sustainable reasons, are a separate discussion entirely), and few people in Moscow, whether part of the noveau elite or otherwise, are deluded with the idea that they can find a better life in America--they already live in a gold-plated bubble rapidly coming to rival Manhattan sensibilities. So for whom does the US remain an attractive destination in Russia? Mostly provincial, less-educated people from poorer, simpler places. I read Wadhwa's article to be saying that--extrapolating from this more generally--this does not set up the incentives we really want.

[1] I found this chart from Reason Magazine to be a pretty accurate illustration of the problem: http://reason.org/files/a87d1550853898a9b306ef458f116079.pdf

[2] Yes, that's technically a separate issue from immigration policy and is rather tied up in the specificity of his profession, but if you want to talk about the amount of mountain-moving required to move to the US permanently, as a whole, it deserves consideration.

Now how did I know that this was a Vivek Wadhwa article before I even followed the link to read the article? Oh, yeah, because this is Vivek Wadhwa's pet issue. As in his previous articles on this subject, he doesn't give any big-picture official statistics (even though those should be available) about how much demand there is under current rules for immigrant visas to the United States by persons from China or India who have completed university educations. Nor does he even relate his anecdotes to the (large) percentage of graduate students in the United States from India or China who somehow manage to stay and eventually settle in the United States under current rules. He simply doesn't provide any thoughtful analytical context for the policy position he supports.

I think it's wonderful for the United States to accept a lot of immigrants--my wife is an immigrant from another country. But I will simply ask the policy questions I generally ask when HN threads include discussion of immigration policy:

1) What country offers BETTER general conditions for convenient immigration by educated persons from China or from India than the United States? Where are that country's immigration rules posted on the World Wide Web? Would you rather live there than in the United States?

2) What countries offer easy and convenient immigration to an arbitrary person from an arbitrary country, say an African person who would like to start a new life by founding a business in some developed country? Where could that person immigrate readily and legally?

3) What countries allow Americans readily to settle with permanent residence status that could turn into citizenship after an application on the same terms that Vivek Wadhwa advocates that the United States offer to citizens of other countries? What countries are currently visible examples of the results of the kind of policy he proposes? Would you rather live in one of those countries than in the United States?

4) Is there any country on earth that has a NET inflow of immigrants from the United States, compared to the number of its own citizens who emigrate to the United States? What country is that? What are its immigration rules? Would you like to start a start-up there?

After edit: If you are sure that there is another country that provides better immigration rules for start-up entrepreneurs than the United States, could you kindly link to some website hosted by that country explaining what the rules are?

From the article: "Let's start by increasing the number of permanent resident visas available for the 1 million engineers, scientists, doctors, and researchers and their families who are in the U.S. legally but trapped in immigration limbo."

Amen to that brother. But myself being someone in that limbo for the last eight years, I dont have much hopes for it. And this is not a Silicon valley story either. I have about 25,000 people ahead of me in the queue. And each year the queue moves in a snails pace. In this pace, I should have it by the time my two year old son graduates. And then I will create the next Google. (I am kidding. Being an entrepreneur means overcoming these, and I am committed to that)

And we are talking only about 750,000 visas currently in adjudication. Just under a million green cards. And at the very least I believe, it can create two million jobs.

Nothing is being done because "1 million engineers, scientists, doctors, and researchers and their families" are not a lethal voting bloc. They lack a voice.

I empathize with people like me. As I do with Americans who have lost their jobs, and the families of illegal immigrants who live in the society's shadows. If there were easy answers to this solution, we would have found it by now. And politicians prefer solutions that are easy to explain to their constituents. We are so used to soundbites now that anything more complex than a monosyllable evokes a strong abhorrent response.

The problem with decoupling amnesty for illegals and high skilled immigration is that the administration doesn't care about high skilled immigration. Illegal immigrants, were they to become legal, will vote Dem. Thus Dems favor it, Reps oppose it. High skilled immigrants don't show a large bias, neither party gets a political advantage from high skilled immigration, so it goes nowhere.

However, don't think that work authorization will stop innovation from fleeing the country. I'm a US Citizen, and I'm leaving the US to start a business in India in few weeks. My partners are both Indians with a green card.

