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The CHIPS and Science Act has set the stage for a boom in U.S. semiconductor production. But a looming question threatens the development of the industry: Are there enough workers with sector-specific skills to support it? Currently, targeted educational programs are doing much of the heavy lifting to build the semiconductor workforce, but they will not be enough. Immigration reform, in particular, to expand the number of skilled-worker visas, is the only way to ensure that the CHIPS Act will achieve its full promise as a catalyst for U.S. high-tech manufacturing.

The U.S. has been losing market share in semiconductor manufacturing for decades. However, supply chain issues during the pandemic finally brought this trend to the fore, highlighting concerns about U.S. reliance on East Asian semiconductor chip manufacturers. This has led to a broad effort by the Biden administration to revitalize domestic manufacturing. One result is the , which pledges a historic  toward expanding the domestic semiconductor industry, including $52.7 billion for semiconductor R&D, manufacturing, and workforce development; a $24 billion investment tax credit for semiconductor firms; and $174 billion to support R&D efforts across several U.S. agencies.

While high-skilled legal immigrants can be essential to a competitive and robust economy, the outdated U.S. immigration system creates significant barriers to retaining them, often discouraging qualified individuals who were educated and trained in the U.S. from working here permanently. A recent BPC-Morning Consult poll showed that many Americans support efforts to retain high-skilled immigrants, and believe they have a positive impact on the U.S. economy. Research has shown that skilled immigrants drive innovation, create jobs, and fill critical labor gaps. Moreover, persistent labor shortages, a result of an aging U.S. population, coupled with declining birth rates require innovative solutions to ensure an adequate supply of workers to fill in-demand skilled positions. Policy action focused on retaining current immigrant workers and attracting more high-skilled immigrants would ensure the U.S. has the workforce to maintain competitiveness.

Importance of and need for high-skilled immigrants

Skilled immigration is the backbone of many industries in the United States, and a recent Bipartisan Policy Center poll found that many Americans recognize its importance for economic growth. With Congress aiming to bolster national competitiveness, high skilled immigration can help improve U.S. security and strengthen the economy by driving technological and industrial innovation.

To expand on this topic further, BPC hosted an online event in April on high skilled immigration and its vital importance for national security and competitiveness. Ben Gitis, associate director of the Economic Policy Program, presented BPC poll results on Americans’ perceptions of high skilled immigration, which was followed by a panel discussion on the role of high skilled immigration in advancing U.S. competitiveness. The panelists included: Kai Hirabayashi, senior manager of public policy at Amazon; Divyansh Kaushik, associate director of the Federation of American Scientists; Margaret Stock, attorney at Cascadia Cross-Border Law Group; and Dane Stangler, director of strategic initiatives at BPC. Below are some takeaways from the discussion.

Effect on firm outcomes within borders. A burgeoning literature has linked high-skilled immigration to various dimensions of innovation. Some of this work has been done at the individual level; for example, documenting the higher propensity of immigrants to patent (Bernstein et al. 2022; Hunt 2011; Hunt and Gauthier-Loiselle 2010) or the positive impact of skilled immigrants on the innovativeness of their peers (Borjas and Doran 2012; Ganguli 2015; Hunt and Gauthier-Loiselle 2010; Moser, Voena, and Waldinger 2014). Other work has been done at the regional level, like the positive effect of skilled immigrants on local innovation (Akcigit, Grigsby, and Nicholas 2017; Burchardi et al. 2020; Kerr and Lincoln 2010). Less work, until recently, has examined whether these linkages translate to the firm setting: does hiring more skilled immigrants improve firm-level innovation, productivity, and performance?

It is not immediately apparent that, despite immigrant-innovation linkages at the individual and regional levels, hiring more skilled immigrants would lead to positive effects on firm innovation. For example, if skilled immigrants and natives are perfect substitutes and skilled immigrants simply replace the skilled natives within the firm, then the outcomes for the firm will remain the same—indeed, this explanation has been proposed for the null effect of H-1Bs on firm patenting found in Doran, Gelber, and Isen (2022). Hiring skilled immigrants could even have a negative impact on performance if an increase in the immigrant workforce creates conflict and coordination frictions that lower performance or if it reduces knowledge transfer among workers due to language and cultural barriers (Page 2011; Parrotta; Pozzoli, and Pytlikova 2014).

These policy actions were made under the pretext of protecting American workers and ensuring economic opportunities would not be taken away from citizens in light of economic fallout from the COVID-19 pandemic. However, they have reinvigorated a debate around United States immigration policies, especially those designed to attract high-skilled immigrants to work, learn, start businesses and innovate in the U.S. A growing body of rigorous academic literature demonstrates that high-skilled immigrants provide a range of long-lasting and material benefits to the U.S. economy, particularly through entrepreneurship and innovation. Consequently, it is important that the U.S. both address the current employment crisis as well as plan for a post-recovery future where it must remain competitive in the global economy.

