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10/22/96

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High-tech workers become new focus of immigration debate

STANFORD -- Silicon Valley's highly skilled foreign-born workers have become something of a political football in the ongoing debate over immigration, and the difference of opinion was emphasized by a panel of experts on immigration policy at a conference sponsored by the Hoover Institution Oct. 17-18.

A gathering of some of the most prominent researchers and advocates on the immigration issue, the conference featured a lively exchange between those who want to change immigration policy. Some advocated cutting immigration overall while increasing the flow of highly skilled workers and students. Others argued that highly skilled workers should be limited because they threaten the jobs of college-educated Americans. Still others maintained that recent reforms to limit immigrant access to welfare programs should be repealed.

The Hoover Institution is among a number of think tanks that plan to continue to study immigration, the institution's director, John Raisian, told an audience of invited guests, most of whom are involved in groups lobbying on immigration issues. Hoover Press will publish a volume summarizing the conference, he said, which should be available by February or March.

New research findings were presented at the two-day conference and many findings from the last five years were reviewed and debated, including what was referred to as the "methodological war" among economists and other social scientists.

Illegal immigration was discussed, but most sessions focused on the economic, environmental and social costs and benefits of legal immigrants. If the flow of legal immigration continues at current rates, it would bring the American population to about 400 million in 50 years, according to U.S. Census Bureau estimates. The change also may render white Americans a minority, a course that Peter Brimelow, senior editor of Forbes and National Review and a white British immigrant, said was not likely to have been Congress' intent.

Highly skilled immigrants, mostly scientists and engineers, are a minority of all legal immigrants, but they became the focus of much of the Hoover conference because of Stanford's location in the Silicon Valley. They were also an issue in Congress this past year when American-born mathematicians urged repeal of a 20-year-old law that made it easier for universities to hire foreign professors. Leaders of Silicon Valley companies joined universities in protesting the change and testified against altering immigration policies. Congressional sponsors eventually abandoned efforts to cut the immigration flow but cut off most federal welfare benefits to non-citizens.

Many conference participants advocated increasing the proportion of immigrants with high skills, or at least reducing the numbers of their low-skilled counterparts. Since 1965, U.S. immigration law has given preferences based primarily on reunification of families, rather than skills or country of origin. The result has been an influx of low-skilled immigrants from economically poor countries in Asia and Latin America, and relatively fewer immigrants from Europe and Japan.

"A society can't have too many highly skilled, highly motivated people," said Stuart Anderson, director of trade and immigration studies for the Cato Institute, a libertarian think tank in Washington, D.C. He called it a "myth" that America has too many people with doctoral degrees in science and engineering.

One quarter of U.S. residents holding doctorates in science and engineering fields are foreign born, according to the National Science Foundation. To cut off migration of foreigners for educational purposes, Anderson said, would mean fewer jobs in universities and more companies doing research and development in other countries. "Our ability to attract and assimilate this talent should be viewed not as a weakness but as a strength," he said.

He and four Silicon Valley executives who spoke said there is a severe shortage of computer science professionals. New college graduates are being "recruited almost like basketball stars ­ six months before graduation," Anderson said.

But Norman Matloff, a computer science professor at the University of California-Davis, disagreed. He said Silicon Valley firms hire foreign-born engineers to keep wages down and displace mid-career U.S. programmers. Americans age 35 and older, some displaced by defense contractors who are downsizing, are not being hired because they would require some retraining, he said.

At many Silicon Valley software and semiconductor firms, more than half of the employees are not U.S. citizens, and those employees are helping the American economy to grow, according to the executives who spoke. They included Joseph Costello, the chairman and chief executive of Cadence Design Systems of San Jose, a software firm with 3,200 employees, 40 percent of them American.

"High tech is blind to the concept of immigrant," Costello said, and will move jobs offshore any time it cannot find enough skilled people here. American engineers "are competing with every other engineer in the entire world and it's an ultimate test ­ do your skills stand up?" The same standard applies to Silicon Valley CEOs, he said.

The foreign born at Cadence work mostly as development engineers or in customer service divisions, Costello said, both in the United States and abroad. Cadence opens development facilities wherever it finds a concentration of skilled people and has groups in San Jose, Boston, India, Taiwan and Scotland. The talent in former Eastern bloc countries is awesome, but legal and political instability has discouraged many firms from starting design groups there.

