[Senate Hearing 113-101]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 113-101
 
         THE ROLE OF IMMIGRANTS IN AMERICA'S INNOVATION ECONOMY

=======================================================================


                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,

                      SCIENCE, AND TRANSPORTATION

                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 8, 2013

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation





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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

            JOHN D. ROCKEFELLER IV, West Virginia, Chairman
BARBARA BOXER, California            JOHN THUNE, South Dakota, Ranking
BILL NELSON, Florida                 ROGER F. WICKER, Mississippi
MARIA CANTWELL, Washington           ROY BLUNT, Missouri
FRANK R. LAUTENBERG, New Jersey      MARCO RUBIO, Florida
MARK PRYOR, Arkansas                 KELLY AYOTTE, New Hampshire
CLAIRE McCASKILL, Missouri           DEAN HELLER, Nevada
AMY KLOBUCHAR, Minnesota             DAN COATS, Indiana
MARK WARNER, Virginia                TIM SCOTT, South Carolina
MARK BEGICH, Alaska                  TED CRUZ, Texas
RICHARD BLUMENTHAL, Connecticut      DEB FISCHER, Nebraska
BRIAN SCHATZ, Hawaii                 RON JOHNSON, Wisconsin
WILLIAM COWAN, Massachusetts
                    Ellen L. Doneski, Staff Director
                   James Reid, Deputy Staff Director
                     John Williams, General Counsel
              David Schwietert, Republican Staff Director
              Nick Rossi, Republican Deputy Staff Director
   Rebecca Seidel, Republican General Counsel and Chief Investigator


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 8, 2013......................................     1
Statement of Senator Rockefeller.................................     1
    Prepared statement of Luis Arbulu............................    38
Statement of Senator Thune.......................................     4
Statement of Senator Heller......................................    28
Statement of Senator Rubio.......................................    30
Statement of Senator Klobuchar...................................    32
Statement of Senator Fischer.....................................    34
Statement of Senator Warner......................................    36
Statement of Senator Nelson......................................    39

                               Witnesses

Ruchi Sanghvi....................................................     5
    Prepared statement...........................................     7
Jeffrey J. Bussgang, General Partner, Flybridge Capital, Senior 
  Lecturer, Harvard Business School..............................     9
    Prepared statement...........................................    10
Gwenne A. Henricks, Chief Technology Officer and Vice President, 
  Product Development and Global Technology, Caterpillar, Inc....    12
    Prepared statement...........................................    14
Stuart Anderson, Executive Director, National Foundation for 
  American Policy................................................    16
    Prepared statement...........................................    18

                                Appendix

Response to written questions submitted by Hon. Frank R. 
  Lautenberg to:
    Ruchi Sanghvi................................................    49
    Jeffrey J. Bussgang..........................................    50
    Gwenne A. Henricks...........................................    50
    Stuart Anderson..............................................    52


         THE ROLE OF IMMIGRANTS IN AMERICA'S INNOVATION ECONOMY

                              ----------                              


                         WEDNESDAY, MAY 8, 2013

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:35 p.m., in 
room SR-253, Russell Senate Office Building, Hon. John D. 
Rockefeller IV, Chairman of the Committee, presiding.

