On US Immigration

How an allegedly racist policy is bad for business

“…the very act of taxing, exercised over those who are not represented, appears to me to be depriving them of one of their most essential rights, as freemen; and if continued, seems to be in effect an entire disfranchisement of every civil right.”

— Jamis Otis on the Stamp Act of 1765

Among the ones impacted by the recent tech layoffs, there will be a good chunk who have been in the country for over a decade on a visa.

Here are a few things you should know about them:

1. All of them were born in India¹.
2. They have, on average, already paid well over half a million $s in taxes²!
3. They played a significant part in building life-changing technologies - ride-share apps, eCommerce systems, voice-controlled machines, broadcasting services, entertainment systems you could chill with, payment systems that power all of these, and more. They were probably already in senior or important positions and may have gone on to become CXOs, as has been the precedent³.
4. They participated in the local economy. They bought from the local grocer, ate at local restaurants, visited the local salons, went to the movies, and bought overpriced popcorn — making the economy stronger. If (or when) permitted, they may have gone on to build enterprises that would have employed locals and built things that make life better globally, as has been the precedent⁴.
5. They engaged in local social life, strengthening civil codes and enriching culture. They obeyed traffic rules, wore masks, volunteered in schools, picked up after their dog and sometimes yours, gave out candy at Halloween, and wished you TGIF with a smile⁵!
6. They invested in the US, are global brand ambassadors of US products, and multiplied ideas through the diversity bonus⁶.

However, in return:

• They did NOT get to elect their representatives, after being under top 5%-ile taxpayers consistently for a decade, oddly in a country that was founded to counter “taxation without representation”⁷.
• Over the last three years, many haven’t had the freedom of movement⁸ to visit their aging parents owing to the rules around visa stamping (a concept so complicated, this post will not capture it). Well into a post-COVID world, many are still asked to make a Sophie's choice between visiting a sick mother vs leaving their partner, school-going children, weaning toddler, pets, life, and job behind in the US with an unknown return date.
• And now, after being laid off, they have to — almost overnight⁹— uproot the lives they built here over a decade and restart in a country they and their kids may not recognize.

***

Of all the humanitarian crises in today’s world, this ranks low. But, when you hear of people packing their bags and leaving everything behind, you picture places run by evil dictators or attacked by colonizers. It is unreal to witness it in a liberal democracy to folks who could be — your friendly neighbor for a decade, your daughter’s best friend since kindergarten, your spotter at the gym, or your mentor.

Justice and morality aside, this policy⁹ is simply bad for business :

• When the economy picks up, the local labor supply will not be prepared to meet the demand. The insensitively ousted immigrants could have been a ‘plug-and-play’ workforce to fulfill the need. But, they would not be available locally and readily. Still fresh from the trauma of having uprooted their lives, they may also not be willing to return.
• The new generation of the potential immigrant population may also be unwilling to participate, having learned of the treatment of their predecessors.
• Even if they do (re)engage, there will be a (re)acquisition and onboarding cost associated — for advertising, administration, and in the case of fresh immigrants a short-term social cost while they settle in.
• Unlike an oil rig or an auto factory, the knowledge economy can be reorganized in a new geography just by attracting human capital, and the US can lose out on the talent war.

***

An easy solution to this crisis would be to extend the time an immigrant in good standing can hang around without a job. They can continue to participate in other fruitful social activities like volunteering or up-skilling and ride out this trough.

A more long-term solution every country should take in regard to their immigrants is to catch up to the global identity of this century and treat this as a marketplace problem vs an arbitrary nativist one. This could be as simple as granting residency rights to anyone satisfying a few conditions:

• Has paid more in income taxes than potential retirement benefits
• Has been in the country for 7 years (~10% of avg lifespan)
• Is not a known violent threat to society

Note: This includes immigration for labor only, and doesn’t include other channels like investment or outstanding scientific contribution.

Citizenship should be granted for what it truly means — being a contributing participant in the economy and society.

But, while that’s being figured out, can these ideal “citizens” be treated with more dignity?

***

Notes:

1. Excluding edge cases, for someone to be on a visa and have lived in the US for a decade continuously, they would have had to apply for a green card, which has a queue based on the country they were born in. As of Nov 2022, only those who were born in India and joined the queue 10 years ago, are still waiting.
2. Based on the tenure of the folks mentioned in this post, Senior Software Engineers are among the most impacted. They make >$250K in 2022 and pay >30%. Taking a conservative case, adjusting for them making less in the ten-year period, and applying a 1% bank rate, total tax paid = $750K.
3. Google, Microsoft, Adobe, IBM, Palo Alto Networks, to name a few tech companies have a CEO who falls under the category of folks mentioned here i.e. they were born in India and worked in the US on a visa. Thousands satisfying the same condition are in senior roles at various tech companies. There are deeper dynamics at play to cause this trend.
4. Immigrants are more likely to become entrepreneurs according to research (MIT study, HBR article). This could be because people who emigrate voluntarily are likely to have a high tolerance for risk.
5. Immigrants from Asia are less likely to commit a crime compared to native-born (study). This correlates with their level of education, which acts as a filter for immigration.
6. Immigration brings various second-order effects.
7. In 1765, the British Parliament approved the Stamp Act, which required colonists to pay taxes on every page of printed paper they used. Colonists disagreed. James Otis wrote, “the very act of taxing, exercised over those who are not represented, appears to me to be depriving them of one of their most essential rights, as freemen; and if continued, seems to be in effect an entire disfranchisement of every civil right.” In preceding years, momentum had begun within the colonies for more economic independence and rights.
8. In order to legally stay in the country, Indian immigrants WITH a visa need to go outside of the US and get a stamp on their passports that allow entry for 3 years. Due to COVID, no one could exit the country and while they may have paperwork for a valid visa, the date on the stamp has ran out for most. This stamping can be done only outside the US. The wait time to get an appointment for this stamping runs over a year as of Nov 22.
9. An H1B visa holder who is laid off has 60 days to renew their visa with another employer or lose their legal status to be in the country. Anyone in this position has practically 45 days to find a job. They need to build their resume, connect with their network, get an interview call, go through a series of interviews, and accept an offer in this period. In good times, it takes 3 months or more to land in a tech role. They also need to simultaneously prepare for the worst — sell their house, car, and belongings; take kids out of school in the middle of the school year and pull them away from their friends and the life they have known; figure out what to do with their pets who can’t travel halfway around the world; figure out how they would manage a relationship with their boy/girlfriends. All this in 60 days!