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International Workers and Students in the US: What Lies Ahead

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Jennifer Oetzel
Jennifer Oetzel outside of Kogod. Credit: Will Diamond

Immigrants continue to shape the future of US businesses, and higher education. In 2017, the top 500 companies in the United States — more than 40% of which were founded by foreign-born entrepreneurs, or their children — generated $12.1 trillion in revenue. These include the likes of Google (Sergey Brin, Russia); Tesla (Elon Musk, South Africa); Pfizer (Charles Pfizer, Germany); and E-bay (Pierre Morad Omidyar, France).

Foreigners’ professional impact isn’t just limited to the business world. According to the Migration Policy Institute, about 1.1 million of the 4.6 million international students worldwide are enrolled in US universities. The States remain a top choice for foreign-born students, with the United Kingdom and China next in line, hosting 11 percent and 10 percent, respectively.

With significant international policy changes, though — like restrictions to the H1-B Visa and the proposed repeal of the International Entrepreneur Rule — the United States’ era of international entrepreneurship and study could be waning. Which, according to Kogod School of Business Professor Jennifer Oetzel, could be a major problem for US business and universities.

“We’re starting to lose foreign students because of their concerns with getting into the country. And if we can’t get the students we want and need, there may be long term economic implications. We are starting to miss out tremendously,” says Oetzel.

So, what do these potential barriers really mean for US business and education? And, perhaps most importantly, what effect could limiting the number of foreign-born workers and students have on the US economy?

To gain insight into some answers, and to further explore the trends outlined above, we sat down with Jennifer Oetzel, Kogod international business expert. Learn more by reading our conversation below.

Kogod School of Business: Can you tell us about some of your background and expertise in regards to immigrant students, entrepreneurs and business professionals?

Jennifer Oetzel: As an undergraduate, I conducted special research projects on the impact of immigration on the United States for my economics major. And then, as a graduate student, I was hired to evaluate a US technology transfer program from the United States to Tunisia. The program involved educating 760 Tunisian students in the United States in science and engineering. The idea was that they would go back to Tunisia with this knowledge and promote development in their country.

In evaluating the project, I would interview students in the US and Tunisia and see what their experiences were, and what happened. Obviously, the focus was on the technology and science, but I also found that the project promoted a greater cultural understanding between countries. A lot of these students said, “I thought the US was just like what you saw on TV or the nighttime soap operas. I had no idea what the culture was really like,” and they came and absolutely loved it! So the program had these other diplomatic benefits, too.

KSB: What are your thoughts on some of the statistics outlined above?

JO: I think this type of data is so powerful. In the United States, 55% of all graduate students in STEM fields are foreign-born. And three out of four tech workers in Silicon Valley are also foreign-born. So, one of the major challenges we have is that the more we restrict immigration and the ability of people to study here, the more intellectual capital we lose. And these are people who may have started new businesses.

We’re starting to lose foreign students because of their concerns with getting into the US and ultimately getting a visa to work, so they're going to other countries. For example, 440,000 foreign students studied in China in 2016, which is a 35% increase from 2012. They are the third globally behind the US and the UK. I think the US has always had this benefit that we don’t fully appreciate – having all these foreign students in the country. We are starting to miss out tremendously to other countries.

KSB: How does this connect to the health of US business?

JO: Well, AACSB and other outlets suggest that we will have a shortage of business PhD’s over the next 10 years. One AACSB report I saw said in 5 years there may be a shortage of 1,142 business PhD’s; in 10 years, 2,400.

It's all so connected. If we can't get students in, then it will negatively affect businesses and business education. Companies may have trouble finding qualified employees. And we certainly won’t have as many entrepreneurs wanting to establish new ventures. Then this, of course, connects to our country’s economic vitality.

KSB: What do you think all of this means for the future of US businesses?

JO: In regards to restricting the H1-B visa, I think one of two things can happen.

One is that many businesses will increasingly outsource work. If they can’t bring people here, they'll go to where they are in other countries. So this may have the reverse effect of businesses actually taking those jobs abroad, instead of sourcing them domestically like the policy intends to promote.

Another issue is that we don’t have domestically-born students going into STEM fields at the rate that we need them for US businesses. We are increasing the number of students studying STEM fields, but we still need to attract foreign workers, as well. This can really limit our long-term competitive potential relative to companies in the rest of the world.

KSB: And the economic implications?

JO: From an international business perspective, as US businesses seek to enter foreign markets and do business with people from other countries, it’s always valuable to have foreign workers with knowledge of other country’s environments. So, not only do we value them for the jobs they're doing here, but they can also build bridges to opportunities in other countries. So yes, the more that we become more isolationist, we’re going to have less knowledge about the world and more difficulty building relationships.

There's even an increasing problem of not getting visas for conferences and short-term events, so that creates a lot of problems for information exchange. And there's some indication that other countries may retaliate by making it difficult for U.S. citizens to do the same. Other countries may say “well if you're making it hard for our people to go to your country, were going to do the same for you.”

KSB: Any other factors we should be aware of?

JO: There is some evidence that a lot of foreign students are going back home to start their businesses, too, so that's another way we are losing them. This is in part because we’re restricting their opportunities here. They’re going to places like India perhaps, or China, where immigration policy isn’t as restrictive.

It’s interesting: China is now the 2nd most popular international destination, behind France. That’s certainly an interesting trend to watch, I think.

KSB: Why do you think foreign born entrepreneurs and business professionals have been so successful?

JO: I don't have any research evidence to support this, but I think it is reasonable to suggest that the kind of people we attract — the people who leave their home country — are somewhat different than the ones who stay. Not everyone leaves, despite the difficult conditions. There is something of a self-selection process at play. The kind of person who leaves, regardless of their education level, tends to be more risk-taking in general, and that in turn has implications for how they're going to behave in the country they go to. Such immigrants are highly motivated and may tend to be more entrepreneurial.

KSB: Looking ahead, do you have any predictions for immigrants working and founding US businesses, based on how things are currently going?

JO: I would watch the trend with H1-B visas to see how many fewer people are getting them from year-to-year. That will have a big impact on businesses, especially on STEM fields. And then, how are businesses responding? And also, where are people are going? If they're not coming here, it could be because we’re restricting them. As I mentioned earlier, they’re going to China, Australia, and other places now, so that could have competitive implications long term.

Certainly economically those are the big issues. We’re not going to increase the number of domestically-born students in STEM fields overnight…that’s a very long-term process, even if we are successful. So how we’re going to fill those jobs is a big concern. ______________________________________________________________________
Jennifer Oetzel, Kogod International Business Professor, conducts research on how major discontinuous risks such as natural disasters, terrorist events, and violent conflicts, affect businesses and whether firms can gain experiential advantages managing these events. Dr. Oetzel’s work has been published in top-tier journals such as Organization Science, Strategic Management Journal, Journal of International Business Studies, and the American Business Law Journal, among others. She is also on the Editorial Board of several journals including the Strategic Management Journal and is Associate Editor at Business & Society. In 2006 she was selected by Businessweek as one of the top three faculty members in the Kogod School of Business.