It would be preferable for us to start our business in the US. We'd love to hire unemployed low skill Americans to act as mechanical turks for us (we need quite a bit of AAI). Their cultural knowledge would certainly be superior to Indian college students (important, since the US is our target market). But Americans are simply too expensive - the business wouldn't be feasible at US minimum wage rates, let alone wages high enough to convince Americans to give up unemployment benefits and come back to work.

For a perspective on why H1-B people might want to flee the United States because of execrable tax policy, you can check out this post and comments on my blog:

http://hodgen.com/hb-person-need-of-fbar-assistance/

tl;dr - if you have more than $10K in a foreign bank account you have to file a tax form. If you don't file such a form, horrific penalties ensue. H1-B workers frequently have accounts in their home countries with more than $10K. They come here to work, become residents for US tax purposes, and are liable for the penalties.

I have talked to more than one such person who finds it expedient to quit their US job and leave in order to eliminate the US tax risk.

EDIT: In case the connection is not obvious, the same logic would apply to immigrant entrepreneurs. If you have some capital outside the USA and you get a green card, you can stay (and risk six-figure tax penalties) or you can give up the green card and eliminate your tax risk. I have a booming business in "give up green card" work at the moment.

"Let's start by increasing the number of permanent resident visas available for the 1 million engineers, scientists, doctors, and researchers and their families who are in the U.S. legally but trapped in immigration limbo."

My problem with this is that a recent RAND study found that Americans are avoiding careers in science and engineering because these fields have become uncompetitive with the professions (law, mba, md, dds, etc) in terms of salary, job stability, and career prospects. In other words, a "shortage", to the extent that it exists, may be a rational response by americans to poor career prospects. It might not make sense to use the immigration system to increase the pool of PhD level scientists and engineers when the most objective research available is concluding that these careers have lost their luster. At the very least, we should recognize that this would probably provide even greater deterrence for people in the US who do have the right to choose their career path.

I tend to favor a points-based system in the US, something more similar to Canada or Australia. I've read about these systems, and while they certainly give credit to scientists and engineers, they appear to be very broad-based (plumbers, lawyers, and electricians get more points than programmers in Australia, last time I looked).

One thing I do agree with - the current system is horrible, the worst of all worlds. We bring in lots of "guest workers", targeting fields that probably aren't experiencing any shortage, and we create an indentured system that in my opinion pretty much violates the concept of personal freedom. It's a crappy system for immigrant and american scientists and engineers, but it does serve a few interests very well.

I pretty much say this every time: take a large but not unlimited number of immigrants, value education and skills in the abstract but avoid focusing too narrowly on any particular trade, profession, or skill set, and give immigrants full freedom to determine their own course in life (ie., no geographical or career restrictions).

Some interesting thoughts on immigration from economist Milton Friedman (http://www.youtube.com/watch?v=3eyJIbSgdSE):

I’ve always been amused by a kind of a paradox. Suppose you go around and ask people: ‘The United States before 1914, as you know, had completely free immigration. Anybody could get in a boat and come to these shores and if landed at Ellis Island he was an immigrant. Was that a good thing or a bad thing?

You will find that hardly a soul who will say that it was a bad thing. Almost everybody will say it was a good thing. ‘But what about today? Do you think we should have free immigration?’ ‘Oh, no,’ they’ll say, ‘We couldn’t possibly have free immigration today. Why, that would flood us with immigrants from India, and God knows where. We’d be driven down to a bare subsistence level.’

What’s the difference? How can people be so inconsistent? Why is it that free immigration was a good thing before 1914 and free immigration is a bad thing today? Well, there is a sense in which that answer is right. There’s a sense in which free immigration, in the same sense as we had it before 1914 is not possible today. Why not?

Because it is one thing to have free immigration to jobs. It is another thing to have free immigration to welfare. And you cannot have both. If you have a welfare state, if you have a state in which every resident is promises a certain minimal level of income, or a minimum level of subsistence, regardless of whether he works or not, produces it or not. Then it really is an impossible thing.

The market in many countries seems relatively untapped compared to the US. You can't fix that problem with a law.

Vivek, please use this energy to create more opportunities and better conditions for US students, that's the only long-term solution.

You can't easily grab international (Asian) brains as you did 50 years ago. Things changed.

Clueless US Administration is destroying the $15 trillion domestic economy to dilute $3 trillion Chinese foreign exchange reserves by devaluing/printing dollars.

So, the factor for leaving the US is better opportunities at home. But the solution is to fix immigration?