1Mary Meeker / Liang Wu5.29.13IMMIGRATION IN AMERICA &THE GROWING SHORTAGE OFHIGH-SKILLED WORKERS
2 America’s technology industry is the global leader, thanks in largemeasure to immigrants. Immigrants and the children of immigrants helped build some of our mostimportant companies, including Apple, Google, Oracle, Amazon, eBay,Yahoo! and LinkedIn...and this trend continues. These companies driveinnovation, create jobs and help grow our economy. To maintain our leadership advantage and competitive momentum, U.S.firms need the world’s best engineers, programmers, mathematicians andscientists. Global competition for talent will rise; foreign nations will likelyincreasingly pursue U.S.-trained talent. While it has become harder toimmigrate to America, opportunities to work for tech companies abroadhave grown.WHY HIGH-SKILLED IMMIGRATION MATTERS TOU.S. TECHNOLOGY COMPANIES...
3 Many high-skilled foreigners graduate from our top universities. Butimmigration policy makes it difficult for them to stay in America. In short,we are training many of the most talented students in the world andleaving many of them with these options – go work in another country fora non-U.S. company or work for a U.S. company in another country. At the same time, tech companies are prevented from bringing into theU.S. enough of the high-skilled workers they need to remain competitive. As a result, U.S. companies are moving some jobs overseas – and othercountries are focused on luring away talented workers who can’t get H-1Bvisas.…WHY HIGH-SKILLED IMMIGRATION MATTERSTO U.S. TECHNOLOGY COMPANIES
4 In previous reports*, we have provided insights on the U.S. economy –USA, Inc. – and Internet Trends, based on our work in and around thetech industry. We believe the immigration debate merits a similar data-based analysis. The U.S. needs broad and comprehensive immigration reform to addressthe large number of undocumented immigrants, border securityconcerns, the need for agricultural workers and reforming the path tocitizenship. In this report, we focus specifically on the shortage of high-skilled tech workers. We use a data-driven, common-sense approach to understand the manycomplex threads in the immigration debate. A better informed public debate over high-skilled immigration wouldenhance reform efforts now under way in Washington. We hope otherstake our observations, share them and improve upon them.THE GOAL OF THIS REPORT*To see our previous reports, visit www.kpcb.com/insights
5 Rapid growth in high-speed, inexpensive Internet access – first on PCs,now on mobile phones and tablets and increasingly on devices of allsorts – has transformed the way people (and companies) around theworld connect and communicate. The breadth + depth + speed + magnitude of technology innovation areunprecedented – and accelerating. Widespread adoption of mobile access to the Internet is a globalphenomenon and is still in the early stages of evolution.TECHNOLOGY INNOVATION –THESE ARE UNUSUAL TIMES
6 America’s innovation & leadership in mobile device technology – After cedingleadership to other regions (Europe & Asia), America’s global share of smartphoneoperating systems has jumped to 88% recently from just 5% in 2005, thanks to Apple andGoogle. American leadership in global Internet innovation – 8 of the top 10 top global Internetcompanies (based on users) are American – led by Google, Microsoft, Facebook, Yahoo!,Wikipedia and Amazon – and 81% of their users are outside the U.S.. How rapidly new U.S. companies have won users to do new things – Like Facebook,Twitter, Linkedin, Tumblr, Groupon, Zynga, Pinterest, Dropbox… Intensity of competition for high-skilled engineers – Five American technologycompanies (IBM / Intel / Microsoft / Oracle / Qualcomm) alone have a combined 10,000current U.S. job openings. The ability to innovate (and secure capital) is at an all-time high – Coding meetsKickstarter… …As is the ability of U.S. companies to attract high-skilled tech experts from aroundthe world.TECH INDUSTRY SURPRISES OVER PASTHALF-DECADE
7 America’s tech leaders want to continue to lead in innovation – but to do so, they needto hire the best and brightest. Demand for science, technology, engineering and math (STEM) experts exceedssupply – U.S. STEM job vacancy rate (unfilled jobs as a share of the labor force) is 3-4times higher than that of other sectors. U.S. policy caps H-1B work visas at 85,000/year (including 20,000 exemption for holdersof master’s degrees) despite much higher demand. Native-born Americans account for a declining portion of STEM graduates at U.S.universities – 54% in 2006, down from 74% in 1985. High-skilled foreign graduates from U.S. universities are often sent home – andthereby prevented from contributing to our economy. Demand is likely to increase for high-skilled workers – as advanced economies realizethe importance of tech skills in a slower-growth world with aging societies. Opportunity for immigration reform is real and reflects needed changes – and there’smomentum, given Senate Judiciary Committee approval of comprehensive immigrationreform measure on May 21. Full Senate debate expected in June.WHERE WE ARE NOW
8WHERE WE ARE NOW…WHERE WE SHOULD BEThe U.S. has the best research universities in the world, which is why weattract the best students from around the world. Forcing them to leave,rather than allowing them to stay and add their skills and knowledge to oureconomy, is one of the most short-sighted policies we have.- John Hennessy (President) Stanford UniversityWith more international students than virtually any university, andgraduating more engineers and technologists than any campus anywhere,Purdue sees as clearly as anyone the senselessness of our currentpolicies. It’s time we begin - in the nation’s interest - taking sensible stepsto welcome more of the extremely talented people that seek to come andstrengthen the American economy...much of that talent prepared andtrained at universities like Purdue.- Mitch Daniels (President) Purdue University(Former Governor) Indiana