"Silicon Valley is also very unstable, in terms of the high turnover of engineers in the valley," Costello said.

The contentions about Silicon Valley employment patterns made at the conference were not backed up by studies, however. A study several years ago by University of California-Berkeley urban planning Professor AnnaLee Saxenian partially attributed the valley's success to the frequent job changing and expertise sharing that goes on in the valley. It generates new start-ups that are highly successful, she said.

Annelise Anderson, a senior research fellow at Hoover who has been on leave to work in Bob Dole's presidential campaign, said that the nation as a whole has no "long-term model that looks at how much immigration would be good, including the fact that we operate more and more in a global economy with competition for capital that flows easily across borders." What is happening to employment in the Silicon Valley, she said, may be a bellwether of "a gradual adjustment to world labor markets."

Matloff argued that U.S. taxpayers should stop subsidizing foreign high-tech job seekers in the form of federal support for educating foreign graduate students in U.S. science and engineering schools. He contended graduate support amounts to a subsidy to foreigners and a few employers.

Graduate schools are filled with foreign students in computer science and engineering, he said, because American students "don't need a green card to be hired."

"The bottom line is these employers are not willing to hire Americans with 10 to 15 years' experience," Matloff said. "They say they need people with the right skills, but should they be insisting on a laundry list of the latest hot skills? I maintain they should not because any computer programmer can pick up a new software technology in a month or so."

Dado Banatao, chairman of S3 Inc. of Santa Clara, said start-up companies cannot afford training. "In a small company, you can't learn on the job. You have no time," said Banatao, an immigrant from the Philippines who said he was involved with five other high-tech companies besides S3.

Costello agreed that if Banatao's company "misses a product cycle by one month, he's out of business because of the competition" among makers of computer chips for graphics.

Ron Unz, co-founder of Palo Alto-based Wall Street Analytics and a Republican primary challenger to Gov. Pete Wilson in 1994, conceded that "some people are unemployed and hurt [by job competition from foreign born] but that's true of every economic policy in our society."

Overall, Unz said, the use of foreign workers "benefits Americans and the economy and eventually even those temporarily hurt." Like many economists, he argued that the negative consequences are concentrated on a few people while the majority benefits ­ as it does from free trade ­ by lowering consumer costs and raising productivity, which, in turn, produces job growth.

A twist on that theory was provided by economist Julian Simon of the University of Maryland. Bringing foreigners here for an education, he said, "makes education one of our best exports. The people who come here to study are paid business for us. There is no reason to believe we are doing them a favor. We benefit in the short run, even when they're students working on research."

Costello agreed. "Our melting pot has been a tremendous advantage and it's just happening one more time, but now the workers are intellectual workers."

Banatao urged better job market forecasting. "Something has to be done in forecasting for the next 10 years. Otherwise, I think that just like manufacturing, R&D will move out. Pure research may stay here, but that will also go out eventually. Do we want to be [only] a service economy? I don't think so."

"The real issue," according to Stephen Moore, director of fiscal policy studies for the Cato Institute, "is why we make it so difficult for talented people to come."

In discussing the impact of low-skilled immigrants, nearly every conference participant referred to studies by George Borjas of the John F. Kennedy School of Government at Harvard. Borjas, an immigrant, estimates that the majority of immigrants in the past 30 years are less educated, relative to contemporary natives, than were past immigrants. He also contends they add less than 1 percent to the gross national product or to economic productivity.

At the conference, Borjas said that, with regard to immigration, "the two questions we have to address are how many and who?"

An individual's answers, he said, will depend either on his or her values or whether he or she is a large winner or loser. "Those who gain, gain a lot. Those who lose, lose a lot."

There is a tradeoff, he contended, between maximizing America's total income and not adding to a growing income gap between the rich and poor within the country. He favors lowering the number of low-skilled immigrants who compete with the lowest income natives and recent immigrants.

Moore illustrated the diverse economic impacts of immigration with a hypothetical scenario. What effect, he asked, would there be on America if 100,000 foreign-born professors offered to work in American universities for free?

"American professors would be worse off, but it would help everybody else because we would be getting their work for free," he said.

-kpo-

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