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BW Businessworld

Entry Level Concerns

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The twin shocks of electoral upheaval and economic challenge seem to have shaken the US establishment into addressing the deadlocked issue of immigration. A country built by immigrants and driven to the top of world economy largely by a steady flow of immigrants is finally moving towards straightening kinks to bring it to the 21st century. The outcome of the immigration reform debate that opened in Washington on 16 April will not only transform the US economy and society, but will also profoundly affect countries whose citizens might be drawn to the US.
The 2012 presidential election forced the Republican Party to stare into the abyss of long-term irrelevance if it failed to win the support of the country’s growing Black, Hispanic and Asian populations. Some 11 million undocumented Latinos and 200,000 Asians, who have been clamouring for legalisation of immigration status, have generally enjoyed the Democratic support.

Although Latinos constituted 10 per cent of the electorate, 71 per cent of them voted for Barack Obama. Republicans admitted that 80 per cent of all minority votes were cast for Obama. 
Nor could Republicans fail to notice the exit polls that showed that 77 per cent of Hispanic voters wanted undocumented immigrants to have a chance to apply for legal status. Abandoning opposition to legalisation of the undocumented has become the first step for Republicans in regaining footing among the electorate. It is no coincidence that one of the Republican hopefuls for the next presidential race is a Latino senator who is leading the charge for immigration reform. The proposed reform aims at granting legal status to the undocumented while they wait to get their green cards.
In a way, granting permanent resident status to low-skilled immigrants is a quid pro quo to the plan offered by Republicans, who want to open the door for skilled workers required by the IT and technology industry. Republican politicians sensitive to the interests of an industry beset with skills shortage have pushed for raising the quota for H1B work visas and simplifying permanent residence rules for skilled foreign workers. Union-backed Democrats have often opposed higher numbers for H1B visas, which they see as taking away US jobs and lowering wages. Indeed, in the face of opposition to outsourcing, many Indian and other companies have resorted to bringing foreign workers to their US clients on H1B visas. While stopgap measures such as allowing 65,000 H1B visas this year have helped meet the demand, they have been unsatisfactory for employers and employees given the bureaucratic obstacles and uncertainties.
Skills shortage has emerged as a significant problem, as increasing automation and the dominant role of IT in business have challenged US hopes for growth. Since the beginning of the 2008 recession, some 2 million manufacturing jobs have disappeared as a result of automation and offshoring. Even as US manufacturers are leaving China to come back home, they are increasingly switching to labour-saving technology. Reviving manufacturing requires engineers and IT professionals rather than blue-collar workers. There is a growing bipartisan consensus that an immigration policy that forces foreign science and mathematics doctoral students to return while reserving green cards mainly for family reunion is not in US interest. The immigration Bill offers provisions to immediately grant 20,000 green cards to advanced graduates from US universities in science, technology and maths. It also raises the annual quota of H1B visa from the current level of 65,000 to 110,000 with a flexible cap.
The passage of such a law will align the US policy with the technological trend of the 21st century and usher in an industrial renaissance. That said, seeing many of their talented workers return home, China and India, which have so far benefited from tight US immigration policies, may now have reasons to worry about brain drain to US shores. 

The author is director of publications at the Yale Center for the Study of Globalisation and editor of YaleGlobal Online.


(This story was published in BW | Businessworld Issue Dated 20-05-2013)