Competition Needs Talent: Why Success for USICA/COMPETES Means Letting Foreign STEM Workers Stay

To continue to lead innovation, the U.S. needs more STEM-focused Ph.D.s and consider prioritizing green cards for immigrants with these skills. Not doing so yields the technological advantage and edge to countries with strategic interests in technology. The America COMPETES Act, “which is being conferenced with the Senate-passed USICA bill, includes an immigration provision under section 80303 that exempts advanced degree holders in STEM fields from green card caps.

In 2020, international students supported an estimated 410,000 American jobs, particularly in STEM. In 2021, 54% of international students pursued a major in a STEM field, and in 2019 almost half of all masters and doctorates awarded in STEM fields went to international students. Yet, in 2019, over 918,000 IT jobs went unfilled.

American companies, not only technology-focused ones, struggle to meet the STEM critical skills shortage and find it increasingly challenging to hire graduates with the degrees needed to drive innovation. To address this issue, the Department of Homeland Security recently announced an expansion to the Optional Practical Training program, a 12 month temporary work permit available to international students graduating from U.S. degree-granting institutions. The new measures add 22 qualifying fields of study to the STEM Designated Degree Program list, increasing the number of international STEM students in emerging tech fields. However, this will not be enough to meet the labor shortage.

The United States Innovation and Competition Act (USICA) aims to develop domestic capacities in semiconductor R&D using $52 billion authorized through the CHIPS for America Fund, and in key technology areas such as artificial intelligence and quantum science, as part of the $120 billion Endless Frontiers Act investment to ensure the U.S. remains competitive in these fields. However, funding these fields means hiring qualified candidates to do the work. Many of those candidates are international students who want to stay in the U.S. after graduating from their programs. Expanding green card caps for international students graduating in these fields will go a long way toward filling that need for tech experts in the United States.

This is not the first time the U.S. has expanded green card access to meet critical skill shortages. The Immigration Act of 1965 included a crucial provision that “gave preference to professionals with skills in short supply in the United States.” This brought thousands of medical professionals and engineers to the U.S. to fill labor shortages across the country. This program was widely considered a bipartisan success and led to the growth of critical domestic industries. Many of those families still reside in the U.S., and their children lead the next generation of innovation. The crucial difference between then and now is that the IT sector is globally competitive and projected to grow as more countries invest in their domestic tech capabilities.

Demand for STEM skills in the U.S. and abroad

Graduates of STEM programs are in high demand across the globe. As the IT sector grows, demand for STEM skills in the U.S. will also increase. In January 2022 alone, over 340,000 unfilled IT jobs were posted in the U.S., up by 12% from last year. Since 2016 the sector has grown 209%. Globally the shortage of IT workers is predicted to reach 82 million by 2030. Training these graduates in the U.S. and exporting them to their home countries fills unmet demand abroad, leaving U.S. companies without the labor needed for domestic innovation. Approximately half of the international students studying in the U.S. are enrolled in STEM-related programs. Nearly half of the 2019 graduate students in STEM fields were foreign nationals on student visas. At the master’s level, in 2019, 50% of all engineering degrees and 57% of computer science degrees were awarded to international students, and international students composed one-third of all doctorates in science and engineering.

Even so, the U.S. is only third in the world in awarding science and engineering bachelor’s degrees, according to the National Science Board, behind India and China. However, the U.S. has produced the most Ph. D.s in science and engineering for many decades, although China has led since 2007 if you count only natural sciences and engineering.

Partially due to the challenges in staffing, U.S. companies have been shifting their R&D operations overseas for many years. By 2015, U.S. multinationals had invested more than $50 billion in overseas R&D operations, with increasing shares in China, India, and Israel. Given the aims of USICA and America COMPETES to re-shore much of these operations in the U.S., ensuring access to the necessary skilled engineers, scientists, and inventors to continue this work will be essential.

Debates over Green Cards for STEM Graduates

Three relevant debates are being considered as Congress considers expanding access for green cards in USICA. The first is whether the H1-B Visa is the more appropriate mechanism for filling the labor gap. Green cards provide permanent residence and offer the possibility of citizenship, but currently are extremely backlogged due to annual per-country caps. We have previously described some of the tradeoffs between the two mechanisms. There is a need to dual-track reforms to each as there are issues with how they are administered, from wait times to expiring unused visas. For this piece, we are highlighting how green cards can address STEM skill gaps since USICA is explicitly addressing that issue.

The second is the argument that U.S. workers will be displaced if we increase access to green cards for international students graduating in the U.S. This assumes that domestic U.S. citizens are available to compete in the labor market, but many of these roles are going unfilled. However, this argument also presumes that the market for graduates in STEM is fixed, but the intent of retaining graduates, from all countries, in key STEM fields is to kickstart innovation and R&D in the U.S., increasing demand for many more jobs. This is not an “either/or” situation. The U.S. should pursue domestic policies that provide education and retraining in the STEM fields for U.S. citizens, and we have recommended that Congress prioritize these areas. But we should also take advantage of the foreign talent already training in the U.S. to continue to keep our advantage and grow these critical sectors.

The final common argument is that because the current green card process has country quotas, prioritizing STEM fields would disproportionally favor applicants from countries with a robust STEM workforce, such as China or India. Those who have been “waiting in line” but do not have a STEM education do not qualify for this new prioritization. Congress needs to address green card application procedures from a historical perspective, and reforms are required to streamline the process. BPC has recommendations on these issues. However, of critical importance to the U.S. as a whole, in the field of STEM, there is a national competitiveness issue that also needs to be addressed. India and China have advanced technology sectors that directly compete with U.S. interests. If the U.S. can keep international students in the U.S. to fill our labor needs and provide them a path to citizenship, we will not have to compete with those graduates once they return to their country of origin.

Final Thought

As Congress conferences on USICA, they should consider how the policy goals will get done with our current labor and skill shortages. Suppose we are to spend billions to boost our competitiveness in relation to countries with advanced STEM industries. In that case, we must increase the number of workers, including international students at American universities, with STEM skills in the U.S. By increasing the number of green cards for international Ph.D. students, the U.S. can ensure that we have the people in place domestically to remain competitive internationally. Requiring these critical graduates to return home means we are subsidizing the development of competitive labor markets abroad. Careful consideration should be made to reform the immigration process in the U.S. In this case, a minor tweak in the process will yield dividends for years.