9• High-skilled immigration policy should be designed tocreate jobs and spur economic growth.• Note that high-skilled immigrants contribute significantly tothe economy yet account for only ~3% of America’sworkforce (and fewer than 15% of all legal immigrants).• All in, immigrants account for ~16% of America’s workforce;almost one-third are undocumented.WHERE WE SHOULD BE…
10• Increase H-1B Quotas – There is clear evidence that we need a higher cap onH-1B visas for foreign STEM workers.• Keep More Foreign Graduates in the U.S. – We should make a greater effortto retain the large number of non-Americans getting advanced degrees(especially in STEM areas) from U.S. universities, while making sure that thesystem does not simply become a short-cut to getting an easy Green Card.• Streamline Immigration Process / Paperwork – Reduce current backlog,create predictable and easier process by increasing efficiency acrossgovernment agencies related to immigration.• Ensure American Worker Wage and Job Protection – Follow thecompromise in recent Senate legislation which creates good rules of the roadfor H1-B visa dependent and non-dependent companies.• Create a New, Dedicated Visa for Entrepreneurs – H-1B visas focus on jobseekers with advanced degrees; we should offer an alternative for peoplecreating new technology businesses (as Canada does.)…WHERE WE SHOULD BE
11Our journey is not complete until we find abetter way to welcome the striving, hopefulimmigrants who still see America as a landof opportunity, until bright young studentsand engineers are enlisted in our workforcerather than expelled from our country.PRESIDENT BARACK OBAMA, 2013“”
130.9%15% 11% 9% 15% 13% 16% 5% 15%0% 20% 40% 60% 80% 100%Native AmericansImmigrants orDescendants ofImmigrantsGerman Irish EnglishOther European African American* HispanicAsian Other / Unclassified3 Million306 MillionUSA Population by Ancestry, 2010 CensusNote: *African-American total includes those who came as slaves and not as voluntary immigrants.Other includes North America (Canada), Australia, New Zealand, and those who have more than one ethnicity reported.Source: Census Bureau, 2010 data.99% OF AMERICANS ARE IMMIGRANTS ORDESCENDANTS OF IMMIGRANTS
14270MMU.S. Born87% of TotalPopulation4MM, 1%19MM, 6%6MM, 2%11MM, 4%40MMImmigrants13%Legal Immigrants (High-Skilled)Legal Immigrants (Family-Based)Legal Immigrants (Refugees & Other)Undocumented ImmigrantsTotal USA Population = 310MMNote: Number of undocumented immigrants currently residing in USA is an estimate by PewResearch Hispanic Center based onCensus data. Precise breakdown of legal immigrants currently residing in USA by type of admission is not available and is anestimate based on Census data as well as Department of Homeland Security immigrant admission data from 1986 to 2010.Source: Census Bureau, PEW, DHS.HIGH-SKILLED IMMIGRANTS ARE ONLY 1% OF TOTALU.S. POPULATIONU.S. Population at a Glance, U.S. Born vs. Immigrantsby Type of Admission, 2010
15WHY PEOPLE COME TO AMERICA –THE SPIRIT OF FREEDOM& OPPORTUNITY
16ECONOMIC OPPORTUNITY + RULE OF LAW =KEY DRIVERS OF IMMIGRATION TO AMERICANote: *Numbers may not add up to 100 due to rounding. Source: Public Agenda survey of 1,138foreign born adults via telephone interviews conducted between 4/23 & 6/7/2009.Having a trustworthy legal systemHaving more opportunity to earn a good livingMaking good health care availableHaving a good education systemBeing a good place to raise childrenHaving free and independent media and free expressionHaving a higher standard of moralityLetting people practice the religion they chooseFor each of the following, please tell me if you think the United States or your homecountry does a better job when it comes to the item, or if they’re about the same?*
17PRESIDENT RONALD REAGAN, 1988You can go to live in France, but you cannotbecome a Frenchman. You can go to livein Germany or Turkey or Japan, but youcannot become a German, a Turk, or aJapanese. But anyone, from any corner ofthe Earth, can come to live in America andbecome an American.“”
18IMMIGRANTS HAVE BEEN KEY TOAMERICA’S ECONOMIC SUCCESS
19The essence of America – that which reallyunites us – is not ethnicity, or nationality orreligion – it is an idea – and what an idea itis: That you can come from humblecircumstances and do great things. That itdoesn’t matter where you came from butwhere you are going.SECRETARY OF STATECONDOLEEZZA RICE“”
20Source: The “New American” Fortune 500, June 2011A Report By The Partnership For A New American Economy.19%23%58%Founders of 2012 "Fortune 500" CompaniesImmigrantChild of ImmigrantAll Others42% OF AMERICA’S FORTUNE 500 COMPANIESFOUNDED BY 1st OR 2nd GENERATION IMMIGRANTS…
214MM7MM15MMTotal JobsCreated by Fortune500 Companies= 25 MillionImmigrantChild of ImmigrantAll Others$1,732B$2,807B$7,211B 2012 TotalRevenue by Fortune500 Companies =$12 Trillion…THESE COMPANIES HAVE CREATED 10+ MILLION JOBS AND$4.5 TRILLION OF ANNUAL REVENUE (= TO 30% OF USA GDP)10+ MillionJobs Created by Immigrant FoundedCompanies, 41% of Total Fortune 500$4.5 TrillionAnnual Revenue by Immigrant FoundedCompanies, 30% of USA GDP,39% of Total Fortune 500Source: FactSet, data as of 4/13.
227 OF 10 MOST VALUABLE & RECOGNIZABLEGLOBAL BRANDS FOUNDED BY 1st & 2ndGENERATION IMMIGRANTSSource: The “New American” Fortune 500, June 2011A Report By The Partnership For A New American Economy.
