Why the U.S. Is Losing Foreign Graduates

A new report says foreign science and engineering graduates are leaving the U.S. to start companies at home. Could a U.S. policy fix keep them here?

By Moira Herbst

Foreign students who graduate from U.S. universities with degrees in science and engineering are increasingly leaving the U.S. to pursue job opportunities in their home countries, according to a report released on Mar. 19. The report, called "Losing the World's Best and Brightest," warns that "the departure of these foreign nationals could represent a significant loss for the U.S. science and engineering workforce, where these immigrants have played increasingly larger roles over the past three decades."

Duke University Professor Vivek Wadhwa, one of the report's authors, says the U.S. should be trying to keep foreign graduates in the U.S. so they can create companies. "Rather than inciting populist sentiment against foreigners and fostering a new nativism, policymakers could instead provide incentive programs to encourage foreign immigrant entrepreneurship, perhaps pairing fast-track residency status with launching of companies," says Wadhwa. "This would help ensure that those who want to stay and start companies can do so."

Wadhwa points out that immigrants have helped found many prominent companies, particularly in the technology field. Among them are Google (GOOG), Intel (INTC), eBay (EBAY), and Yahoo (YHOO). The report also recommends loosening restrictions on temporary work visas, such as the H-1B visas that are used by highly skilled workers from other countries.

The Lure of Permanent Residence

His analysis is controversial. Some experts believe the issue of foreign students leaving the U.S. after graduation has less to do with immigration policy than with the dynamics of the global economy. "The survey shows the obvious: Rational people will go where the jobs are, and the jobs are in India and China," says Ron Hira, assistant professor of public policy at Rochester Institute of Technology.

Hira says it may well make sense to offer permanent residence to a greater number of talented workers. But he contends that the survey results don't support the argument for more H-1Bs, which are temporary work visas. He and others have argued that outsourcing companies, such as Infosys (INFY) and Wipro (WIT), have used the temporary visas to train foreign workers in the U.S. and then move the jobs overseas. Loosening the rules for H-1B visas, he believes, would be counterproductive. "By outsourcing, American companies have destroyed job opportunities in the U.S. while creating them in India and China."

The Wadhwa report is the fifth in a series backed by the Kansas City (Mo.)-based Ewing Marion Kauffman Foundation. Written by four academics including Wadhwa, the report is based on a survey of 1,224 foreign nationals who are currently studying in institutions of higher learning in the U.S. or who had graduated by the end of the 2008 academic school year. The publication itself says the study was not a true random survey and cannot be considered a representative sample. The survey comprised 229 students from China, 117 students from Western Europe, and 878 students from India.