1. Immigration & American Competitiveness Council on Foreign Relations November 13, 2007 Michael S. Teitelbaum Vice President Alfred P. Sloan Foundation

2. Immigration is key part of “shortages” debate Claim: U.S. produces too few S&Es K-12 failures Declining S&E interest among US citizens Typical solutions: Restructure K-12 in science/math Subsidize more domestic S&E majors More S&E visas [“best and brightest”] More R&D

5. Typical report recommendations Tapping America’s Potential (2005) More/better K-12 teachers More S&E undergrad/grad More scholarships & loan- forgiveness at all levels More S&E immigrants More research funding Rising Above the Gathering Storm (2006) More/better K-12 teachers More S&E scholarships +25,000 4-yr undergraduate +5,000 3-yr graduate More S&E immigrants More research funding Double R&D tax credit

6. Case Study: Bill Gates on visas [Senate hearing March 7, 2007] “critical shortage of scientific talent” “…only one way to solve that crisis today: Open our doors to highly talented scientists and engineers who want to live, work, and pay taxes here” “terrible shortfall in the visa supply for highly-skilled scientists and engineers”

7. How many? “my basic view is that an infinite number of people coming, who are taking jobs that pay over $100,000 a year, they’re going to pay taxes, we create lots of other jobs around those people,…the country should welcome as many of those people as we can get…” “So, even though it may not be realistic, I don’t think there should be any limit.” Bill Gates: U.S. Senate Committee Hearing on Strengthening American Competitiveness Bill Gates: U.S. Senate Committee Hearing on Strengthening American Competitiveness

8. Thought needed: 2 cautions Disaggregate “scientists & engineers” Disaggregate “high-skill immigration”

9. Scientists and engineers (S&E) Scientists (mostly PhDs) Engineers (mostly BS, some MS) IT (most bachelors, many not S&E) i.e., large variation within “S&E”

10. “High-skill immigration” Permanent visas (labor market test) “extraordinary” “outstanding professors/researcher” “skilled workers” “professionals with baccalaureate degrees” Temporary visas (no labor market test) “specialty workers” (H-1B) “intracompany transfers” (L)

12. Odd focus on supply-only… Demand side often ignored – surprising! S&Es need employment, labs Few can hang out shingle… Degrees require large personal investment Yet S&E careers falling behind others

13. Misdirected solutions Pumping up supply w/o demand is: unwise & wasteful ultimately ineffectual Assess first: how attractive are careers? Assess: do temporary visas and & offshoring reduce domestic interest? Needed: honest “systems” perspective Needed: connect degrees with demand

14. Labor market: the evidence? Slack markets; no general shortage Remuneration flat, career paths unstable Much variation over time, and by field Data may point more to surpluses… …even during ‘90s high-tech boom? (RAND): rising S&E unemployment that “while the overall economy is doing well, is a strong indicator of developing surpluses of workers, not shortages.” Since: IT, telecom, biotech bubbles burst

16. Yet “shortage” claims continue - why? Interest groups making their case Employers Universities Government funders Immigration lawyers Intend no harm; just promoting interests But politicians, journalists often believe & Federal agencies often fail to analyze

17. Shortages sometimes “looming” Hard to forecast demand Many shocks, long lags Government S&E budgets: unpredictable Military procurement: erratic, unpredictable Private markets: speculative booms & busts IT, aerospace, biotech, telecom “Accurate forecasts have not been produced” National Research Council, 2000 & getting even harder (offshore outsourcing)

18. Case study: Biomedical PhDs Natural experiment 1998-present much more $, more younger PhDs But nasty “hard landing” underway NIH (1998-2003): $13.6 to $27.3 billion Lower inflation-adjusted, but still large Goals included: Higher grant success rates More attractive for younger scientists

19. NIH Budget Authority FY 1977 – FY 2007 (Current vs. Constant 1977 Dollars Using BRDPI as the Inflation Factor) (Dollars in Billions) $30 $25 $20 $15 $10 $5 $0 19771978197919801981198219831984198519861987198819891990 1991199219931994199519961997199819992000200120022003200420052006 2007 Current Dollars Constant Dollars

20. Number PhDs 35-or-younger increased far more than those in tenure-track jobs Source: Survey of Doctorate Recipients, NSF. The use of NSF data does not imply NSF endorsement of the research methods or conclusions contained in this report.

21. Grant success rates first rose, then declined to lower than pre-doubling

22. Success rates down for younger

23. PhD system: structural problems Positive feedback => unstable equilibria Magnifies booms, magnifies busts PhDs & postdocs funded by research $ More research $ = more PhDs & postdocs Lag (multi-year) Then more seeking NIH research $ => declining grants success rate Especially difficult for younger scientists

24. A useful heads-up for NSF NSF research budget to double 2008-15 Depends on Appropriations, of course, but… Will there be hard landing in 2016? How minimize risks? Reduce feedback of research $ on training Balance % fellowships vs. research funding

25. Needed: better “fit” w/ demand COMPETES focus: economic competitiveness i.e. non-academic science careers Employers: strong graduate science, PLUS skills: basic business project management interdisciplinary/teamwork Communication Professional Science Masters (PSM)

26. Status report on PSM degree Proof of concept ~105 programs, 55+ universities, 25 states 1300-1500 current students ~2000 alumni Initial job experiences good Real progress, but still small and fragile Goal: “normal” part of graduate education7

27. So far: little Federal support COMPETES Act: PSM authorization for NSF Plus buoyant NSF basic research budgets Less competition than when budgets flat? Modify structure: less positive feedback

28. Some useful URL links RAND | Issue Papers | Is There a Shortage of Scientists and Engineers? How Would We Know? RAND | Issue Papers | Is There a Shortage of Scientists and Engineers? How Would We Know? http://www.rand.org/pubs/conf_proceedings/2005/C F194.pdf http://www.rand.org/pubs/conf_proceedings/2005/C F194.pdf Bill Gates: U.S. Senate Committee Hearing on Strengthening American Competitiveness Bill Gates: U.S. Senate Committee Hearing on Strengthening American Competitiveness Into the Eye of the Storm: Assessing the Evidence on Science and Engineering Education, Quality, and Workforce Demand Into the Eye of the Storm: Assessing the Evidence on Science and Engineering Education, Quality, and Workforce Demand

29. Thank you! Michael S. Teitelbaum Vice President Alfred P. Sloan Foundation teitelbaum@sloan.org