240%2%4%6%8%10%0%5%10%15%20%25%30%35%40%1820 1835 1850 1865 1880 1895 1910 1925 1940 1955 1970 1985 2000%ofWorldPopulation%oftheWorldGDPUSA GDP as % of World (Left Axis)USA Population as % of World (Right Axis)USA Percent of Global GDP & Global Population, 1820 – 2012GDP Share Peak @ 36%, 1944Population Share Peak @ 6%, 1950sSource: Angus Maddison, University of Groningen, OECD. GDP & population data from 1980 to 2012 based on adjusted WorldBank / IMF data. Note population & GDP growth highly correlated (92%).U.S. SHARE OF WORLD GDP PEAKED JUST ASPOPULATION AS % OF WORLD PEAKED
2544%24%34%2%9%11%16%18%30%31%36%0%10%20%30%40%50%1900-09 1910-19 1920-29 1930-39 1940-49 1950-59 1960-69 1970-79 1980-89 1990-99 2000-08%ofUSAPopulationGrowthfromImmigrationUSA Population Growth from Immigration, 1900-2008Source: Census Bureau, data as of 2008.IMMIGRANTS HAVE NEARLY ALWAYS ACCOUNTED FORMATERIAL PORTION OF AMERICA’S POPULATION GROWTH
261980 TO 2013 –AS THE WORLD HAS GROWNMORE COMPETITIVE, AMERICAHAS LOST SHARE OF GLOBALECONOMIC GROWTH
270%10%20%30%40%%ofGlobalGDPUSA Europe China India Latin AmericaAS CHINA AND INDIA GAINED SHARE OF GLOBAL GDP,AMERICA’S SHARE HAS DECLINEDPercent of Global GDP, 1820 – 2012.USA vs. Europe vs. China vs. Latin America vs. IndiaSource: Angus Maddison, University of Groningen, OECD, data post 1980 perIMF (GDP adjusted for purchasing power parity).27%16%33%15%2%19%16%6%8%2%
28BUT AMERICA IS THE GLOBAL LEADERIN TECHNOLOGY AND INTERNET…AND IMMIGRANTS HAVE MADEOUTSIZED CONTRIBUTIONS AS FOUNDERSAND KEY PERSONNEL
29Company Mkt Cap ($MM)Apple $416,622Google 268,445IBM 239,530Microsoft 234,828Oracle 172,044Amazon.com 119,011Cisco 116,904Intel 105,721Ebay 65,357Facebook 63,472EMC 53,347Hewlett-Packard 43,118Texas Instruments 38,756VMware 35,917Priceline 35,583Automatic Data Processing 31,274salesforce.com 25,840Dell 25,003Yahoo! 24,306Cognizant Technology 23,648Adobe Systems 20,640Broadcom 19,713Intuit 19,393LinkedIn 19,357Symantec 16,916Other U.S. Tech Companies 622,632Total $2,857,376AMERICAN TECHNOLOGY COMPANIES =69% OF GLOBAL PUBLIC TECH MARKET CAPITALIZATIONTotal USA Public Technology Companies =$2.9 Trillion in Aggregate MarketCapitalizationUSA Public Technology Companies* = 69% ofAggregate Market Capitalization of Global Top 100Technology CompaniesUSA69%Europe8%Japan7%S. Korea6%Other4%India3%China3%USA* = $2,519BEurope = $298BJapan = $245BS. Korea = $203BIndia = $118BChina = $111BROW = $160BNote: *While total USA tech companies support aggregate market cap of $2.9T as of 3/13, those in theglobal top 100 support aggregate market cap of $2.5T. Source: FactSet, data as of 3/13.
30Top 10 Internet Properties by Global Monthly Unique Visitors, 2/13Source: comScore Global, 2/13.0 200 400 600 800 1,000 1,200Baidu.comTencentGlam MediaAppleAmazon.comWikipediaYahoo!FacebookMicrosoftGoogleMonthly Unique Visitors (MMs)USA UsersInternational Users80% OF TOP 10 GLOBAL INTERNET PROPERTIES‘MADE IN USA’…81% OF USERS OUTSIDE USA
31INNOVATIONS IN MOBILE CONNECTIVITY HAVE TILTEDTECH INDUSTRY MARKET SHARE TO AMERICASource: 2005 data per Gartner, 2012 data per IDC.Global Smartphone Operating System Market Share(by Units Shipped), 2005 vs. 20122005 20120%20%40%60%80%100%MarketShareofSmartphoneOSOther OSApple iOSGoogle AndroidMicrosoft Windows PhoneBlackBerry OSLinuxNokia SymbianMade in USAOperating systems88%5%
32IMMIGRANTS ARE KEY DRIVERS OF INNOVATION &GROWTH IN AMERICA’S TECHNOLOGY INDUSTRYPercentage of Companies Founded by Immigrants, 2007Foreign-National Contributionto U.S. Global Patent Applications, 1998-2006Immigrant-Founded Start-Upsas Percent of Total in Tech Centers, 2007Source: The Kauffman Foundation, America’s New Immigrant Entrepreneurs reports, published in 2007.Defense / AerospaceEnvironmentalBioscienceAll Industry FieldsInnovation / Manufacturing-Related ServicesSoftwareComputers / CommunicationsSemiconductors8%9%20%25%26%28%32%35%60%50%40%30%20%10%0Portland ResearchTriangleParkDenver Seattle Austin D.C Boston SanDiegoChicago N.Y SiliconValley30%25%20%15%10%5%0%1998 1999 2000 2001 2002 2003 2004 2005 2006%ofTotal%ofTotal
33Founders / Co-Founders of Top 25 U.S. Public Tech Companies, Ranked by Market Capitalization60% OF TOP 25 TECH COMPANIES FOUNDED BY 1st & 2ndGENERATION AMERICANS = 1.2MM EMPLOYEES, 2012*Note that while Andy Grove (from Hungary) is not a co-founder of Intel, he joined as COO on the day it was incorporated.