Increasingly, Chinese Engineers in Silicon Valley Are Going Home. That’s Bad News for America.
I had an interesting conversation recently with a friend who is a software engineer at a top tech company here in San Francisco. He’s Chinese — he came to the US to attend graduate school for computer science at a well-known university, and stayed after graduation to join a top-tier company. Now he’s a senior engineer at a different top-tier firm, responsible for ensuring that key systems are running and building new products that have generated lots of money for the US economy.
What stuck me in talking to my friend is that something has changed rather dramatically recently for the Chinese immigrants who come to the US for computer science jobs. These jobs are some of the best-compensated and most important jobs in our economy. And for decades, the story for this particular group was that same as the rest of the immigrant tale. Basically, a one-way street of opportunity from the developing world to America.
But now the economics have changed. My friend described the choice facing these immigrants as follows: if they want to maximize the amount of money they earn in the short-term after graduation, they choose a job at a US company. Right out of school, most are hired into engineering individual contributor roles, where coding ability matters more than people skills.
However, as they think about entrepreneurial opportunities and getting promoted into people management, the preference shifts back to China. Managing a team or starting a company in the US means language and cultural barriers, and the Chinese startup scene is red hot. Why struggle to master English and learn new cultural norms so you can get a promotion when you could just move back home and earn the same or more?
There are two ways to look at this. The positive view is this is how efficient labor markets should work. Talent is compensated appropriately for what it is best at doing, and can freely flow between markets to optimize depending on personal preference. The existence of a relatively new and thriving Chinese startup scene simply creates more opportunity for talented Chinese tech workers.
But there is also a darker view as it relates to the American economy. The reason that the preference for individual contributor roles is in US companies is based on compensation. There are fewer local engineers to compete with in America than in China, so salaries are higher here as a result of the scarcity. So the optimal strategy for Chinese engineers is to come to the US and spend a few years earning big salaries at Google or Amazon or Apple, then move back to China to start their own companies.
Play this out into the future and you see a serious problem for America. Where once immigration enabled highly-motivated and highly-skilled workers to become part of the American dream full-time, we are now simply leasing the best talent as long as we can afford to pay them the most money. As soon as they have better opportunities elsewhere, they’ll leave. And increasingly, they are finding those opportunities back home.
This isn’t just a high-skill/high-tech problem either. Our economy is near full employment, and we need more motivated workers across all sectors of the economy. Immigrants are often the ones able to take the jobs most Americans either aren’t willing to do or aren’t willing to properly prepare for, whether that means bussing tables and cleaning hotel rooms, or spending years taking difficult engineering courses in college so you can write good code.
Many on both sides of the aisle in Congress agree on the need for more immigration. As Lindsey Graham (R-South Carolina) put it recently,
“The idea of cutting legal immigration in half and skewing the green cards to one area of the economy, I think, is bad for the economy … I want more legal immigration, not less.”
The truth is that immigrants come to America precisely because there is economic opportunity here. If we don’t have better opportunities than at home, they won’t come. The current administration’s xenophobic, racist and nonsensical approach to immigration policy only puts us in a worse position. Instead of welcoming badly needed workers into our economy, we are scaring them away with fear mongering and sometimes literally deporting them after decades of legal residence for no reason at all.
In addition to being deeply inhumane, this reduces the number of potential immigrants willing to take the leap and come here, which means we’ll simply have to pay more for the labor of the ones who do. That’s how economics works. This is deeply stupid to be doing with respect to America’s long-term economic prospects. If you want to see what happens to a previously-bright economy that closed its borders to immigrants to its detriment, take a look at Japan. It is a case study in economic stagnation and missed opportunity.
If we don’t change this, quickly, we will all watch as the American economy tumbles out of first place on the global stage, we lose our dominance in national security and our technological edge, and countries that actually welcome immigrants take our place.
I don’t think that is the future that any American wishes for.
