Why the U.S. Is Losing Foreign Graduates

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.

The Pull of Friends and Family

After finishing their studies, large numbers of foreign students have traditionally chosen to stay in the U.S. to work full-time or pursue postdoctoral work. But that dynamic appears to be changing, the report says. Of the survey respondents, very few would like to stay in the U.S. permanently; only 6% of Indian, 10% of Chinese, and 15% of Europeans. The largest group of respondents wants to return home within five years—45% of Indian, 40% of Chinese, and 30% of European students.

The strongest reason students cited for leaving the U.S. was the desire to be with friends and family at home. The second most important factor was the perception that economic opportunities at home were better. Chinese students, in particular, strongly feel the best job opportunities lie in their home country, with 52% saying their home country has the best job opportunities, vs. 32% of Indian respondents and 26% of European respondents.

The least important factor in their decision to leave the U.S. was discrimination, followed by the difficulty of getting a visa to stay in the U.S. and availability of jobs in the U.S., according to the report. Still, the vast majority of foreign student respondents—85% of Indians and Chinese and 72% of Europeans—said they are concerned about obtaining work visas.

Too Soon to Draw Conclusions

Baris Guzel, a 25-year-old candidate for a master's in engineering management at Duke University and a student of Wadhwa, says the difficulty in obtaining a visa to stay in the U.S. for several years is the main reason he plans to leave the country after he graduates in May. Originally from Turkey and currently on a J-1 student visa, Guzel says he and four other friends are planning to start a company called that offers a free online tool to create user surveys. He is considering starting the company in Germany. "It is hard for foreigners to get a job these days [in the U.S.]," say Guzel. "In Germany, it is easy to obtain a working visa."

B. Lindsay Lowell, director of policy studies at Georgetown University's Institute for the Study of International Migration, says it is difficult to draw conclusions from the Wadhwa study because of the methodology. "Shy of systematic administrative data or reasonably random samples, I'm skeptical that we can really say anything too definitive about the number or nature of the apparent return migration," he says.

He cautions against making policy decisions without more reliable data. He believes that if more students are in fact returning to their home countries, the predominant reasons are probably economic. "I think [return migration] reflects the state of the U.S. economy at the moment," he says. "The labor market is pretty soft, and corporations are tightening their belts. At the same time, India is apparently doing pretty well. So why not return?"

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