**Francisco D’souza is a person of Indian origin born in Kenya. Source: FactSet as of 3/13; “The ‘New American’ Fortune500”, a report by the Partnership for a New American Economy; “American Made, The Impact of Immigrant Founders &Professionals on U.S. Corporations”Rank CompanyCoMkt Cap ($MM) LTM Rev ($MM) Employees1st or 2nd Gen ImmigrantFounder / Co-FounderGeneration1 AppleS$416,622 $164,346 76,100 Steve Jobs 2nd-Gen, Syria2 GoogleS268,445 49,958 53,861 Sergey Brin 1st-Gen, Russia3 IBMS239,530 104,507 434,246 Herman Hollerith 2nd-Gen, Germany4 MicrosoftS234,828 72,764 94,000 -- --5 OracleS172,044 37,230 115,000 Larry Ellison / Bob Miner 2nd-Gen, Russia / 2nd-Gen, Iran6 Amazon.comS119,011 61,093 88,400 Jeff Bezos 2nd-Gen, Cuba7 CiscoS116,904 47,252 66,639 -- --8 IntelS105,721 53,341 105,000 --* --9 EbayS65,357 14,028 31,500 Pierre Omidyar 1st-Gen, France10 FacebookS63,472 5,089 4,619 Eduardo Saverin 1st-Gen, Brazil11 EMCS53,347 21,714 60,000 Roger Marino 2nd-Gen, Italy12 Hewlett-PackardS43,118 118,397 331,800 -- --13 Texas InstrumentsS38,756 12,690 34,151 Cecil Green / J. Erik Jonsson 1st-Gen, UK / 2nd-Gen, Sweden14 VMwareS35,917 4,605 13,800 Edouard Bugnion 1st-Gen, Switzerland15 PricelineS35,583 5,261 7,000 -- --16 Automatic Data ProcessingS31,274 10,945 57,000 Henry Taub 2nd-Gen, Poland17 salesforce.comS25,840 3,050 9,800 -- --18 DellS25,003 56,982 111,300 -- --19 Yahoo!S24,306 4,987 11,700 Jerry Yang 1st-Gen, Taiwan20 Cognizant TechnologyS23,648 7,346 156,700 Francisco Dsouza / Kumar Mahadeva 1st-Gen, India** / 1st-Gen, Sri Lanka21 Adobe SystemsS20,640 4,373 11,144 -- --22 BroadcomS19,713 8,006 11,300 Henry Samueli 2nd-Gen, Poland23 IntuitS19,393 4,153 8,500 -- --24 LinkedInS19,357 972 3,458 Konstantin Guericke / Jean-Luc Vaillant 1st-Gen, Germany / 1st-Gen, France25 SymantecS16,916 6,839 20,500 -- --Total Founded by 1st or 2nd Gen Immigrants $1,590,800 $507,516 1,151,835
34JOBS AT TOP 50 U.S. TECH COMPANIES GREW 4XTO 2.5 MILLION OVER 2 DECADES05001,0001,5002,0002,5003,0001993 1996 1999 2002 2005 2008 2011AggregateNumberofEmployees(000s)Aggregate number of employees among (current) Top 50 Public USA TechnologyCompanies by Market Cap, 1993-2013 YTDSource: FactSet as of 3/13.
3542% of Scientists in Top 7 U.S. CancerResearch Centers Are Foreign Born• University of Texas MD Anderson – 62%• Memorial Sloan-Kettering Cancer Center – 56%• Fox Chase Cancer Center – 44%• Johns Hopkins Sidney Kimmel Comprehensive Center – 35%• Dana-Farber Cancer Institute – 33%• UCSF Diller Family Comprehensive Cancer Center – 32%• Fred Hutchinson Cancer Research Center – 30%BEYOND COMPUTINGSource: National Foundation for American Policy, based on National Cancer Institute data, policybrief published in 2013.
36STEM(SCIENCE / TECHNOLOGY /ENGINEERING / MATH)-RELATEDEMPLOYMENT HAS INCREASED~2X FASTER THAN NON-STEMEMPLOYMENT…
370%2%4%6%8%0MM2MM4MM6MM8MM1983 1986 1989 1992 1995 1998 2001 2004 2007 2010%ofTotalUSAWorkforceUSAScience&EngineeringWorkersUSA Science & Engineering Workers & % of Workforce, 1983-2010Science & Engineering Workers (MMs) % of USA WorkforceNote: *Potentially understated - according to the National Science Foundation, over 4 million people in America use their science& engineering degree in their job even though their occupation is not formally classified as a science & engineering occupation.Source: National Science Board, data as of 2010.U.S. DEMAND FOR HIGH-SKILLED STEM WORKERS KEEPSGROWING – 7MM STEM WORKERS* IN 2010, UP FROM 3MM IN 1983
38Total USA Employment % Change from 2000 by Sector, 2000-201240-85%* INCREASE IN STEM + CMS* JOBS VS.30% FOR NON-STEM JOBS SINCE 2000Note: *CMS is Computer / Math Sciences. Source: U.S. Census Bureau, Current Population Survey(CPS); Ian Hathaway, Engine.is report published in 2013. Note: Data have been smoothed using a 12-month moving-average.EmploymentChange(%)Since2000
39Job Openings as % of Respective Labor Force by Sector, 2005-2012Note: Calculated as job openings in each sector divided by labor force in each sector. Note that the job vacancy data used here aren’tavailable by level of educational attainment. Therefore, we are unable to restrict this portion of the analysis to workers with a bachelor’sdegree or more. As a result, the differences here between STEM, Computer / Math Sciences & non-STEM may be somewhat overstated.Source: Ian Hathaway (Engine.is) analysis of data from U.S. Census Bureau, CPS; Conference Board; Bureau of Labor Statistics, JOLTS.3-4X* MORE STEM JOB OPENINGS THAN NON-STEMJobOpeningsasaShareofLaborForce
40…BUT AMERICA CANNOT FILL ALLSTEM-RELATED JOB OPENINGS…
41122,30051,4740 50,000 100,000 150,000# of Job OpeningsRequiring a BachelorsDegree in ComputerScience# of Graduates w/Bachelors Degree inComputer ScienceNumber of People, per YearSource: Microsoft analysis (released in 2013) based on Bureau of Labor Statistics data.COMPUTER SCIENCE JOB OPENING FORECAST =2.4X # OF COMPUTER SCIENCE GRADUATESProjected Average Annual # of Graduates w/ Bachelor’s Degree in Computer Science vs. # of JobOpenings Requiring a Bachelor’s Degree in Computer Science, 2010-2020E
42View outside of Quixey’s office onCastro St. in Mountain View, CA.Source: Joshua Stanton-Savitz.STREET VIEW – COMPANIES & STARTUPS CAN’T HIREENOUGH ENGINEERS42View outside of Quixey’s office on Castro St. in Mountain View, CA.Photo: Joshua Stanton-Savitz, 5/13.