       OPENING STATEMENT OF HON. JOHN D. ROCKEFELLER IV, 
                U.S. SENATOR FROM WEST VIRGINIA

    The Chairman. We are starting because it is time to start. 
There is still a vote completing itself having to do with 
oceans, which is most of the Earth. So members will come by.
    The United States has always been and still is a place that 
attracts talented people from all across the country and all 
around the world, and they are searching for new opportunities. 
They view our country as a place that values and rewards hard 
work. They are attracted to our vibrant, open economy, and they 
admire our universities and research institutions that lead the 
world in technological and scientific innovation. Now, the 
question is, is that a statement about today or a statement 
about a couple of years ago? And we can talk about that.
    They are often top students in their home countries and 
would have plenty of career opportunities if they decided to 
stay there. But they want a bigger challenge and they want a 
bigger stage, so they come here to the United States.
    Tens of thousands of high-skilled immigrants come to this 
country every year to study, work, or start a business. We 
should welcome these people because they make our country and 
our economy stronger. They create American jobs.
    The role of immigrants in the phenomenal growth of the U.S. 
technology industry over the past 2 decades is very well-
documented and stunning, is it not? Absolutely stunning. Many 
of our largest and most successful tech companies, like Intel, 
eBay, Yahoo, and Google were founded or cofounded by foreign-
born immigrants. In fact, from 1995 to 2005, foreign-born 
entrepreneurs helped found 25 percent of all new high-tech 
companies in America.
    But the contributions of high-skilled immigrant workers to 
economic success go way beyond Silicon Valley. It even reaches 
West Virginia. We are a relatively small state. We are not a 
big, urban state like South Dakota, but we do our best.
    [Laughter.]
    The Chairman. And we have really a lot of companies that 
have people who have worked their way up, who have come from 
overseas and decided not to return home but to stay.
    But the contributions of high-skilled immigrant workers to 
our economic success go beyond, as I indicated. As our 
witnesses are going to tell us today, companies in every region 
of our country--large, midsize, and small--benefit from their 
talents and skills.
    My home state of West Virginia has benefited from the high-
quality foreign-trained doctors who practice in underserved 
areas. And this is the subject of some soreness to me, on the 
side of those doctors who come here and stay. And I think that 
probably South Dakota is more open to new people than West 
Virginia was. I was new to West Virginia when I went there, and 
it took me 12 years to not be a carpetbagger, 12 long years.
    [Laughter.]
    The Chairman. I mean, that is just the nature, Scotch-
Irish.
    But these foreign-trained doctors--and they practice in 
areas where other doctors will not practice or do not practice. 
Therefore, I value them incredibly.
    So when a West Virginian comments that their pronunciation 
of a word might be different, to me it makes absolutely no 
difference whatsoever. For some of them, it creates a pattern 
which makes it harder for them to go back, which is so silly, 
is it not? It is so silly. And it is part of American 
isolationism, and it is not healthy. And it is what we are 
going to try and change in this immigration bill, or at least 
start to change.
    We benefit from foreign professionals who do some 
specialized advanced manufacturing jobs in our states, and I 
have a whole slew of examples.
    Our witnesses are also going to tell us our immigration 
laws sometimes make our country a very much less welcoming 
place for high-skilled immigrants than it should be. High 
demand for H-1B visas and long waiting times for green cards 
make it more difficult for talented foreign students to work, 
to start a business here after they finish their degrees.
    Unfortunately, some students give up and go home. Now, 
there are two arguments to that. Part of me says that is good 
because when they go back, they are needed. They are needed 
here; they are needed there. So let's say I am Korean or I am 
Pakistani or whatever. If they come and they get their degrees 
here and stay here, I am very happy about that, but, quite 
frankly, I am also happy if they go home, you know, but I don't 
want to push them home. I want to make it a choice that they 
can make on their own.
    So, you know, Canada and Australia, they are actively 
recruiting. We seem to be making things harder. So that is the 
reason that my learned colleague, Senator Thune, and I are 
having this hearing.
    As the Senate begins debating immigration reform, which I 
have hope for, I have real hope for, I have called this 
hearing--we have called this hearing to examine what changes 
are needed in our laws to maintain our ability to attract the 
best and the brightest to the United States.
    This issue is part of a bigger challenge that we spend a 
lot of time discussing in this committee, and that is the 
challenge of maintaining our country's position as a world 
leader in technology and scientific innovation. To maintain our 
lead, we have to be producing enough workers with the skills 
and training to do the jobs that our 21st century innovation 
economy is creating.
    One of the reasons American companies have foreign 
engineers and scientists is because our U.S. education system 
is not even coming close to producing enough of them. In fact, 
I think on a net basis we may be backsliding. We talk a lot 
about it, even give it a certain amount of money, and of course 
the states do. But it is just woefully inadequate. It is 
woefully inadequate.
    Leaders in government, academia, and the private sector 
have all identified this issue as one of the keys to our long-
term economic success. We have to do a better job encouraging 
our children to pursue STEM subjects. Now, how do you do that?
    I have had so many roundtables in West Virginia with STEM 
teachers. I remember one woman had been a coalminer, and she 
had stopped that and she had gone into math teaching, where she 
was an absolute genius. And, of course, to be a coalminer, you 
have to have all kinds of technical skills anyway, but she just 
brought an awful lot to the table.
    But science, technology, engineering, and mathematics, 
those are the most important things we can study, other than 
how to be nice to each other in the classroom and not shoot.
    A few years ago, President Obama commented that our economy 
would be in better shape if fewer young people aspired to be 
investment bankers and more, instead, became engineers, 
scientists, doctors, and teachers. And, of course, that is 
true, but try to sell that to somebody who has college and 
graduate degree loans to pay off.
    He received some flak for this comment, but I think he had 
it exactly right. The industries that are creating the high-
paid, rewarding jobs of the 21st century are the science and 
technology sectors. We have to do a better job getting our 
students excited about these subjects, both at the K-through-12 
and the college level.
    We have a long way to go in this country to reach the point 
where we celebrate the accomplishments of science fair winners 
in the same way that we celebrate sports champions. I don't 
know much really to celebrate about sports champions, except 
for the 4\1/2\ years that they survive if they play football. 
And then they have to rely on what they learned in school, 
which would be very little, and so the rest of their life is 
sort of a big downer. On the other hand, you get into STEM and 
your life has no limits.
    To keep our economy and our country strong in the coming 
decades, we are going to need a lot of well-educated, tech- and 
science-savvy workers and entrepreneurs. That is obvious. They 
are the people who are going to create the good American jobs 
of the future. And whether these people are American-born or 
come to this country as teenagers or as adults, we need to give 
them all the opportunity to contribute to the success and 
prosperity of our country.
    And that concludes my remarks.
    The distinguished Ranking Member, Senator Thune.