Immigrants are Entrepreneurial

Effect on firm outcomes across borders. Immigrants may play an even larger role for firm outcomes across borders. There is a well-documented strong positive relationship in the research literature going back several decades between immigrant diasporas and the trade, capital, and investment linkages with the countries of origin of these immigrant diasporas. For some recent examples (and of course, interested readers will want to check earlier studies cited in these works), Burchardi, Chaney, and Hassan (2019) find that the presence of historical diasporas in US counties leads to more foreign direct investment to and from those counties and the countries of origin of the diasporas, and Balachandran and Hernandez (2021) find that US venture capital firms become more likely to invest in India as their ties expand to Indian entrepreneurs in the United States. Hernandez (2014) further links the presence of immigrant diasporas to the success of foreign subsidiaries.

These immigrant diasporas increase cross-border investment success through three main channels. First, immigrants can reduce information frictions; in particular, because immigrants understand features of their home country such as market structure, consumer preferences, and business norms, they can identify business opportunities and alleviate many of the challenges inherent in cross-border trade and investment. Second, diasporas increase demand for “nostalgia” goods from the country of origin and in that way influence consumer preferences and tastes. Third, diasporas can provide social capital; for example, when courts do not work well, the social connections of immigrants and their knowledge of the local regime can decrease the costs of enforcing contracts.

The United States is the world’s greatest developer of medicines and new inventions to ameliorate and cure intractable diseases, a status achieved through massive investment in private and public companies, academia and R&D. Most importantly, our success has been founded on the creativity and dedication of our most precious resource—our people.

Our people include researchers, clinicians, entrepreneurs and business executives from all over the world. They are colleagues in our laboratories, management teams and boardrooms. They discover and develop therapies that drive US biomedical innovation and deliver new medicines to patients, not only in America, but also across the globe. And they start companies that drive the economic growth and employment provided by biotech. Many of our colleagues from abroad ultimately become Americans, all to the great benefit of the United States. Indeed, a study found that in 2014, 52% of the 69,000 biomedical researchers in the United States were foreign-born2.

Immigrants are playing key roles in nearly every aspect of the vaccine effort in the United States. Even the chief adviser to Operation Warp Speed, the Trump administration's vaccine distribution program, is an immigrant — Moncef Slaoui, the former head of GlaxoSmithKline's vaccines department.

President Trump often takes credit for the record-breaking speed of vaccine development — and for "unleashing America's scientific genius," as he puts it.

Most international students who want to remain in the U.S. plan to pursue H-1B visas, Chen noted. But the legal cap makes this a challenge, and many students aren’t aware of alternatives.

“If we want to truly encourage STEM professionals to come to the United States for studies and a career, we need to eliminate the unpredictability of a random H-1B lottery,” Feist wrote.

Many international students are in the biological sciences and in medical schools. With COVID-19 spiraling out of control here, there is no good reason to limit the entry of international students and workers. There are good reasons to welcome them and their creative problem-solving skills.

Actions that prevent the best and the brightest students, scientists and technologists from coming to America are an assault on American innovation. These corrosive attacks are coming at an increasing pace. The threat to international students came just weeks after the Administration proposed restrictions on new H1-B worker visas. Officials claimed that the impact of such actions, when combined with extended restrictions on new green cards, would bar as many as 525,000 Foreign workers from the country for the remainder of the year.

Many scientists and engineers in America are immigrants. People who were born in another country make up nearly one-fourth of all STEM (science, technology, engineering and math) workers in the U.S.3

While the national solar industry is booming, America is still behind China and European countries in the race toward clean energy.4

The third pillar of a green free trade agreement should be the unencumbered movement across borders of highly talented people working in green industries. In the United States, immigrants generate more patentable ideas and technologies than do native-born workers—and these immigrants are more likely to found companies, which create jobs that benefit everyone. Skilled immigrants complement rather than replace skilled native-born workers. Immigrants were central to the success of the IT industry and will likely be pivotal for green technology as well.

As green technology becomes the locus of innovation, the sector will attract the best global talent, as IT has. In industries that are undergoing rapid technological change, the strongest firms flourish and attract skilled labor. Companies tend to innovate as their employees gather and exchange ideas in proximity to employees of other firms. As companies become more productive, they draw more skilled labor. This virtuous cycle of innovation and growth achieves its maximum potential when the most talented workers are allowed to move across national borders through relaxed immigration controls. But in the United States, for instance, the H-1B program does not go far enough. Had the United States allocated more visas in recent decades, the ITA would likely have been more effective. Congress should avoid this mistake by doubling or tripling the annual allocation of H-1Bs.

Climate change continues to threaten the health of the planet and its inhabitants. The development and implementation of a wide variety of new technologies which aim to mitigate climate change and its associated causes will be essential for reducing the damage. Green technology will therefore play a central role in this fight. Understanding which sort of innovation currently constitutes the base of such technologies and understanding how they differ is crucial for determining which factors influence their development. Previous literature has suggested that migration and the presence of foreign inventors is responsible for augmenting shares of crucial types of technology and the development of new and more complex ones. According to the previous literature green technologies are often more novel and more complex as they combine a greater variety of existing knowledge. Therefore, understanding these challenges in the context of GT is particularly important.