43FIVE HIGH-TECH COMPANIESALONE – IBM, INTEL, MICROSOFT,ORACLE AND QUALCOMM – HAVECOMBINED 10,000 CURRENTOPENINGS IN THE UNITEDSTATES.Source: Technology CEO letter to the president and lawmakers, 3/13.http://www.scribd.com/doc/130388692/Tech-CEO-letter
44DEMAND FOR STEMGRADUATES / EXPERTS HASRISEN DRAMATICALLY…
45U.S. EMPLOYER DEMAND FOR STEM EXPERTS /GRADUATES CONTINUES TO RISE…Sustained Growth is Projected for STEM OccupationsRelative Employment Levels vs. 2006 Employment (2006=100), by OccupationSource: Chairman’s staff of the Joint Economic Committee based on data from the Bureau of Labor Statistics.The BLS does not project employment for individual years from 2010-20. For the purposes of this chart, LifeSciences excludes Medical Sciences. Report published in 2012.RelativeEmploymentLevelsvs.2006Level(2006=100)
46…WHILE SUPPLY OF NATIVE-BORN STEM GRADUATES /EXPERTS HAS FALLEN ONRELATIVE BASIS
47STEM DEGREES HAVE FALLEN AS % OF DEGREESGRANTED IN AMERICA...Source: Chairman’s staff of the Joint Economic Committee based on data from the Department of Education’s NationalCenter for Education Statistics: Integrated Postsecondary Education Data, STEM Degrees include degrees in:Engineering, Physical Sciences, Geosciences, Math and Computer Sciences and Life Sciences (except Medical Sciences).Report published in 2012.A Smaller Percentage of Degrees Are STEM DegreesSTEM Degrees as a Share of All Degrees Granted, 1985 - 2009STEMDegreesas%ofAllDegreesGranted
48…WHILE U.S.-BORN STUDENTS HAVE FALLEN TO 54% (2006)FROM 74% (1985) OF U.S. STEM DOCTORATE GRADUATESSource: Chairman’s staff of the Joint Economic Committee based on data from the Department of Education’s NationalCenter for Education Statistics: Integrated Postsecondary Education Data, STEM Degrees include degrees in:Engineering, Physical Sciences, Geosciences, Math and Computer Sciences and Life Sciences (except Medical Sciences).Report published in 2012.Share of STEM Doctorates Granted to U.S. Domestic Students, 1985 - 2006STEM Doctorates as a Share of All Doctorates Granted, 1985 - 2009%ofSTEMDoctoratesGrantedtoU.S.DomesticStudents/STEMDoctoratesas%ofAllDoctorates
49First University Degrees in Natural Sciences,By Selected Country/Economy, 1998–2008Note: *Data for selected countries not available in 2007-2009. Natural sciences include physical, biological,environmental agricultural, computer sciences and mathematics. SOURCES: Organisation for Economic Co-operation &Development, Education Online database, http://www.oecd.org/education; & national statistical offices. Science &Engineering Indicators 2012Doctoral Degrees in Engineering, By SelectedRegion/Country, 2000 To Most Recent Year*GLOBAL SCIENCE & ENGINEERING GRADUATIONRATES INCREASINGLY FAVOR CHINAEngineeringNatural SciencesDegreesin000sDegreesin000s
51…BUT AMERICAN COMPANIESARE CONSTRAINED BY CAPS ONH-1B VISAS (85,000 ANNUALLY –OR < 0.03% OF U.S. POPULATION).THERE’S DEMAND FOR AT LEAST150,000 PER YEAR.
52U.S. DEMAND FOR H-1B WORKERS HAS EXCEEDEDCAPSNumber of Initial Petitions for New H-1B Workers Submitted by Employers Relative to the Cap,2000 – 2009#ofPetitionsin000sKKKKSource: GAO analysis of Homeland Security data, Testimony Before the Subcommittee on Immigration Policy and Enforcement,Committee on the Judiciary, House of Representatives. Report published in 2011.
53ECONOMIC GROWTH &EMPLOYER DEMAND IMPLY MOREH-1B VISAS SHOULD BE GRANTED
540100200300400$10$11$12$13$141999 2001 2003 2005 2007 2009 2011NumberofVisasIssued(000s)USARealGDP($T)USA Real GDP* vs. Employment (H-1B) Visas Issuedper Year, 1999 - 2012Real GDP ($T) H-1B Employment Visa IssuedSINCE 1999, U.S. REAL GDP UP 26% WHILE ANNUAL H-1BVISAS GRANTED REMAINED CONSTANT & ANNUAL H-1BQUOTA DECLINEDNote: *Real GDP adjusted for inflation.Source: BEA, State Dept. data as of 2012.2005-201285KH-1B Visas Subject to Cap200465K1999-2000115K2001-2003195K
55Source: Brookings Institute, USCIS, 2013.H-1B Visa Annual Cap & Availability Windows For Employers, 1999-2014FLAT H-1B WORK VISA QUOTA BLOCKING U.S. FIRMSFROM HIRING SKILLED WORKERS THEY NEEDAnnual Cap on H-1B visasH-1B Availability Windows
56HIRING H-1B WORKERS DOESNOT DISPLACE AMERICANWORKERS –DATA IMPLY NEW AMERICANJOBS ARE CREATED
577.54.7Firms w/ <5,000 Workers Firms w/ 5,000-10,000 Workers0246810NewEmploymentperH-1BApplicationNew Employment per H-1B Application, by Company Size, 2002-2005Average New Employment perH-1B Application = 5.0Source: National Foundation for American Policy (NFAP) Study based on 2002-2005data, report published in 2008.COMPELLING CORRELATION BETWEEN H-1BAPPLICATIONS & NEW AMERICAN JOBS CREATED
58Impact of H-1B Visa Restrictions% of SurveyedCompanies AgreeingHired more people (or outsourcedwork) outside of USA65%Delayed or changed plans for projects 46%Affected competitiveness againstforeign competitors74%Source: 2008 NFAP survey response from 27 companies who are members of TechNet, the SemiconductorIndustry Association (SIA) and the larger corporate members of SEMI (Semiconductor Equipment andMaterials International).RESTRICTING H-1B QUOTAS HAS FORCED AMERICANCOMPANIES TO HIRE & RELOCATE WORKERS ABROAD
59PLAYING BY THE RULESPRIMER ONH-1B VISAS & GREEN CARDS
60SO, YOU WANT AN H-1B VISA?Congress capped annual new visas at 85,000 in 2004… And you need to be sponsored by anemployer. If you lose your job, you need to leave the country, unless you find a new sponsoror switch to another kind of visa (like a student or visitor visa).For foreigners to getan H-1B visa towork in the U.S.,you’ll need to be askilled worker…With at least abachelor’s degree……in designated“specialtyoccupations.”You can stay up tosix years, if yourvisa is renewed butthey are hard to get.