                 STATEMENT OF HON. JOHN THUNE, 
                 U.S. SENATOR FROM SOUTH DAKOTA

    Senator Thune. Chairman Rockefeller, thank you for holding 
today's hearing on the role of immigrants in America's 
innovation economy.
    And I want to extend a warm welcome to our witnesses, some 
of whom, I understand, are testifying before Congress for the 
first time today. So welcome. It is nice to have you all here.
    Immigrants have been an undeniably important part of our 
nation's economic success story, especially in the technology 
industry. In fact, according to a study by the Kauffman 
Foundation, over 20 percent of high-tech companies in the 
United States have been founded by immigrants. Immigrants 
created revolutionary companies like Google, Intel, and eBay. 
It would be hard to imagine modern American life without these 
innovative companies.
    It is worrying, however, that for the first time in decades 
the growth rate of immigrant-founded startups nationwide has 
stagnated, perhaps even declined.
    Our nation is currently engaged in a global battle for jobs 
and economic prosperity. Many of our foreign economic 
competitors are taking aggressive action to lure the brightest 
minds, including scores, by the way, educated here in the 
United States, to their countries, not just for the talent that 
they bring individually but for the jobs that they help to 
create and sustain.
    That is why it is more important than ever before that we 
put in place policies that will keep the United States in first 
place as the world's top economy. We can win this battle for 
jobs and talent by ensuring that the United States continues to 
be the innovation capital of the world.
    We should have a competitive tax policy that encourages, 
rather than discourages, investment and growth. We must 
continue to identify new export markets and fight to increase 
market access and reduce tariffs. And we need to examine our 
regulatory framework so that job creators have regulatory 
certainty and are not unnecessarily burdened.
    In addition to these goals, our country needs an updated 
high skills immigration policy that allows the brightest minds 
to come to our country and become entrepreneurs. The fact that 
the Commerce Committee is holding this hearing reflects the 
fact that immigration policy is a multifaceted issue and that 
we must consider the issue from all perspectives if we are 
going to get the policy right.
    Our panel today is composed of people from a variety of 
backgrounds and demonstrates the struggle of the private sector 
to obtain and keep talented people. I look forward to hearing 
about the experiences and the challenges high-skill immigrants 
face as they seek to found companies, create jobs, and help 
grow our nation's economy.
    Before I close, I wanted to take a moment to mention a 
proposal to expand high skills immigration known as the 
Immigration Innovation Act, otherwise known as the I-Squared 
Act, a bill that was introduced by Senator Orrin Hatch. I am a 
cosponsor of this important bill along with many other members 
of this committee.
    This bipartisan legislation seeks to change the H-1B visa 
program by, among other things, increasing the annual 
allocation of H-1B visas from 65,000 to 115,000. And I might 
add that I think it should go much higher than that. The bill 
also includes a novel market-based escalator that allows the 
supply of H-1B visas to increase or decrease to adequately meet 
the market's demand.
    I believe the I-Squared Act addresses the immediate need to 
provide American employers with greater access to high-skilled 
workers and puts in place a sustainable long-term policy that 
should help us avoid repeated short-term fixes.
    Of course, today's hearing occurs in the shadow of a much 
larger debate about reform of our immigration system and the 
comprehensive proposal put forward by eight of our colleagues, 
including Senator Rubio, who is a member of this committee. As 
the Judiciary Committee prepares the markup of that legislation 
and as we all look ahead to likely floor consideration, I hope 
our committee's hearing will inform key aspects of the ongoing 
immigration debate.
    Again, Mr. Chairman, I want to thank you and I want to 
thank our witnesses for joining us today.
    I commend each of you for engaging with this committee on a 
critical issue to our nation's future, and I look forward to 
hearing your testimony.
    Thank you.
    The Chairman. Thank you, Senator Thune.
    So now we will have our panel, and we will start with Ms. 
Ruchi Sanghvi.
    How did I do?
    Ms. Sanghvi. Pretty good.
    The Chairman. That means I didn't do very well.
    [Laughter.]
    The Chairman. Anyway.

                   STATEMENT OF RUCHI SANGHVI

    Ms. Sanghvi. Thank you. Good afternoon, Chairman 
Rockefeller, Ranking Member Thune, and members of the 
