America's Reverse Brain Drain
America's losing its skilled immigrants to other countries, argues David Heenan in his new book, Flight Capital: The Alarming Exodus of America's Best and Brightest. Recently, Inc. talked with Heenan about why the "reverse brain drain" is happening, what other countries are doing to recruit immigrants, and how it's hurting American companies.
Q: When did you start to notice this trend?
A: In Hawaii, where I live, I started five or six years ago to notice a number of people, particularly bright ones, going back in the opposite direction.
Q: Why do you believe that the workers leaving are the highly skilled ones?
A: The people at the top end of the spectrum--scientists, engineers, doctors--are much more mobile just in terms of their makeup. Their skills are in real demand, not only in their home country, but elsewhere. They tend to be much more footloose, have a much wider range of opportunities, and a mindset to be more geographically adventurous.
Q: Tell me about what other countries are doing to lure them back.
A: Foreign governments and foreign companies are actively all over them. There are significant incentives, both at the corporate level and national level, to get these people to reconsider coming back to the motherland.
Taiwan was one of the first to tap into what was their brain drain of Taiwanese engineers. They created a number of incentive programs, including summer travel at the government's expense, to come back home and reconnect with their roots. Singapore was on its heels 15 or so years ago, and Ireland has been playing this game for about a dozen years.
[These countries] as a matter of industrial policy have been targeting high-growth, future-growth industries, like life sciences and nanotech. To be competitive in those markets they need people.
Q: So what's the U.S. doing?
A: On a 10-point scale, in terms of national incentives, we're at about a one. The U.S. policy is basically, let the market decide. If people want to come here, whoopee, good for them. In fact, a lot of our immigration attitudes and policies keep people out.
Q: OK, but the California stem-cell initiative is along the lines of what Taiwan and Singapore are doing in terms of funding high-growth industries.
A: The California program is a good case in point at the state level of a state that saw an opportunity. Some other states have followed, and I think that's good.
Q: And the fact that the government bans embryonic stem-cell research has to make it less attractive for scientists.
A: You may recall, one of the things I recommend is we ought to allow stem-cell research. A number of people I talked to in the life sciences, particularly in Singapore, were there because stem-cell research is actively encouraged.
Q: You discuss how Germany and Japan are also facing a labor shortage. Are they being more welcome with regard to immigrants, and if so, how?
A: Germany and Japan are, in many respects, worse off. Virtually every industrialized country is confronted with a significant labor shortage, particularly in the knowledge sectors. That's exacerbated by aging populations and low birth rates--Japan, Germany, the Netherlands, Scandinavia. Japan hasn't responded to it; the population is very homogenous and xenophobic, and in terms of allowing immigration or encouraging it, it's just not part of their makeup. Germany has been somewhat more open, particularly after World War II, when it lost a generation of young men. It went to Turkey and encouraged large numbers to immigrate as guest workers.
Q: How did September 11 change U.S. immigration policy?
A: Nationally, it was bipartisan: we've gotta tighten up the borders. The problem was that it happened very quickly. It was like the disaster in New Orleans: People hadn't thought through the implications of it all, embassies overseas weren't staffed to do the kind of screening that was now required of people who want to get their visas renewed. So huge backlogs of both potential immigrants into the U.S., as well as foreign students who were doing summer research overseas--now all of them found themselves in very difficult straits getting back into the U.S.
Q: The cap on H1-B visas is an area where this problem is pretty clear.
A: The number of students and others who are in the U.S. in technology, science, and engineering, who would absolutely love to work here, are going to have to go back home. We're driving a chunk of people out of the country that have skills that are very much in demand.
Q: What do you think is the most compelling reason for foreigners who are studying or working here to return to their homelands?
A: There's opportunity there, and in many cases, there's more opportunity there. That's the major reason. In addition, a number are going back because they're turned off by the U.S. and U.S. culture.
Q: What do you mean?
A: The dumbing down, the coarsening of the United States--public vulgarity, bare midriffs, it's very offputting.
Q: Can they earn more money overseas?
A: In many cases, in India and China, areas like Shanghai and Bangalore are growing two to three times faster than the U.S., which is a mature market. Their GNP rates are triple ours. It's high growth and the tech boom--they're trying to make up for lost time. So it's the robustness of the economy, and the job opportunities, and entrepreneurial opportunities for a lot of people that is a major, major driving force.
In many cases it's a 25 to 30% cut in salary. But they can have maids, and a lot of things that they couldn't have in the U.S. A big part, too, is their kids. The kids get a better education in their home countries.
Another issue is that some of these people--and you hear this more from Chinese and Indian people--they claim they run into a glass ceiling in U.S. companies; some call it the 'bamboo ceiling.' A lot are engineering and techie types. Those guys can be labeled staff types, analyticals, and they're not given leadership or supervisory roles. So that may compound the problem.
Q: You talk about how a rising tide lifts all ships, and there'll be a more equal distribution of brainpower and resources due to the reverse brain drain. So is the global economy better off because of the reverse brain drain? Is there an upside to it?
A: To the extent that these people go back and contribute to the strength of their particular economy and those economies prosper, more and more people in those countries are going to enjoy the benefits of globalization and a higher standard of living. That's a very healthy thing for the world to see more of these countries move up the curve.
But no country can afford to see its best brains walk out the door. The U.S. has, for generations, relied very heavily on imported talent, like Hitchcock and Einstein. In recent years, we haven't been training own native-born sons and daughters in science, technology, and engineering. We're starting to lose our lock on imported talent at the same time our homegrown talent is [diminishing].
Q: Does the reverse brain drain affect particular companies--big corporations, say, or small entrepreneurial firms--more than others?
A: The bigger companies can rebuff this to a greater extent than the smaller companies. One of the escape valves they have is when Raj says 'I wanna go back to India,' they say, 'Great, we've got a branch network in India, work for us back home.' Microsoft would be in the same boat. They have, essentially, a landing pad, a place where these people can go back to, which isn't the case for a small employer that really doesn't have much in the way of overseas opportunities. They really can't accommodate the guy.
The companies that suffer the most from this are the leading-edge companies in science, technology, innovation, people that really rely on brainpower.