61BUT WAIT…YOU WANT TO STICK AROUND?• H-1B visa holders who want to stay in the country can apply for a Green Card– which lets you stay permanently. After five years, Green Card holders canapply to be citizens.• Green Card holders can live and work in the U.S. on a permanent basis…• …But they aren’t easy to get.• There’s an annual quota of 140,000 for skilled workers and professionals…• …And a per-country quota of no more than 7% of total Green Cards issued,regardless of size of population of the country…• …So it could take up to 10 years or longer for skilled professionals from somecountries to get approved for Green Cards.• As a result, many more H-1B visa holders must seek renewal status whiletheir Green Card applications are being processed.
62• In 1979 – 18%• In 1997 – 28%• In 2006 – 35%Foreign-bornengineeringprofessors• In 1979 – 10%• In 1997 – 25%• In 2006 – 31%Foreign-bornmath/computersciencesprofessorsWHILE FOREIGN-BORN PROFESSORSPLAY A MAJOR ROLE IN U.S. COLLEGESAND UNIVERSITIES…Source: National Science Foundation survey of full-time faculty who received Ph.D.’s from American institutions, 2011
63…U.S. POLICIES FORCE MANYAMERICAN-EDUCATED FOREIGNSTUDENTS TO RETURN HOME
6401002003004005006002003 2004 2005 2006 2007 2008 2009 2010 2011 2012NumberofVisasIssued(000s)Number of Student Visas (F1) vs. Employment (H-1B)Visas Issued per Year, 1992 - 2012F1 Student Visa Issued H-1B Employment Visa Issued~100K Difference~350KDifference85KH-1B VisasSubject toCapSource: U.S. Department of State, as of 5/13.U.S. SENDING MORE QUALIFIED FOREIGN STUDENTS HOMEPOST GRADUATION – 3.5X RISE IN STUDENT & EMPLOYMENTVISA ISSUANCE GAP OVER DECADE
65Data as of January 2012, Examples for illustration purpose only. The individuals qualifications and the requirementsof their job determines the actual waiting time.HIGH-SKILLED IMMIGRANTS CAN WAIT 35YEARS OR MORE FOR GREEN CARDSHow long must I wait?Estimated time to acquire a U.S. green card.
66ALL IN, HIGH-SKILLEDIMMIGRANTSACCOUNTED FOR <15%OF LEGAL IMMIGRANTS IN 2012
6765%15%13%4% 3%Total Legal Immigrants = 10.5 Million, 2002-2011Family Based (Relatives of US Citizens)Employment Based (High-Skilled Immigrants)Refugees & AsyleesDiversity Based (Encourage Immigration fromSmaller Countries)Other“HIGH-SKILLED” IMMIGRANTS = ONLY 15% OFLEGAL IMMIGRANTS IN PAST DECADESource: Department of Homeland Security. Data as of 2011.
68USA RIVALS, MORE FOCUSED ONJOB CREATION ANDCOMPETITIVENESS,GRANT 7X MORE GREEN CARDSBASED ON SKILLS (ON RELATIVEBASIS) THAN AMERICA DOES
69Percentage of All Green Cards Distributed by Each Country ThatAre Employment-Based, 2010U.S. PEERS ISSUE 7X MORE GREEN CARDS ON RELATIVEBASIS THAN U.S. AS THEY TARGET IMMIGRATION FOR JOBS+ SKILLSSource: OECD (2012), “Trends in International Migration Flows andin the Immigrant Population.”Weighted Average(ex. USA) = 50%90%80%70%60%50%40%30%20%10%0%ofGreenCardsDistributed
7003006009001,2001,5001986 1988 1996 1998 2000 2002 2004 2006 2008 2010 20120%15%30%45%60%75%TotalLegalImmigrantsAdmitted(000s)%ofTotalImmigrantsAdmittedUSA Number of Immigrants by Type of Admission, 1986 - 2012Total Legal Immigrants Admitted (000s) % Family-Based% Employment-Based % Refugees & Asylees% OtherSource: Department of Homeland Security,data as of 2012.73%66%U.S. IMMIGRATION POLICY OF PAST 30+ YEARSFOCUSED ON FAMILY REUNIFICATION (66% OFIMMIGRANTS), NOT HIGH-SKILLED IMMIGRANTS
71GLOBAL COMPETITION FORHIGH-SKILLED IMMIGRANTS WILLLIKELY INTENSIFY AS ECONOMICGROWTH SLOWS & SOCIETIES AGE &COUNTRIES PURSUE ECONOMICGROWTH DRIVERS
72-6%-4%-2%0%2%4%6%8%10%1950 1960 1970 1980 1990 2000 2010 2020ERealGDPY/YGrowth(%)USA Real GDP Annual Growth Europe Real GDP GrowthUSA Trendline European TrendlineUSA + Europe Real Annual GDP Growth, 1950-2020ENote: Real GDP adjusts for inflation. Source: BEA, IMF, data as of 4/13.ECONOMIC GROWTH IS SLOWING IN MOST DEVELOPEDCOUNTRIES / REGIONS – INCLUDING USA / EUROPE
73Growth in Potential Labor Force (Population Aged 15-59), Indexed to 1950 level = 100Source: Jack A. Goldstone, Brookings Institute based on projection by United Nations. Report published in 2011.MANY MAJOR ECONOMIES (LIKE CHINA / RUSSIA /EUROPE / JAPAN / S. KOREA) LIKELY TO EXPERIENCELABOR FORCE DECLINESIndexedValue(1950level=100)
7410203040501950 1960 1970 1980 1990 2000 2010MedianAgeMedian Age by Country, 1950-2010JapanEuropeRussiaUSAChinaLatin AmericaIndiaSource: United Nations, Population Division. Data as of 2010.SOCIETIES ARE AGING IN MOST DEVELOPEDCOUNTRIES / REGIONS – U.S. MEDIAN AGE WAS 37 IN2010, UP FROM 30 IN 1950
75Note: Labor force includes all employed & unemployed civilians 16 years old & over. It does not include those who have no job & are notlooking for one. Many who are not in the labor force are going to school or are retired. Family responsibilities keep others out of the laborforce. Women joining labor force has been a key driver of overall labor force growth – in 1950, only ~35% of women (16+) are in the laborforce, by late 1990s, ~60% of women (16+) are in the labor force – since then, the 60% ratio has remained constant. Source: BLS, 4/13.1.1%1.6%2.0%1.2% 1.2%1.1%1.1%1.7%2.6%1.6%1.3%0.8%0%1%2%3%1950s 1960s 1970s 1980s 1990s 2000sAnnualGrowthRate(%)Annualized USA Population & Labor Force Growth Rates, 1950sto 2000sPopulationLabor ForceU.S. LABOR FORCE GROWTH FALLING AS POPULATION GROWTHSLOWS, GAINS FROM WOMEN JOINING LABOR FORCE EASE ANDBABY BOOMERS RETIRE