Committee. My name is Ruchi Sanghvi, and I am honored to be 
here today. My testimony today is my own personal story, and I 
am here in my own capacity and not on behalf of my employer.
    I am grateful for the opportunities I could have only had 
here in the United States, but the immigration system that I 
have experienced leaves much room for improvement. For that 
reason, I want to begin by thanking the senators for putting 
forward a comprehensive, bipartisan plan. I know from personal 
experience that this is a deeply human issue and hope that 
Congress passes a comprehensive bill this year.
    I came to America as a starry-eyed college student and have 
been on a roller coaster ride ever since then. I have worked at 
companies like Facebook, Dropbox, and even started my own 
company called Cove. I am privileged to work with people I 
respect and learn from every day. I met my husband here in the 
U.S. and have friends who are like family.
    I want to give back to the community that I have come to 
know and love in a meaningful way, but it has been difficult 
every step of the way. I have been an immigrant for the last 12 
years. I have had all kinds of visas, from F-1s, OPTs, CPTs, H-
1Bs, and now, finally, a green card. I had to overcome many 
roadblocks to get to where I am today, roadblocks that I hope 
can be addressed in the new legislation.
    I was raised in Pune, India, and in the fall of 2000 
traveled to Pittsburgh to study at Carnegie Mellon University. 
After graduating from college, I got a job doing math modeling 
at a bank in New York City. But when I arrived in New York 
City, I panicked. I didn't want to work on Wall Street like my 
other friends from college.
    Most people in my position would have quit their job and 
looked for a new one, but I couldn't because I was on a visa. I 
had to find a new job before I could quit my old one. Choosing 
your profession, your place of work, and where you want to live 
all seem like fundamental choices everyone should have, but if 
you are an immigrant on a visa, it is a hard, stressful 
decision fraught with many uncertainties.
    When I first started at Facebook back in 2005, I was the 
first female engineer. I was also one of the first employees on 
a visa, and it took us a few months to understand how to 
transfer my H-1B. I created and built many important features, 
like News Feed, Facebook Platform, Facebook Connect, and 
others, but I also spent a lot of time finding talent, 
interviewing people, and building out the Facebook team.
    Talent is the lifeblood of most startups. Startups create 
jobs and then compete for talent to fill those jobs. Much like 
me, there were many talented individuals educated at top U.S. 
universities who were immigrants and would have been able to 
contribute significantly at Facebook.
    The H-1B application process is a black box to most people 
and most startups. Very few people on an H-1B are willing to 
risk joining a startup, and even fewer startups are willing to 
invest the time and energy to interview candidates on a visa.
    So after a few years at Facebook, I realized I wanted to 
start my own company, but I had to have my green card before I 
could leave Facebook to start a company. All I wanted was 
permission to follow my passion, to follow that American dream, 
but yet again I was faced with roadblocks even before I could 
take that first step.
    So in early 2011, I finally started my own company called 
Cove. We needed engineering talent and were competing with the 
likes of Google, Apple, and Facebook. I wasn't going to turn 
away anyone who was interested in working at Cove, even those 
on a visa.
    I consulted three immigration lawyers, and they gave me a 
two-page list of requirements that would make my case a strong 
one. So instead of spending time building a product and the 
company, I was checking off a list of requirements to secure H-
1Bs. The process took 6 months--6 months just to transfer a 
visa, not get a new visa, but transfer a visa to my company.
    My story is not a sad one. It is an American story, one of 
hope and hard work. And I am hopeful that if we are to be able 
to fix the immigration system, there will be many more like me 
wanting to create value, wanting to create jobs, and give back 
to the community.
    The fact is that the current system results in more than 40 
percent of math and science graduates leaving the United States 
after we have educated them. The economic reality is that 40 
percent of Fortune 500 companies are started by immigrants and 
their children. Our economy, based on knowledge and ideas, can 
only grow if we add more talented, skilled, and hardworking 
people to it.
    Thank you again for the opportunity and privilege to share 
my story with this committee.
    [The prepared statement of Ms. Sanghvi follows:]

