Global Economics

U.S. Immigration Battle Heats Up


With Congress set to consider bills that deal with illegal immigrants and H-1B visa abuse, President Obama may find immigration reform a tough promise to keep

From Andrew Carnegie, the Scottish-born 19th-century steel baron, to Roberto C. Goizueta, the Cuban exile who led Coca-Cola (KO) through most the 1980s and '90s, immigrants have been at the helm of many of America's top companies.

That's just as true today, even as politicians in Washington argue about whether to embark on immigration reform. Without immigrants, there would be no Google (GOOG), co-founded by Russian-born Sergey Brin. Two of the three people who launched YouTube were immigrants, too: Steven Chen, originally from Taiwan, and Jawed Karim, born in Germany. Immigrants also helped start Yahoo! (YHOO), eBay (EBAY), and Sun Microsystems (JAVA).

It's not just Silicon Valley that has depended on immigrants. They're also prominent in the world of finance, thanks to people like billionaire George Soros, former World Bank chief James Wolfensohn and Berkshire Hathaway's Ajit Jain (a possible successor to Warren Buffet.

Like Jain, many of the most successful immigrants in Corporate America today are from India. Indra Nooyi, who went to college in the southern Indian city of Chennai and earned an MBA in Kolkata, is the CEO of PepsiCo (PEP). Sanjay Jha, another Indian immigrant, is the co-CEO at Motorola (MOT). Vikram Pandit, born in the western Indian state of Maharashtra, is chairman and CEO of Citigroup (C). (For more on the world's most successful immigrants, see this BusinessWeek slide show.)

Despite the successful role immigrants have played in U.S. business, many Americans are worried about losing their jobs to immigrants or having their work outsourced to foreigners in the U.S. on short-term visas. That could make it more difficult for President Barack Obama to keep his promise to push for immigration reform. On Aug. 20, the President met with pro-immigrant activists in the White House and pledged not to let fights over health-care reform and energy legislation put the immigration issue on the back burner. Obama is hoping to do better than President George W. Bush, who failed in his effort last year to pass immigration reform.

Dueling Reform Bills in Congress

The battle could start heating up as soon as next month. Obama is likely to support the efforts of Senator Charles Schumer (D-N.Y.), chairman of the Senate's immigration subcommittee, who has said he will introduce new reform legislation this autumn that will crack down on illegal immigration. "We must create a system that converts the current flow of unskilled illegal immigrants into the United States into a more manageable and controlled flow of legal immigrants who can be absorbed by our economy," the senator said in a speech outlining his proposals in June.

However, he and Obama face some tough challenges. For instance, Illinois senator and fellow Democrat Richard Durbin is a co-sponsor of a bill to crack down on alleged abuse of H-1B visas, which allow companies to employ workers from overseas for limited stays. Durbin and the bill's co-sponsor, Senator Charles Grassley (R-Iowa), have introduced legislation to limit the granting of H-1Bs, visas that are especially popular among U.S. tech companies like Microsoft (MSFT) as well as Indian IT services outsourcers like Infosys (INFY) and Wipro (WIT). The proposal has led to intense opposition in India. "It's a very drastic initiative," Wipro Chairman Azim Premji told BusinessWeek in May. "It will choke the United States of talent coming in."

Ironically, the latest immigration fight will take place at a time when the U.S. has become a less attractive destination for many immigrants. Because of the recession, there's less demand for low-cost labor. But the U.S. is also turning out to be less attractive for highly educated workers, too. James Chu, chairman and CEO of ViewSonic, the privately held maker of PC monitors, immigrated to the U.S. from Taiwan in 1986 and launched the company that became Walnut (Calif.)-based ViewSonic a few years later. However, he says, "if today I were young, I would probably choose China." For young entrepreneurs around the world, "if you want a good environment and a good education, the U.S. of course will still be the choice for a long period of time," says Chu, speaking while on a business trip in China. However, "if you want a place that's a challenge and exciting, China is probably the one."

American universities are feeling the impact of the declining appeal of the U.S. for potential immigrants. According to a new report by the Council of Graduate Schools, admission offers to prospective students from outside the U.S. fell 3% this year. Fueling the drop was a decline in interest from India and Korea, with Indian admissions falling 12% and Korean admissions down 9%.

One reason for the fall is the increasingly aggressive efforts by universities in Asia to recruit students who might have gone to the U.S. to study. "With the center of gravity in the global economy shifting to Asia, it's just natural for students from the U.S. and Europe to seek Asian experiences and networking opportunities through business schools in Asia," Suh Kil Soo, associate dean at Yonsei University Graduate School of Business, told BusinessWeek in May.


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