Tamar Jacoby—"Silicon Valley Would Not Exist Without Immigration." Wrong!
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August 09, 2008, 12:47 AM
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From Norm Matloff’s H-1B/L-1/offshoring e-newsletter.

Norm Matloff writes:

The Woodrow Wilson Center held a debate on immigration earlier this summer, the first portion of which you can view here. I recommend it to you.

The participants were Mark Krikorian of the Center for Immigration Studies, a think tank that favors lower yearly levels of immigration, and Tamar Jacoby, a prominent writer in favor of expanded immigration policies.

Not surprisingly, the debate focused on low-skilled immigrants. I say "not surprisingly," because the public image of immigrations has in the last few years been moved in that direction, as the result of "image influencing" by those with vested interests in low-skilled immigration, i.e. the employers of low-skilled immigrants and the Latino political activists. As a result, the connotation of the word "immigrant" has incredibly changed from its dictionary definition of "someone who moves to this country" to "a low-skilled person who moves here from Mexico."

Yet Jacoby did bring up high-skilled immigration, claiming that "Silicon Valley would not exist without immigration." Her "proof" of that claim consisted of citing the usual statistics on the percentage of foreign-born among engineers and entrepreneurs in Silicon Valley.

Krikorian did not respond to Jacoby on this point, at least not during the regular portion of the debate, which is all that was on the Web. But Jacoby was completely off base.

The basic fallacy in Jacoby`s argument is easy to see by noting that approximately 40 percent of our nation`s small motels happen to be run by immigrants from India. Good for them, but no one would leap to the conclusion that without Indians there would be no motels. Similarly, Jacoby`s stating that x% of the engineers and y% of the entrepreneurs in Silicon Valley are immigrants does not imply that without immigrants Silicon Valley would have x% fewer engineers and y% fewer entrepreneurs.

So, Jacoby is guilty of making a non sequitur. And her conclusion is not only invalid (i.e. not logically following from her stated facts) but it is also incorrect.

Let`s look at that "x% of the engineers..." statement first. Jacoby claimed that the American engineers are not displaced by the immigrants. Yet displacement has in fact become the standard mode of business. As readers of this e-newsletter know, I stress the point that the biggest attraction of the H-1B program to employers is as a means of avoiding hiring older Americans, i.e. U.S. workers over the age of 40, actually more like 35. The firms hire young H-1Bs instead of older Americans. I`ve shown this statistically, and we`ve all seen the principle in action in specific cases, in which employers lay off Americans and replace them with H-1Bs and L-1s. Note that these are major employers, such as Siemens, the Bank of America, and so on; for example, many of you recall the case with Nielsen Co. earlier this year.

So displacement is a real issue. Digging deeper, though, Jacoby claims that when Silicon Valley was in its early stage of development, there simply weren`t enough Americans to fill the jobs. I wish to emphasize that no study, other than those sponsored by the industry, ever showed that there was a labor shortage during the dot-com era, but let`s look at the first Silicon Valley boom, in the late 70s and early 80s.

I don`t believe there was a shortage then either, in the sense that engineers could and did pick up computer technology even if their original engineering specialty was in something else. But let`s suppose for the sake of argument that there was a shortage in 1980. Were the imported workers necessary to fill that (hypothesized) shortage? The answer is no. In those days, the standard route to tech immigration was to come to the U.S. with a Bachelor`s degree in a non-computer science field, get a quicky Master`s degree in CS at a U.S. school, and then get hired in Silicon Valley. For instance, in those days, about 80% of our Master`s students at UC Davis were foreign students, the vast majority of which did not have a Bachelor`s in CS. Colleagues at other universities told me similar figures, and of course I observed it first hand via my immersion in the Chinese (then mainly from Taiwan) immigrant community.

Note carefully that of the 20% of our domestic Master`s students in CS at UCD, most of them didn`t have an undergraduate degree in CS either. And that is precisely my point: If (again, if) there had been a programmer shortage at that time, employers could have publicized this same route, i.e. getting a quick Master`s in CS as entree into the field, among Americans, thus drawing their workers domestically instead of importing them.

As to Jacoby`s point that "y% of Silicon Valley entrepreneurs are immigrants," the fact is that y = x, to a close approximation; immigrants have been engaging in entrepreneurship at about the same rate as their overall numbers among engineers. Entrepreneurs in the field typically start out as engineers, so if x% of the engineers are immigrants, then naturally about x% of the entrepreneurs will be immigrants too. It doesn`t mean that we have more businesses in Silicon Valley than we would have without immigration.

Looking at it another way, even the studies that have trumpeted immigrant entrepreneurship have shown that native and immigrant engineers become entrepreneurs at the same rates. So, if that x% of the workforce that now consists of immigrants were to consist of natives instead, we`d still have the same number of businesses.