                  Prepared Statement of Ruchi Sanghvi
    Good afternoon Chairman Rockefeller, Ranking Member Thune and 
Members of the Committee. My name is Ruchi Sanghvi and I am honored to 
be here today as a representative story for the hopes and dreams of 
millions of people wanting to have the right and privilege of living 
and working in the US. My testimony today is my own personal story; and 
I am here in my own capacity and not on behalf of my employer.
    I made it through the gauntlet of today's immigration system. For 
that, I am grateful. I am also particularly grateful for the 
opportunities that I could have only had here in the United States. But 
the system that I have experienced leaves much room for improvement. 
For that reason, I want to begin by thanking the Senators in the Gang 
of 8 for putting forward a comprehensive, bipartisan plan that aims to 
fix our nation's archaic and broken immigration system. It's easy to 
get lost in the numbers, but I know from personal experience that this 
is a deeply human issue--our current system isn't working for the 
economy or for families in the United States. I hope that Congress 
passes a comprehensive immigration bill this year so that President 
Obama can sign it into law.
    I came to America in 2000 as an impressionable and excited college 
student at Carnegie Mellon University and have been on a roller coaster 
ride ever since then. I am proud to say I was the first female engineer 
hired at Facebook, and later started my own company, Cove, which was 
acquired by Dropbox, where I work today. I'm privileged to work with 
talented people I respect and learn from every day. I met my husband 
here in the U.S. and have friends who are like family. I want to give 
back to the community I've come to know and love in a meaningful way, 
and I intend to continue to do so in the years ahead. I am tremendously 
thankful for the opportunities that have been afforded me.
    My path, however, has not been easy. I've been an immigrant for the 
past 12 years. Being an immigrant not only dictates your professional 
life but your personal life as well. I've had all kinds of visas from 
F1s, OPTs, CPTs, H1-Bs, and now finally a green card. Things that most 
people take for granted--such as switching jobs, following your dreams 
to start your own business, investing in relationships or building a 
home--are truly a challenge because of the great uncertainty 
surrounding your long-term status.
    Today, I want to talk about some of the roadblocks I had to 
overcome to get to where I am today--roadblocks that I hope can be 
addressed in new legislation.
    I was raised in Pune, India and, in the fall of 2000, travelled to 
Pittsburgh to study Computer Engineering at Carnegie Mellon University 
(CMU). I chose CMU because it was one of the premier institutions in 
the world for Computer Engineering and Computer Science. After 
graduating from college, I got a job doing math modeling for a 
derivatives trading group at a bank in NYC. But when I arrived in New 
York City, I panicked when I realized I didn't want to work on Wall 
Street like many of my other college friends. Living in the U.S. on a 
visa meant I had to search for and secure another opportunity before I 
could leave the job in New York--a process already stressful enough for 
any new graduate.
    Choosing your profession, your place of work, and where you want to 
live all seem like fundamental choices everyone should be able to make. 
But if you are an immigrant on a visa, it's a hard, stressful decision 
fraught with many uncertainties.
    A few months after arriving in Silicon Valley and starting work at 
Oracle, a friend of mine told me about a recently launched startup 
called Facebook. Out of curiosity, I went to check out their offices 
and, near the entrance, they had a chalkboard with three words: 
``Looking for Engineers.'' I was blown away by the energy and intensity 
of the people working there. On a whim, I decided to apply and got the 
job--but as I was one of the first Facebook employees on a visa, it 
took us a few months to understand how to transfer the H1-B over from 
my previous employer.
    As all entrepreneurs know, building the employee base is the 
lifeblood for any startup. Startups create jobs and then compete for 
talent to fill those jobs. This was not any different at Facebook--we 
dedicated a large amount of time recruiting and attracting the world's 
best engineers, designers and product managers to come work at the 
company. I personally spent a lot of time finding, interviewing, 
evaluating and expanding the Facebook team.
    Much like me, there were talented individuals educated at top U.S. 
universities who clearly would have been able to contribute 
significantly in our workplace but for the fact that the combination of 
uncertainty, risk and time required to secure a visa meant that they 
shied away from startups. The H1-B visa application and transfer 
process is a black box to many talented immigrants and startup 
companies--however bright and talented, very few workers on an H1-B are 
willing to risk joining a startup and even fewer startups are willing 
to invest the time and energy interviewing applicants on a visa.
    After a few years at Facebook, I realized I wanted to be an 
entrepreneur. I really wanted to start my own company but couldn't do 
it on my H1-B status. I had to wait for my green card before doing so. 
All I wanted was permission to follow my passions, to follow the 
American Dream, but yet again I faced roadblocks because of a broken 
immigration system.
    In early 2011, I finally started my own company Cove. We needed 
engineering talent and were competing with the likes of Google, Apple, 
and Facebook. I wasn't going to turn away anyone who was interested in 
working at Cove, including those on a work permit. I now was in the 
unique position of applying for H1Bs and work permits for my employees. 
I consulted three immigration lawyers and they gave me a two page list 
of requirements that would help increase the likelihood of securing the 
appropriate visa for an employee interested in working at my startup. 
Instead of spending time building the product and the company, I was 
trying to check off the list of requirements to secure the H1-Bs. 
Because we didn't have millions of users or millions in funding, I had 
to apply for bank loans, look for office space and ask prominent VCs 
and CEOs for letters of recommendation just to prove we were a 
legitimate startup. The process to apply for a ``transfer'' alone took 
6 months.
    As a student, employee, entrepreneur and wife, I've seen firsthand 
how the broken U.S. immigration system makes it more difficult at every 
turn for talented, law-abiding people to build their lives in the U.S., 
serve their communities, and create jobs here.
    My tale is not a sad one; it's one of hard work, hope and the 
opportunities that America offers. I have been able to achieve all that 
I have despite the immigration system, not because of it. I'm hopeful 
that if we are to be able to fix the immigration system, there will 
undoubtedly be many more like me wanting to create value, wanting to 
create jobs and give back to the community. The fact is that the 
current system results in more than 40 percent of math and science 
graduate students leaving the United States after educating them. The 
economic reality is that 40 percent of Fortune 500 companies are 
started by immigrants and their children. And that should not be 
surprising; the very idea of leaving your home for a new land to pursue 
a better life is inherently a risky and entrepreneurial activity. A 
person with this risk-taking mindset is already predisposed to take 
great chances to do great things. If we made it easier for the world's 
talent to stay here, we would be creating more opportunities for 
everyone. Today's economy based on knowledge and ideas can only grow if 
we add more talented, skilled and hardworking people to it.
    Thank you again for the opportunity and privilege to share my story 
with the Committee. I hope the Congress will find a way to pass 
comprehensive immigration reform in the near term as the long-term 
future of our economy depends upon it.