76USA Birth Rate vs. Population Replacement Rate*, 1960 - 2010012341960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010USABirthRateUSA Fertility Rate Replacement RateNote: *Population replacement rate is the number of children each woman needs to have to maintain current populationlevels. In most developed countries, the natural replacement rate is close to 2.1. Source: World Bank, data as of 2010.WITHOUT IMMIGRATION, U.S. POPULATION SHRINKS ASBIRTH RATE FALLS BELOW REPLACEMENT RATE
77IMMIGRATION COMPETITION?LET THE GAMES BEGIN…
79GOOD DEAL, EH?[E]veryone knows the American system is pretty dysfunctional...Im going to the Bay Area to spread the message that Canada isopen for business; were open for newcomers. If they qualify,well give them the Canadian equivalent of a green card as soonas they arrive…I’m not going to apologize, and you know what, if you guys cannotfigure out your immigration system, we’re going to invite the bestand the brightest to come north of the border.- Jason Kenney, Canada Minister of Citizenship, Immigration & Multiculturalism, May 2013“”
80AS COUNTRY-BY-COUNTRYCOMPETITION FORHIGH-SKILLED IMMIGRANTS RISES,AMERICA REMAINS A PREFERREDDESTINATION
81AMERICA = #1 GLOBAL DESTINATION FOR IMMIGRANTS20% (OR 43MM) OF GLOBAL MIGRANTS IN 2010
82AMERICANS SUPPORTHIGH-SKILLED IMMIGRATION –POLICY REFORM CAN MAKEIT EASIER
83Source: TechNet / Zogby Analytics survey of 1,000 US adults, 3/13.MANY AMERICANS SUPPORT HIGH-SKILLEDIMMIGRATION & ARE CONCERNED ABOUTAMERICA’S ROLE AS TECH INNOVATOR• Support for High-Skilled Immigration – 63% of likelyAmerican voters surveyed believe America faces a shortage ofhigh-skilled workers and that immigration policy shouldencourage high-skilled workers to stay in America.• Worried about U.S. Innovation Status – ~43% of Americanssurveyed believe next major technology or innovation productwill come from China while only 30% believe this discovery willcome from America.
84VIEWS FROM TECHNOLOGY LEADERS…At a time when talent is the key to economic success, it makes no sense toeducate people in our universities, often subsidized by U.S. taxpayers, andthen insist that they return home…our immigration system makes it verydifficult for U.S. firms to hire high-skilled foreign workers. Last year ,at Microsoft, we were unable to obtain H-1B visas for over a third of ourforeign-born candidates.- Bill Gates (Founder and Chairman) MicrosoftWhy do we kick out the more than 40 percent of math and sciencegraduate students who are not U.S. citizens after educating them? Why dowe offer so few H-1B visas for talented specialists that the supply runs outwithin days of becoming available each year, even though we know eachof these jobs will create two or three more American jobs in return? Whydon’t we let entrepreneurs move here when they have what it takes to startcompanies that will create even more jobs?- Mark Zuckerberg (Founder and CEO) Facebook
85…VIEWS FROM TECHNOLOGY LEADERS…Improving and increasing high-skilled worker immigration to America willincrease jobs and help drive economic growth.- Meg Whitman (CEO) Hewlett-PackardIts critical that America attract the best and brightest minds from around theworld to drive the next wave of technological innovation and economicgrowth.- John Chambers (CEO) Cisco SystemsContinued technological innovation depends on continued growth in technicaltalent. As a country, we need to use all of the available tools to increase thepipeline of Science, Technology, Engineering, and Math (STEM)professionals - from encouraging young students to pursue degrees in mathand science to ensuring that our immigration policy enables us to tap theexpertise of highly-skilled workers from around the world.- Tom Leighton (Co-Founder / CEO) Akamai
86…VIEWS FROM TECHNOLOGY LEADERS…Immigration has always been a key to Americas future. We are more thana country founded by immigrants. We are a country whose competitivestrengths are entrepreneurship and immigration. When you consider howmany companies are founded by immigrants, you realize that immigrationis fundamental to any long-term economic growth and prosperity … Thehigh-skill immigration question is simple: Would you rather have moregreat technology companies here in the U.S. or abroad?- Reid Hoffman (Co-founder, Executive Chairman) LinkedIn(Partner) GreylockThe denial of U.S. visas has forced us to routinely apply for visas inCanada and Ireland … We prefer that talented workers be able to work inour American offices as it would be best for our company, people and thelocal economy.- Mark Pincus (Founder / CEO) &Colleen McCreary (Chief People Officer) Zynga
87…VIEWS FROM TECHNOLOGY LEADERS…The tech sector in the U.S. is creating more jobs than it can fill, given theshortage of American computer science graduates. If we don’t take steps as acountry to address immigration in the short run and improve education in thelong term, then inevitably these jobs will start to leave the United States andmove to other countries.- Brad Smith (General Counsel) MicrosoftAs someone who came to this country as a political refugee, working at acompany co-founded by an immigrant, I know first-hand how much the idea ofAmerica means to the world. The most talented people on the planet dream ofcoming here. Our laws, markets and educational system give us a unique andsustainable competitive advantage relative to other countries. But we will onlyrealize this advantage if we make it possible for people to stay, build greatbusinesses, and contribute to our economy. Immigration reform is essential toour future success, not just at Google, but as a nation.- Laszlo Bock (SVP People Operations) Google
