February 2007 Bulletin on Foreign Scientists and EngineersMerage Foundation for the American Dream and the University of California, Irvine

Dear Colleagues,
Our first Attracting Talent newsletter published last June focused on issues concerning admission of foreign students as well as foreign scientists to the U.S. to study and work. This e-mail update, the second by the Merage Foundations and UCI, describes important pending legislative and administrative actions that will impact the desire and ability of foreign students and scientist and engineers to go to school, participate in research, live and secure employment in U.S.  We know you are interested in the outcome of current discussions in Congress and the Administration.  A special thanks to Stuart Anderson, head of the National Foundation for American Policy, “our man in Washington,” for providing key narrative support to develop the e-mail. We welcome your feedback.

—Paul Merage, Founder and President, Merage Foundation for the American Dream
—Michael Gottfredson, Executive Vice Chancellor and Provost, UC Irvine
—Marshall Kaplan, Executive Director, Merage Foundation for the American Dream

Table of Contents

• April 1 “Witching Hour” Approaches; Likely Impossible for U.S. Employers To Hire International Student Graduates
• High Skill Immigration, International Student Reforms Again Likely Tied to Fate of Larger Bill
• Substitution Regulation Goes to OMB, Concerns Raised in Proposed Regulation
• Two Studies Conclude Immigrant Entrepreneurs Make Significant Contributions to U.S. Economy, Innovation
• No End In Sight for Employment-Based Green Card Problems
• Visa Changes Urged

April 1 “Witching Hour” Approaches; Likely Impossible for U.S. Employers To Hire International Student Graduates
The lack of H-1B visas will soon reach another crisis “milestone.” It is expected employers will be unable to hire international students who graduate from U.S. universities in May. The reason? An H-1B applicant must have completed a degree before being eligible for a visa but all H-1B visas for FY 2008 will likely be exhausted shortly after filing opens on April 1, 2007. It is possible that even the 20,000 visas exempted from the cap for individuals with advanced degrees from U.S. universities could also be used up before graduation day.
In this instance, additional visas would not be available until the start of FY 2009, which begins on October 1, 2008. Simply put, graduating international students will likely have to leave the country and work for a foreign company or a U.S. firm with offices abroad.

H-1B visas are temporary visas used to hire skilled foreign nationals for up to six years.  The visas are important for U.S. employers, since it is not practical to hire someone directly on a green card (permanent residence), given the wait of five years or more in the skilled green card categories due to inadequate legal immigration quotas.
In 9 of the past 11 years, employers have used up the entire quota of H-1B visas prior to the end of the fiscal year.  In the past three years, the quota was used up prior to the start of the fiscal year.

The only solution would be a short-term legislative increase in the H-1B quota. However, that is considered unlikely. It’s a real blow to America’s ability to retain top talent from around the world.

High Skill Immigration, International Student Reforms Again Likely Tied to Fate of Larger Bill

When your car is broken down, you may have no choice but to accept a ride from the only car that’s driven down the rode for a long time. That’s the situation facing employers, universities, international students and immigrants.

The new chair of the House’s immigration subcommittee, California Democrat Zoe Lofgren, said, “I don't think we're inclined to take any one issue ahead of any other at this point," she said. "At the current time, the thought is we'd move all the issues in one comprehensive bill.” (Tech Daily, January 29, 2007)

There are pros and cons for supporters of high skill immigration if provisions are included as part of the larger immigration reform effort. On the one hand, in a separate, stand alone bill each provision on high skill immigration would perhaps receive greater scrutiny than as part of a 500-page piece of legislation. On the other hand, a stand-alone bill would be less likely to die amid controversy, as did last year’s large immigration bill. Different versions of immigration reform passed both houses last year but bill sponsors were considered so far apart that serious negotiations to reconcile the two bills never took place.

For bill sponsors of the larger immigration bills, it makes sense to attract the support of high tech employer and business groups by including measures on H-1B visas and employment-based green cards. Yet for supporters of those provisions, it means accepting a ride in a car whose destination is unknown.

Attempting to respond to perceived fraud in the labor certification, the Department of Labor has sent to the Office of Management and Budget (OMB) a regulation on “substitution” that worries both employers and immigrants. Labor certification is a test of the labor market that is a prerequisite for most employment-based green cards. Substitution is when an employer uses an approved labor certification for one employee because the original employee is no longer being sponsored for immigration, perhaps because he or she took another job.

Under current law an approved labor certification application remains valid indefinitely. Employers believe since they often paid for the labor certification approval via legal fees or through staff time, they should be able to use the approved application for another individual.  

One reason the issue is important is the priority date for a green card is affected by the date of approval for labor certification. In short, an individual with a labor certification approved on January 2004 will likely receive a green card far earlier than a worker with a certification approved in January 2007. Under current practice an individual could use a labor certification application approved years earlier so long as he or she meets the eligibility requirements and is seeking the same position.

The Department of Labor counters that it is trying to address past instances of fraud and instances where an employer may ask an individual to “pay” more than the costs of the employer’s legal fees if he or she wants to use the labor certification when “substituting” for a previously sponsored individual. Critics of DOL argue that simply requiring that it is prohibited for an employer to receive more than its incurred costs as part of labor certification would address perceived problems.
  
While the contents of the revised version of the regulation sent to OMB are not known, since OMB is still reviewing the rule, the proposed version of the regulation contained several controversial elements.

The proposed regulation prohibited immigrants from paying for an attorney as part of the labor certification process. “The regulation of the practice of law is the province of the states, not the DOL, and there is no precedent that we are aware of that permits an agency to intrude into the attorney-client relationship by mere regulation,” wrote the American Immigration Lawyers Association. There are concerns such a provision would deprive employment-based immigrants of independent legal advice and could dissuade smaller firms from sponsoring skilled foreign nationals for immigration.