    The Chairman. Thank you very much. Is it not true that when 
you went to Facebook, there was a sign that said, ``We need 
engineers''?
    Ms. Sanghvi. It is true.
    The Chairman. And you just walked right in and got a job.
    Ms. Sanghvi. I walked right in, interviewed, and then got a 
job.
    [Laughter.]
    The Chairman. Mr. Jeffrey Bussgang, who is General Partner, 
Flybridge Capital Partners, and a senior lecturer of business 
administration at the Harvard Business School.
    Please.

       STATEMENT OF JEFFREY J. BUSSGANG, GENERAL PARTNER,

              FLYBRIDGE CAPITAL, SENIOR LECTURER,

                    HARVARD BUSINESS SCHOOL

    Mr. Bussgang. Thank you, Chairman Rockefeller and Ranking 
Member Thune and other members of the Committee, for the 
opportunity to testify here today.
    I want to especially thank the Senators who have worked on 
this important issue over the years, including the work that 
went into predecessor efforts, such as the Startup Visa bill, 
led by Senator Warner, and the I-Squared Act, led by Senator 
Thune, and the current bill being debated, led by Senator Rubio 
and the other members of the Gang of Eight. The proposed 
bipartisan legislation is a strong start, including expanding 
H-1Bs and creating the Invest Visa program as well as a path to 
citizenship.
    I am a former entrepreneur turned venture capitalist and 
also teach entrepreneurship at Harvard Business School. My 
firm, Flybridge Capital, has offices in Boston and New York and 
invests in early stage technology startups around the country.
    It is no surprise that I am passionate about this topic. My 
father was born in pre-war Poland and survived the Holocaust as 
a refugee and soldier. When he arrived in the U.S. after the 
war, he liked to say that he spoke five languages but all with 
an accent. When he came to America, he attended MIT and then 
earned his Ph.D. at Harvard and then himself became an 
entrepreneur, creating a small business that eventually 
employed over 100 people.
    In my own career, I have watched our dysfunctional 
immigration system turn away the best and brightest from 
creating jobs and wealth in America. I won't dwell on the 
aggregate statistics because you all already know them, but 
instead I would like to share a few examples of how our broken 
immigration system is working against our national economic 
interests. By humanizing this issue, I hope to convey why it is 
that in the global war for talent America's immigration policy 
has become a laughingstock--except the stakes are so high, it 
is no laughing matter.
    One of my star students at Harvard Business School, T.T. 
Nguyen Duc, grew up in Vietnam and came to America to attend 
Stanford University. She worked at a prestigious consulting 
firm before enrolling at Harvard to earn her MBA. For the last 
2 years, T.T. has been working on starting an online education 
company that will dramatically decrease the cost and increase 
the access of a quality high school education. Naturally, she 
wants to start the company here in the U.S.
    A few weeks ago, T.T. came to me very upset. She has 
learned that once she graduates next month, she has to either 
leave the country within 60 days or find a job with someone 
that will sponsor her H-1B visa. As you know, the odds of this 
are long. This year, the H-1B cap sold out very quickly. It 
appears T.T. will have to abandon her dreams of starting a new 
company and instead pursue it in another country that will 
welcome her instead.
    Another example is Sravish Sridhar. Sravish came to America 
from India over 15 years ago to attend the University of Texas 
and earned a degree in computer science. He cofounded a 
software company that raised $30 million in venture capital and 
sold it successfully. A few years ago, he founded another 
software company in Boston, has raised $7 million, and employs 
20 people. Last week, Sravish was named the Rising Entrepreneur 
of the Year by a local business association.
    He applied for his residency under the EB-3 category in 
2003. Even though it has been 10 years, he is still not yet 
eligible to get his green card because of the large backlog of 
visas. When his wife earns her Ph.D. at Harvard in a few 
months, she, too, will have no permanent status. Thus, Sravish 
may be forced to leave America and move his company with him.
    Another entrepreneur I know--I will call her Jackie--is 
Canadian. She was an executive in two successful startups in 
the U.S. Her success allowed her to cofound her own company and 
also become an angel investor in other startups. She has 
provided angel capital and mentorship to over a dozen 
entrepreneurs. She was recently named by Inc. magazine among 
the top 10 women in technology.
    Jackie is here on an H-1B visa. Due to a technicality, the 
visa didn't identify her as the president of her own company 
but rather as a consultant. When she returned from Canada last 
fall from a business trip, Jackie was detained at Boston's 
Logan Airport. After some rough questioning, she was handcuffed 
and taken to an immigration prison. She stayed in prison for 2 
nights before being able to clarify the minor error and secure 
her release.
    Each of these three stories has a set of common themes: Our 
outdated immigration system has unintended consequences. The 
world's best and brightest are clamoring to attend our world-
class universities, integrate with our superior entrepreneurial 
ecosystem, access our capital, and build their companies and do 
great things. They recognize that the U.S. is the absolute best 
place in the world to found and build a company.
    In order for us to continue to be the place where the 
world's most creative, brilliant entrepreneurs come to build 
the next eBay, the next Intel, and the next Google, our 
immigration system needs to change. I fear it may be too late 
for T.T., Sravish, and Jackie, but, with your leadership, it 
won't be too late for the millions like them who are eager to 
follow in their footsteps.
    Thank you again for the opportunity. I look forward to your 
questions.
    [The prepared statement of Mr. Bussgang follows:]

