Nov. 7, 2008 -- Job losses and fears of a recession could lead more foreign workers and students in the United States to move back to their home countries -- and that has some economic observers worried.
Vivek Wadhwa, an executive resident at Duke University and a senior research associate at Harvard, believes that the United States is headed for a massive reverse brain drain.
Wadhwa, who led a Duke study on foreign-born professionals, said there likely won't be a short-term impact of loss of skilled expatriates, but it will have significant implications in the long term.
"It's a ticking time bomb for the U.S.," the former entrepreneur said. "If they [foreign nationals] go back to their home countries, not only will we lose critical talent we need for the future, we will also bolster our competition."
Skilled foreign workers and entrepreneurs comprise a significant portion of the U.S. workforce.
The study by Duke University and the Kaufman Foundation found that in more than 25 percent of technology companies established in the United States from 1995 to 2005, the chief executive or lead technologist was foreign-born.
In Silicon Valley, the percentage of immigrant-founded start-ups had increased to 52 percent in 2005. The study found that all companies founded by immigrants from 1995 to 2005 produced $52 billion in sales and employed 450,000 workers in 2005. Indians comprised the largest group of skilled foreign workers.
More than 1 million skilled foreign workers compete for 120,000 permanent U.S. resident visas each year. Each country has a seven percent limit, so, for example, India and China are given the same quota as Iceland.
According to the study, in U.S. engineering schools, 60 percent of Ph.D candidates and 42 percent of master's candidates are foreign nationals.
In the current climate, when hiring has declined, visa restrictions -- which make it harder for workers to stay in the U.S. without a job -- create significant challenges for foreign workers.
Large companies that traditionally recruited foreign talent on visas has declined as many have cut back on hiring. And unlike citizens, immigrants can lose their visa if they are laid-off, making it difficult for them to look for another position.
Reverse Brain Drain?
But does that mean the U.S. could potentially face the problem of reverse brain drain?
Foreign students and workers tend to go back to their home after a certain period of time -- often because of family -- but that trend is likely to accelerate.
Vinay Lekharaju, 24, came to the United States for a masters degree and a desire to expand his engineering career, but is discovering fewer opportunities than he originally anticipated.
"I don't see many companies wanting to take international students," the Duke University student said. "Looking at these difficult conditions [fewer jobs and visa issues] puts a lot of pressure on us."
It's usually the best and brightest who come to U.S. universities to study, and when they go back to their home countries, they tend to move to industries that compete with those in the United States, such as engineering, information technology and research and development.
"They are fuelling the rise of India and China," said Wadhwa, who predicts that in the next five years, 100,000 Indian and Chinese workers and students will move back.
That would be a considerable number, given that it matches the amount who have left over the last 20 years.
But it is not just the economic downturn and visa issues that are keeping foreigners from working in the United States.
Educators say opportunities abroad, specifically in Asia, also are luring both foreigners and U.S. citizens.
It's all about relative opportunity, said Ron Hira, a professor at Rochester Institute of Technology and author of "Outsourcing America: The True Cost of Shipping Jobs Overseas and What Can Be Done About It."
"Opportunities in India and China are much better than they were a generation or 10 years ago, which is attracting a number of people to go back," he added. "The new term that's being used is 'brain circulation' -- that people are moving back and forth."
The loss of foreign nationals has both advantages and disadvantages. The United States may lose some of its brightest, but that may open up more opportunities for U.S. citizens, Hira said.
The issue of visas is not a new one, but the current economic conditions are bringing it to the forefront. When foreign nationals who are on a work visa lose their job, they have no choice but to leave the country.
The Duke University study found that more than 1.1 million skilled workers were waiting for green cards in 2006, and it can take anywhere between six to 12 years to get one.
Foreign workers can only apply to companies that can sponsor their visas. In the current climate, that may be a difficult task, and even those whose jobs are secure may have to contend with lesser promotions and lower salaries.
"You [particularly foreign students] have to sell yourself extra hard in a competitive market like right now," said John Landers, a regional manager at recruitment firm Robert Half International. "I think some people are starting to get a little bit desperate just because there are not many opportunities out there."
International students attending U.S. universities can work in the country for a year after their graduation, after which they must obtain a temporary work visa known as H1-B, which is applicable for six years.
There are 65,000 H1-B visas available for those who hold an undergraduate degree, and 20,000 additional ones for those with a masters degree.
H1-B visas are in short supply -- the cap on applications for H1-B visas was reached on the first day they were available for fiscal year 2008.
A 28-year-old Japanese engineer, who did not want his name to be revealed, said he was facing a tough decision between moving back to Japan or staying in an unchallenging job in the United States.
"It's hard for me to find a job in the U.S.," he said. "The economy is going down and I have been contacted with a couple of agencies, but almost everybody said it's too hard for us to look for a job."
Foreign workers like him and students like Lekharaju are hoping more opportunities will emerge in the near future, especially after the new administration takes office. But it remains to be seen whether the government will expand H1-B visas to attract more foreign talent.
"What was a trickle will become a flood, and I see the U.S. now having to accept a new reality," said Wadhwa. "In the past, we would take it for granted that the world's best and brightest come here. Now we will have to complete with them, just like Europe and the Middle East does."