The proposed regulation states that all future labor certifications will expire after 45 days, which may not be enough time for new employer-sponsored immigrants to complete the immigration application process, due to processing problems at both the immigration service and DOL.

If the final version of the regulation does not change from the proposed rule, it would reduce flexibility for employers and employment-based immigrants navigating the already difficult green card process. The regulation could face a court challenge.

Two Studies Conclude Immigrant Entrepreneurs Make Significant Contributions to U.S. Economy, Innovation

Within a span of a few months, two independent studies concluded immigrant entrepreneurs make substantial contributions to U.S. innovation and the American economy.

In November 2006, the National Venture Capital Association released  “American Made: The Impact of Immigrant Entrepreneurs and Professionals on U.S. Competitiveness,” authored by Stuart Anderson of the National Foundation for American Policy and Michael Platzer of Content First. (Disclosure: Stuart Anderson writes for the Merage Foundation’s Attracting Talent newsletter.)

The study found that over the past 15 years, immigrants have started 1 in 4 (25 percent) U.S. public companies that were venture-backed, representing a market capitalization of more than $500 billion. A key lesson of the study is the importance of maintaining a more open, legal immigration system, said one of the authors, “Few of these impressive immigrant entrepreneurs could have started a company immediately upon arriving in the U.S. - many were just children, international students or H-1B professionals - but it’s clear that America helped shape them into entrepreneurs as much as they have helped shape America.”

Jerry Yang, co-founder of Yahoo!, came to this country from Taiwan at the age of ten and went on to Stanford University where he and David Filo developed the concept for the world’s largest global online network, now headquartered in Sunnyvale, California. "Yahoo! would not be an American company today if the United States had not welcomed my family and me almost thirty years ago,” said Mr. Yang.  “We must do all that we can to ensure that the door is open for the next generation of top entrepreneurs, engineers and scientists from around the world to come to the U.S. and thrive. Whether they arrive as children, students, or professionals, we want the best and the brightest here. Our immigration policy should reflect that or these talents will go elsewhere.”

While immigrant founders of U.S. public companies come from across the globe, the most common countries of origin are India, Israel and Taiwan.  These companies are headquartered across the country but are concentrated in five states: California, Massachusetts, New Jersey, Washington and Texas. 

Two-thirds of the private companies surveyed who use H-1B visas (temporary visa to hire skilled foreign nationals) say that current immigration laws harm U.S. competitiveness, according to the study.  Forty percent stated that current immigration policies have negatively impacted their companies when competing against other firms globally.  One-third of the private companies said that the lack of visas had influenced their company’s decision to place more personnel in facilities abroad.

In a another study, a team of student researchers at the Pratt School of Engineering at Duke University, led by Executive in Residence Vivek Wadhwa, Research Scholar Ben Rissing, and Sociology Professor Gary Gereffi concluded: “What is clear is that immigrants have become a significant driving force in the creation of new businesses and intellectual property in the U.S. – and that their contributions have increased over the past decade.”

Released in January 2007, “America’s New Immigrant Entrepreneurs,” confirmed the overall results of the NVCA study, finding that 25 percent of engineering and technology companies started in the U.S. from 1995 to 2005 had at least one immigrant founder. One difference in the two studies is that the Duke study focused on technology-related companies and the NVCA report centered on businesses that had received venture capital. Undoubtedly the companies in the two reports overlapped considerably.

The Duke paper finds that over half of Silicon Valley technology startups had one more immigrants as a key founder. The paper also found that the “contribution of non-citizen immigrants to international patent applications increased from 7.3 percent in 1998 to 24.2 percent in 2006.

            Copies of the two studies can be found at:

http://www.nvca.org/pdf/AmericanMade_study.pdf

http://memp.pratt.duke.edu/downloads/americas_new_immigrant_entrepreneurs.pdf

According to the State Department’s February 2007 Visa Bulletin, an employment-based immigrant in the Skilled Workers and Professionals (3rd preference) category can still expect to wait at least four to six years for a green card. The problem is the demand for visas has far exceeded the supply. Congress has not changed the limits on employment-based green cards since 1990. The Senate-passed immigration bill in 2006 contained higher immigration quotas that would have substantially reduced the wait times. These wait times are likely to worsen absent legislative changes by Congress. The wait times for Members of the Professions Holding Advanced Degrees or Persons of Exceptional Ability (second preference) range from one to two years for individuals from China and four years for professionals from India.

A coalition of groups recently announced a set of visa policy recommendations inspired by concern “about the current state of U.S. visa policy and its impact on the country's competitiveness as a destination of choice for academic, exchange, and business visitors.  The groups included the Alliance for International Educational and Cultural Exchange, the Coalition for Employment Through Exports, the Heritage Foundation, NAFSA: Association of International Educators, and the National Foreign Trade Council.
Among the recommendations:

1. Restore to the Secretary of State the authority to grant U.S. consulates discretion to waive the personal interview requirement based on risk assessment.
2. Strengthen and expand the Visa Waiver Program.
3. Improve efficiency, transparency, and reliability in the visa process.

"America is a great country because for 250 years we have welcomed people from all over the world. Their creativity, their inventions, and their hard work have been instrumental to our economic and social growth. Our current visa policy jeopardizes all that because it tells people they are not welcome here," said National Foreign Trade Council President Bill Reinsch.

"The efforts of the United States to reach out to the world, whether to recruit talent, train the world’s future leaders, or improve our image abroad, continue to be ill-served by the visa system that is currently in place," said NAFSA: Association of International Educators Executive Director and CEO Marlene Johnson.

The full statement can be viewed at:

http://www.nafsa.org/press_releases.sec/press_releases.pg/coalitionvisarecs07_2