Study: U.S. Sees Decline in Immigrant Entrepreneurs
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In a Washington Post op-ed, immigrant entrepreneur scholar, Vivek Wadhwa tells the story of Anand Chhatpar, an Indian student who studied in the U.S., received eight patents, and built two companies:
During his junior year, Chhatpar founded BrainReactions with two other students. The company provided a platform for students to help large corporations solve problems and innovate. Anand says the business served dozens of notable clients.
After meeting his wife, Shikha, at the University of Wisconsin–Madison in 2008, they teamed up to start another business, Fame Express. The company built Facebook game applications and, according to Anand, the apps were played online by 20 million people around the world and garnered 900,000 fans. He says that during the first two years, Fame Express grossed about $1 million in revenue and he and his wife paid more than $250,000 in taxes. Anand was featured in numerous media outlets including CNBC-TV18’s Young Turks, U.S. News & World Report, and BusinessWeek.
This sounds like one of those classic American success stories. I wish that were so, but immigration policy and bureaucracy got in the way:
In September 2010, the Chhatpars returned to India for a legally mandated period, while awaiting paperwork from the U.S. Citizenship and Immigration Service (USCIS), which would clear a path to citizenship.
Two months later, their petition for EB-1 status was denied, despite the fact that they already had employees in the United States, were paying considerable taxes, had a clear track record of starting companies, and BusinessWeek.com had once featured Anand as one of the “Best Entrepreneurs Under 25.”
Now, the Chhatpars run their companies from India. “They are paying taxes to the Indian government, hiring Indian programmers, and boosting the Indian economy. They would rather be creating products for the U.S., hiring American workers and paying U.S. taxes. But our government won’t let them,” writes Wadhwa.
Talk about a missed opportunity, and unfortunately it looks like it’s a trend.
Wadhwa, along with AnnaLee Saxenian, and Daniel Siciliano, co-authored a report that found that the percentage of immigrant-founded engineering and technology companies has “stagnated, if not declined.” This update of a path-breaking 2007 study found that “the proportion of immigrant-founded companies nationwide has dropped from 25.3 percent to 24.3 percent since 2005.”
The authors gave a closer look to Silicon Valley and discovered the pattern is more dramatic:
The findings indicate that 43.9 percent of Silicon Valley startups founded in the last seven years had at least one key founder who was an immigrant. This represents a notable drop in immigrant-founded companies since 2005, when 52.4 percent of Silicon Valley startups were immigrant-founded.
In an interview with the American Enterprise Institute’s Nick Schulz, Wadhwa warns that the U.S. is at a critical stage in the global competition for skilled workers and entrepreneurs:
The high-skilled, well-educated doctors, scientists, engineers, and entrepreneurs who entered the country legally will be long gone. These people earn large salaries, pay full taxes, and are in high demand all over the world. As I have discussed in my book [The Immigrant Exodus], why would they put up with treatment from the U.S. government that many call “insulting” or “humiliating,” when they have much better options? Research shows that the majority of entrepreneurs who already returned home are doing better in their home countries than they were in the United States. The word is out about this and tens of thousands more are returning home every year. This could be a disaster for the U.S. economy and competitiveness.
Action from Washington could reverse this pattern. There are a number of bills in the House and the Senate that would increase the number of green cards available to Science, Technology, Engineering, and Math (STEM) graduate students. Also, a report released earlier this year by the U.S. Chamber and the Immigration Policy Center (IPC) of the American Immigration Council recommends making the U.S. more friendly to immigrants wanting to start companies and create jobs here.
A bipartisan solution is possible, and as we see, it’s needed to maintain America’s global competitiveness.