America's Perilous Anti-Immigrant Protectionism

By erecting immigration barriers to protect knowledge workers, the U.S. is resurrecting a ghost of the Depression-era Smoot-Hawley tariff

By Vivek Wadhwa

As unemployment rises and the recession deepens, advocating skilled immigration has become fraught with risk. In the past two months, Kauffman Foundation has published two of my reports outlining how U.S. immigration policy is chasing away talented foreigners who had previously served as a backbone for U.S. science innovation. I have received more than 1,000 e-mails attacking me for my views and disparaging my race and heritage. Some have threatened to do me harm.

The xenophobia reflected by these attacks and recent public discourse is a dangerous indication of a political climate and attitude shift that threaten our economy. The U.S. is sliding toward a new kind of protectionism, one that seeks to preserve knowledge-worker jobs by shutting out skilled immigrants. This protectionism could be every bit as devastating to the U.S. as the Smoot-Hawley Tariff Act, which boosted tariffs to record levels, sparked a trade war, and ravaged world trade during the Great Depression. In the knowledge economy, production of intellectual property is the highest-valued good, helping create great jobs and strong growth. Erecting immigration barriers, political or cultural, to protect knowledge workers is nothing more than IP Protectionism, a modern-day version of Smoot-Hawley.

Most of my critics know me only as a Duke professor and Harvard researcher. Few know that I, too, arrived in this country as a low-level programmer working at a big investment bank. I was exactly the kind of hire that Congress banned when it forbade banks such as Citibank (C), JPMorgan Chase (JPM), and Wells Fargo (WFC) that are receiving Federal rescue money to issue H-1B visas. I was young, hungry, and eager to make something of myself here. I earned an MBA from the Stern School at New York University. I went on to found two software companies, one of which went public. Those businesses collectively employed more than 1,200 workers and dispersed hundreds of millions of dollars in salaries and benefits. Had I not moved to the U.S. from Australia, where I attended university, I would probably have ended up starting my companies there. I moved to the U.S. because I believed this was the most open and inclusive society in the world. I didn't plan on becoming an entrepreneur. It just turned out that way.

Going Back Home

I'm hardly alone in following this trajectory. As I have written in previous columns, my research has showed that immigrants founded one in four U.S. technology startups over the past decade. The founders of these companies were highly educated and most came to the U.S. to study or work—not as entrepreneurs. In my Indian and Chinese students, I see myself many years ago. They came here, often at great sacrifice. Many had hoped to stay and work in technology or consulting jobs. Few had planned to return immediately to their home countries. Most would take relatively low-level positions to get experience and a foot in the door.

Now, most foreign students are going home. Companies are offering fewer H-1B visas to foreigners. For the first time in many years, the H-1B visa program, which has been the primary conduit for technology labor into the U.S., is undersubscribed. Less than two years ago, U.S. companies lined up to hire H-1Bs.

Part of the reason for fewer H-1Bs is the economy. Companies are simply hiring less. But there's another, more troubling reason. Due to government policy and an increasingly xenophobic climate, hiring foreigners has become as toxic as issuing a subprime mortgage.