In a striking move, Canada has unveiled a new pathway for high-skilled immigrants in the United States to migrate north. The policy risks undermining America’s economy and geostrategic position and should serve as a wake-up call to Washington. Reforming the nation’s high-skilled immigration system is a pressing need.
On net, legal immigrants with college degrees create jobs. Immigrants founded most U.S. billion-dollar startups. And the most successful immigrants, like Elon Musk, came to the U.S. as international students and then transitioned to an H-1B visa, designed for specialty occupations.
When Congress reduced the H-1B visa annual cap in 2004, the result wasn’t more jobs for Americans. It was less innovation and the relocation of some firms to Canada. Research tends to find that H-1B visa holders are some of the most innovative immigrants. They make American companies more profitable with their patents, and they create more jobs through “intrapreneurship” (the process of creating new ventures within their companies).
Demographic concerns reinforce the importance of high-skilled immigrants. An aging population means a deteriorating fiscal situation. Those on employment-based visas are typically younger and highly educated, meaning that they usually pay intothe system, unlike most immigrants who arrive illegally, as refugees, or via family ties.
Moreover, the race to attract high-skilled immigrants has geopolitical consequences. China is making significant advances in technology and artificial intelligence and looking to attract talent by paying upwards of $155,000 to its Ph.D. students living abroad to return; it’s guaranteeing them jobs, too, through the Thousand Talents Plan. The H-1B visa is also key to expanding ties with India: three-quarters of H-1B visa holders are Indian. If the U.S. is to keep its edge in this technological cold war, we need the best minds, wherever they were born. High-skilled immigrants can help ensure that American tech companies, academic institutions, and research centers continue to lead.
Unfortunately, the U.S. immigration system is poorly designed to achieve these goals. People born in India hold no prospect of getting a U.S. green card because of low immigration caps, and while they can wait indefinitely on a visa here, their children must self-deport at 21, making Canada’s immigration offer quite attractive as a way to avoid going back to India. Long-term H-1B holders make nearly $130,000 a year. A single taxpayer with the median long-term H-1B salary would contribute some $22,000 in federal income taxes and nearly $20,000 in payroll taxes, while remaining ineligible for welfare benefits, and this is not counting capital gains and state and local taxes on income, sales, and property. Canada’s move could initially cost the U.S. federal and state governments up to half a billion dollars per year in tax revenue alone.
Indeed, the American immigration system seems designed to deter high-skilled migration, seemingly preferring instead to welcome newcomers principally based on family ties (as Robert VerBruggen has demonstrated). The current process involves a bureaucratic labyrinth that can take years to navigate, with no guarantee of success at the end. It takes about twice as long for high-skilled immigrants to gain entry to the United States than to Canada, and Indians can’t obtain green cards unless they marry an American. If the U.S. continues to block their way with red tape, we should not be surprised when they choose friendlier shores.
Creating a legal-immigration system that better serves the national interest is a matter of straightforward policy changes. First, process applications within a few weeks instead of a few years—perhaps by charging premium processing fees for more services. Second, allow the family members of legal immigrants living here to work, so that they have an incentive to stay and can become full members of society. Third, expand the number of green cards available to high-skilled immigrants through the EB-1 and EB-2 paths or create an additional points-based path, ensuring that H-1B visa holders can stay in the U.S. permanently. Some ways to do this include exempting some immigrants, such as spouses and children as well as graduates of U.S. universities with Ph.D.s in STEM fields, from immigration quotas. This could expand the number of EB green cards from 120,000 to up to 250,000—still a fraction of the roughly 1 million legal immigrants admitted each year.
The implications of inaction are severe: economic stagnation, technological decline, and a worsening demographic crisis. Americans shouldn’t want their northern neighbor to outcompete them for talent.