The foregoing analysis demonstrates that in the context of U.S. MSAs, there are certain characteristics which are associated with the development of green technologies. It has been clearly shown that the shares of skilled and highly skilled foreign workers and the share of foreign inventors is among these factors. In nearly all cases, the share of foreign inventors is associated with increased counts of GT patents in posterior periods. Additionally, there is evidence that this effect is specific to certain types of GT and may even promote further diversification into more forms of GT.

While the Trump administration treated foreign-born professionals as a threat, enacting numerous obstacles and even bans on their entry into America, the report states, “The United States benefits far more from the immigration of highly skilled foreign workers than other countries.” According to the report, “In 2013, the United States had 15 times as many immigrant inventors as there were American inventors living abroad. By contrast, Canada, Germany, and the U.K. all maintain a net negative inventor immigration rate. Compared with other U.S. advantages in the AI competition—such as financial resources or hardware capacity—this immigration advantage is harder for other countries to replicate.”

The report identifies several problems with the current U.S. immigration system, including international students becoming more likely to study in other countries and the long waits for employment-based immigrants for green cards, which are in some ways connected. As this recent article explains: “Without a change in immigration law, it will be sometime in the year 2216—195 years from now—when the last person born in India waiting today in the employment-based immigrant backlog is expected to receive a green card.”

A bipartisan government commission on artificial intelligence (AI) recommends changing U.S. immigration laws to allow America to attract and retain talent to compete in AI and other cutting-edge technologies. The commission’s report, which is likely to be influential, concludes that preventing Chinese nationals from studying or working in AI, as some anti-immigration and anti-China legislators have proposed, would benefit the Chinese Communist Party and hurt the United States.

This week, after two years of research, hearings and investigations, the National Security Commission on Artificial Intelligence released its Final Report. Eric Schmidt, former CEO and chairman of Google and cofounder of Schmidt Futures, chaired the commission. Robert Work, a former deputy secretary of defense, served as vice chair.

Attracting and securing highly skilled foreign-born talent has played a vital role in U.S. innovation and competitiveness by making up for the deficits in the current U.S. education system in turning out sufficient AI talent. Indeed, 66 percent of students in America’s top AI PhD programs are foreign born, more than 50 percent of computer scientists employed in the United States are foreign born, as are about 65 percent of Silicon Valley computer and mathematics workers, and 66 percent of the “most promising” U.S.-based AI start-ups have at least one immigrant founder.69

Given the importance of foreign-born AI workers to U.S. innovation success in AI, the United States needs policies to strengthen and expand the immigration pipeline that allows highly trained AI talent to innovate in the United States, including foreign STEM (science, technology, engineering, and mathematics) graduates of U.S. colleges and universities. But while many competitor nations, including the United Kingdom, China, Canada, France, and Australia, have adopted flexible immigration policies to attract foreign talent in AI and other technical fields, the U.S. immigration system has remained largely the same for the last 50 years. These outmoded visa laws, as well as recent anti-immigrant rhetoric and international competition for AI talent from other countries, are causing many international AI scientists and engineers to look outside the United States for education and employment.

In addition to directly investing in the technologies that fuel innovation power, the United States must invest in the input that lies at the core of innovation: talent. The United States boasts the world’s top startups, incumbent companies, and universities, all of which attract the best and the brightest from around the world. Yet too many talented people are prevented from coming to the United States by its outdated immigration system. Instead of creating an easy path to a green card for foreigners who earn STEM degrees from American schools, the current system makes it needlessly difficult for top graduates to contribute to the U.S. economy.

The United States has an asymmetric advantage when it comes to employing highly skilled immigrants, and its enviable living standards and abundant opportunities explain why the country has attracted most of the world’s brightest AI minds. More than half of all AI researchers working in the United States hail from abroad, and the demand for AI talent still far exceeds supply. If the United States closes its doors to talented immigrants, it risks losing its innovative edge. Just as the Manhattan Project was led in large part by refugees and émigrés from Europe, the next American technological breakthrough will almost certainly rely on immigrants.

While many factors made Silicon Valley a success, immigration was a key ingredient. Today, in the face of chronic labor shortages, immigration is vital to keeping the U.S. competitive and ensuring that the federal government’s latest investments are used productively. Indeed, a 2021 survey of technology executives found that a majority raised labor shortages as their top concern, ranking it higher than supply chain issues and cybersecurity threats.

Second, immigrants power the American economy’s scientific discoveries, technological advancements and innovation ecosystem. In fact, more than half of our most innovative startups valued at more than $1 billion were founded by immigrants, along with 38 percent of our Nobel Prizes in chemistry, medicine and physics.

To meet our rapidly evolving national security needs and achieve lasting economic growth, the United States must foster a 21st-century science and technology workforce that employs the creativity and ideas of people from across the country and worldwide. We can out-compete China and other highly populous nations only if we draw upon the talents of all Americans and leverage our history as a welcoming nation to attract, educate and retain a global science and technology talent pool.

Highly skilled immigrants are behind many of scientific breakthroughs that have powered our country’s national security and economic growth. These include co-founders of two of the biggest semiconductor chip manufacturers in the United States, Qualcomm and Intel, and many more. Yet, our woefully outdated immigration system is causing many to pack their bags, take their world-class education, U.S. degrees, and research, and leave.