 Prepared Statement of Jeffrey J. Bussgang, General Partner, Flybridge 
           Capital, Senior Lecturer, Harvard Business School
    Thank you, Chairman Rockefeller, ranking member Thune and other 
members of the Committee for the opportunity to testify here today. I 
want to especially thank the senators who have worked on this important 
issue over the years, including the work that went into predecessor 
efforts, such as the Startup Visa bill led by Senator Warner, and the 
current bill being debated, led by Senator Rubio and the other members 
of the ``Gang of Eight''. The bipartisan legislation being worked on, 
which includes the Invest Visa program as well as a path to 
citizenship, is a strong start.
    My name is Jeff Bussgang. I am a former entrepreneur turned venture 
capitalist and also teach entrepreneurship at Harvard Business School. 
My firm, Flybridge Capital, has offices in Boston and New York City and 
invests in early-stage, technology start-ups around the country. We 
have invested in over 70 companies in our history and our portfolio 
companies employ over 3,300 people.
    It is no surprise that I am passionate about the issue of 
immigration. My father was born in pre-War Poland and survived the 
Holocaust as a refugee and soldier. When he arrived in the United 
States after the war, he liked to say he spoke 5 languages, but all 
with an accent. When he came to America, he attended MIT, earned his 
PhD at Harvard and then himself became an entrepreneur, creating a 
small business that worked closely with the Department of Defense on 
major satellite communications and missile defense systems, employing 
over 100 people.
    In my own role as an entrepreneur, venture capitalist and business 
school professor, I have watched our dysfunctional immigration system 
turn away the best and brightest from creating jobs and wealth in 
America. I won't dwell on the aggregate statistics--that 40 percent of 
all Fortune 500 companies were founded by an immigrant or the child of 
an immigrant, that 76 percent of patents issued to our top 10 
university systems had an immigrant inventor and that in many of the 
high technology sectors that I operate and invest in, the unemployment 
rate is effectively below zero due to a lack of qualified technology 
workers, choking off further growth and opportunity. But you all 
already know all this.
    Instead, I'd like to share with you a few specific examples of how 
our broken immigration system is working against our national economic 
interests. By humanizing this issue, I hope to convey why it is that in 
the global war for talent, America's immigration policies have become a 
laughingstock. Except the stakes are so high, there's nothing funny 
about it.
    One of my students at Harvard Business School, T.T. Nguyen Duc, 
grew up in Vietnam and came to America to attend Stanford University on 
a full, merit-based scholarship. She worked at a prestigious management 
consulting firm before enrolling at Harvard to earn her MBA. T.T. took 
my entrepreneurship class and was one of my star students. For the last 
two years, she has been working on starting an online education company 
that will dramatically decrease the cost, and increase the access, of a 
quality high school education--an issue of tremendous importance to all 
American families. Naturally, she wants to start the company here in 
the US, because she knows that this is the best place in the world to 
finance and build an entrepreneurial company. A few weeks ago, T.T. 
came to me very upset. She has learned that once she graduates next 
month, she has to either leave the country within 60 days or find a job 
with someone that will sponsor her H-1B visa. As you know, the odds of 
this are long. This year, the H-1B cap was ``sold out'' within a week. 
It appears T.T. will have to abandon her startup dream, or pursue it in 
another country that will welcome her instead.
    Another example: Sravish Sridhar came to America from India over 15 
years ago to attend the University of Texas in Austin and earned a 
degree in computer science. He co-founded a software company in Texas 
that raised $30 million in venture capital and employed 120. After 
selling that firm successfully a few years ago, he founded another 
software company in Boston and has raised $7 million and employs over 
20. Last week, Sravish was named the Rising Entrepreneur of the Year by 
a local business association. Unfortunately, Sravish may be forced to 
leave America and move his business overseas. He applied for his 
permanent residency (``Green Card''), under the EB-3 category in 2003. 
Even though it has been 10 years, he is still not yet eligible to get 
his green card because of the large backlog of visas. When his wife 
earns her PhD at Harvard in a few months, she will have no permanent 
status. Our system should be rewarding the Sridhars and their families 
for building their companies in America, not chasing them away.
    Another entrepreneur I know, I will call her Jackie as she prefers 
her story not be public, is Canadian. She was an executive in two 
startups that raised venture capital and sold successfully. Her success 
allowed her to cofound her own company and also become an angel 
investor in other startups. She has provided angel investment and 
mentorship to over a dozen entrepreneurs. Her own company has raised 
$12 million in venture capital. Jackie was recently named a top 10 
women to watch in technology by Inc Magazine and one of the most 
powerful women in advertising by another magazine. She is here on an 
H1-B visa. Due to a technicality, the visa didn't identify her as the 
president of her own company, but rather as a consultant. When she 
returned from Canada last fall from a business trip, she was detained 
at Boston's Logan Airport. After some rough questioning, she was 
handcuffed and taken to an immigration prison. She stayed in prison for 
two nights before being able to secure her release.
    Each of these three stories has a set of common themes. Our 
outdated immigration system has unintended consequences. The world's 
best and brightest are clamoring to attend our world-class universities 
and access our superior entrepreneurial ecosystem. They want to 
integrate with our community and access our capital and knowhow to help 
build their companies. They recognize that the United States of America 
is the absolute best place in the world to found and build a company. 
In order for us to continue to be the place where the world's most 
creative, brilliant entrepreneurs come to build the next eBay, Google 
and Intel--each of which was co-founded by an immigrant entrepreneur--
our immigration system needs to change. I fear it may be too late for 
T.T., Sravish and Jackie, but with your leadership, it won't be too 
late for the millions like them that are eager to follow in their 
pioneering footsteps.
    Thank you again for the opportunity. I look forward to your 
questions.

    The Chairman. Thank you for your excellent testimony.
    Ms. Gwenne Henricks?
    And I am very happy about you because you don't come from 
the Silicon Valley and you don't come from Boston and you don't 
come from New York. You come from Mossville, Illinois, which is 
the home of Caterpillar, which has, I think, something like 
10,000 engineers?
    Ms. Henricks. That is right.
    The Chairman. So, I mean, so there it is, right in the 
middle of the country.
    Anyway, you are the Chief Technology Officer and Vice 
President of Product Development and Global Technology. We are 
glad you are here.

 STATEMENT OF GWENNE A. HENRICKS, CHIEF TECHNOLOGY OFFICER AND 
  VICE PRESIDENT, PRODUCT DEVELOPMENT AND GLOBAL TECHNOLOGY, 
                       CATERPILLAR, INC.