88…VIEWS FROM TECHNOLOGY LEADERS…Our current immigration system is ridiculous - its disrespectful or even abusive toamazing immigrants who increasingly have other choices. These people are vital toour ability to create competitive businesses - which lead to jobs and prosperity - andwe should be fighting to get them here instead of making them confront abureaucratic and arbitrary system that might or might not let them in. And weshould be giving them incentives to stay, instead of making them worry as they buildtheir lives here that they might be kicked out.- Joe Lonsdale (Partner) Formation 8, (Co-Founder) Palantir TechnologiesWe need great engineers in order to build great companies. The current immigrationsystem not only prevents great engineers from working at companies that needthem, but also limits their ability to be entrepreneurs. In order to remain competitivein the global war for talent, we need a policy that enables the U.S. to both becompetitive and win.- Mike Abbott (General Partner) Kleiner Perkins(Former VP, Engineering) Twitter
89…VIEWS FROM TECHNOLOGY LEADERSI would argue why not raise the cap to 500,000? Why not 1 million? As long asthey are truly skilled, and there is real demand for their services by U.S.companies, why limit at all? Why not let the market decide how many areneeded?If the premise is that STEM jobs create more jobs, which there is plenty ofevidence for, then in my mind, the more the better. And there is no reason to"protect" U.S. employees because they will benefit from the additional jobopenings thanks to the growth which will result from the great talent we willattract … We see it every day in our companies - if they are able to get greattalent, they are more likely to succeed, grow and create more jobs directly andindirectly.- Oren Zeev (Founding Partner) Orens Capital
90A FIX MAY BE IN THE WORKS…NEXT STEPS = SENATE FLOORDEBATE IN JUNE + HOUSEDISCUSSION AND PROCESS (MAY BEMULTIPLE INDIVIDUAL BILLS INCOMING MONTHS) WITH PUSHTOWARDS CONFERENCE
91A LOOK AT KEY PROVISIONS IN THEIMMIGRATION BILL BEFORE THE SENATE• Exempt Ph.D.’s and STEM degree holders from U.S. universitiesfrom annual Green Card cap; also would exempt all familymembers of foreign workers.• Boost H-1B base to 115,000 initially, with higher levels in years inwhich demand exceeds supply; current exemption for master’sdegree holders increases to 25,000 from 20,000.• Makes it easier for H-1B holders to change jobs while keepingvisa status.• Sets rules to make sure H-1B holders aren’t displacing U.S.workers; requires U.S. employers to recruit U.S. workers.• Creates fee for each H-1B petition to be paid by employers;proceeds to fund STEM education and training.
93GROWTH IN PEOPLE+ JOBS + GDP + PRODUCTIVITY+ EDUCATION + CONFIDENCE= KEY TO USA’S SUCCESS
94[Immigration], I believe, is one of the most important sourcesof Americas greatness. We lead the world because, uniqueamong nations, we draw our people - our strength - from everycountry and every corner of the world. And by doing so wecontinuously renew and enrich our nation…Thanks to each wave of new arrivals to this land of opportunity,were a nation forever young, forever bursting with energy andnew ideas, and always on the cutting edge, always leading theworld to the next frontier. This quality is vital to our future as anation. If we ever closed the door to new Americans, ourleadership in the world would soon be lost.PRESIDENT RONALD REAGAN, 1989“”
95WHAT YOU CAN DO• With momentum for change building in Congress,we have a window of opportunity to enact truereforms that will grow the U.S. economy andcreate U.S. jobs.• You can help keep the focus on Congress to drivechange. Make sure your voice is heard.
96ACKNOWLEDGEMENTS• A lot of people helped pull this document together andhelped modify along the way.• We thank the engineers and tech industry leaders – H1-B+ green card holders + first generation Americans +American natives – that inspired us to push forward tocompile the thoughts.• Special thanks to Eric Savitz, Alix Burns, Mike Abbott,Juliet DeBaubigny, Fred Miller, Itamar Rosen, Greg Dingle,Jackson Gorham and John Maier.• Design by
97This report has been compiled for informational purposes only and should not to beconstrued as a solicitation or an offer to buy or sell securities in any entity.Contributors to the report cannot guarantee the accuracy or completeness of any of thedata (compiled from public sources believed to be reliable) and make no warranties(express, implied or statutory) as to the information in it.The information presented in this report does not necessarily reflect the views of KleinerPerkins Caufield & Byers (KPCB) or any of its associated management personnel,investment vehicles, investors, portfolio companies or any affiliates or associates of theforegoing.Subject to the Terms and Conditions of Use http://kpcb.com/terms_of_use applicable tothis Site, KPCB grants users of the Site a limited license to download this report and touse, reproduce and distribute the report, solely for non-commercial purposes.DISCLOSURE
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