    Ms. Henricks. Thank you. Good afternoon, Chairman 
Rockefeller, Ranking Member Thune, and members of the Senate 
Commerce Committee. Thank you for holding this important 
hearing.
    I am Caterpillar's Chief Technology Officer and President 
of Product Development and Global Technology. And Caterpillar's 
world headquarters are located in Peoria, Illinois. We employ 
more than 132,000 people worldwide, and we distribute our 
products to more than 180 countries around the world.
    In my position, I oversee global innovation. And when you 
look at our big, yellow machinery, you may not think of us as 
high-tech, but I assure you we are. We currently employ more 
than 10,000 engineers and scientists and technologists all 
around the world. Last year, we filed nearly 1,100 new patent 
applications and we invested $2.4 billion on research and 
development. Today, our machines are powered as much by 
software as they are by fuel.
    Our competition is global, and to maintain our competitive 
advantage, we need access to the world's best talent. And that 
includes a sustainable pipeline of workers in the fields of 
science, technology, engineering, and math, or STEM. 
Caterpillar has a long history of working to increase the 
supply of skilled STEM talent in the U.S. However, we still 
fall short of meeting our needs.
    And that is where our immigration system comes into play. 
Of course, high-skilled immigration reform will benefit Silicon 
Valley-type companies, but it will also benefit Midwestern 
manufacturers like Caterpillar. Today, we have more than 1,400 
employees working in the U.S. on non-immigrant visas and an 
additional 300 employees who have obtained their green card 
through Caterpillar. The vast majority of these employees are 
working in STEM fields.
    However, our current system for high-skilled immigration is 
broken. From the cap on H-1B visas to the backlog of green card 
applications, there is a lot of room for improvement. As you 
know, H-1B visas are the primary way a company like ours can 
hire foreign workers. And as you are also aware, the cap on H-
1Bs was filled immediately this year. Accordingly, we will not 
be able to recruit H-1B employees again until October 1st, 
2014. That is 18 months from now.
    This cap has not been permanently increased in more than 20 
years. However, technology and innovation has dramatically 
changed since then. The current cap and the system for 
petitioning for H-1B visas is outdated. Not only would we like 
to see the overall cap increased significantly, but we would 
like to see the number of H-1Bs allotted each year increase to 
accommodate demand.
    After we hire a foreign national and sponsor his or her H-
1B visa, we often want them to stay at Caterpillar as a 
permanent employee. In that case, we sponsor the individual for 
a green card.
    As you know, many foreign nationals receive advanced STEM 
degrees from American universities, yet they are unsure if they 
will be able to stay here to work. And, as a result, these 
highly skilled foreign nationals often have no choice but to 
return home, and they may end up working for one of our 
competitors. Any legislative solution should exempt STEM 
graduates from the annual cap.
    Further, there is a significant backlog on green card 
petitions based on a per-country limit. Because of this 
backlog, some of our employees have been waiting 8 to 10 years 
to receive their green card. And these are hardworking 
employees who have assimilated into American culture, and they 
want to make the U.S. their home.
    In January, Senators Hatch, Klobuchar, and Rubio introduced 
S. 169, the I-Squared Act of 2013. This legislation is 
important because it establishes the link between the need for 
high-skilled immigration and the need for greater STEM 
education and funding in the U.S. I would also like to thank 
the other members of this Senate Commerce Committee who have 
cosponsored this bill.
    And we appreciate the hard work and the continued resolve 
of the Gang of Eight. Reaching bipartisan compromise on any 
issue is difficult, but their work signifies the importance of 
finding consensus on commonsense immigration reform.
    The Gang of Eight bill includes important elements of high-
skilled immigration reform. It includes an increase of the H-1B 
visa cap, exempts many STEM graduates from the green card cap, 
and repeals the per-country limits, among other things. 
However, it also contains some potentially onerous provisions 
related to recruiting, nondisplacement, and outplacement that 
could make it much more difficult for a company like 
Caterpillar to obtain new H-1B visas for our employees.
    In summary, our country's future competitiveness relies on 
reforming both our education system and our immigration system. 
And we look forward to working with you and your colleagues in 
both the House and the Senate to pass meaningful, commonsense 
immigration reform this year.
    Thank you again for the opportunity to be here today, and I 
look forward to answering any questions you may have.
    [The prepared statement of Ms. Henricks follows:]

Prepared Statement of Gwenne A. Henricks, Chief Technology Officer and 
Vice President, Product Development and Global Technology, Caterpillar 
                                  Inc.
Introduction
    Good afternoon. Chairman Rockefeller, Ranking Member Thune, and 
members of the Senate Commerce Committee, thank you for holding this 
hearing and providing me the opportunity to testify here today on 
behalf of Caterpillar.
    My name is Gwenne Henricks, and I am the Chief Technology Officer 
and Vice President of Product Development and Global Technology of 
Caterpillar Inc. Caterpillar employs more than 132,000 employees 
worldwide and distributes products in more than 180 countries through a 
dealer network that consists of about 190 dealers worldwide.
    Headquartered in Peoria, Illinois, Caterpillar is the world's 
leading manufacturer of construction and mining equipment, diesel and 
natural gas engines, industrial gas turbines and diesel-electric 
locomotives. We have a long history of innovating on behalf of the 
customers we serve.
    In my position as Chief Technology Officer, I am responsible for 
overseeing our global innovation and product development. When you look 
at our big yellow machinery or engines, you may not think of us as 
``high tech;'' however, our company is constantly innovating at a rapid 
pace. In fact, we currently employ more than 10,000 engineers, 
scientists and technologists worldwide who are dedicated to providing 
high-quality solutions that our customers need to be successful. Last 
year, we filed nearly 1,100 patents and spent approximately $2.4 
billion on research and development. Today, our machines are powered as 
much by software as they are by fuel.
    Whether we are researching ways to move more dirt with less fuel, 
developing products that generate fewer emissions or exploring new 
autonomous solutions--Caterpillar technologies are reshaping the 
process of using, managing and owning heavy equipment.
Innovation and Education
    To continue to innovate at this level, we must maintain our 
competitive advantages, and at Caterpillar, we consider our people to 
be our greatest asset. The world has changed, and our competition is 
global. To maintain our economic and technological advantages over 
those global competitors, Caterpillar needs access to the world's best 
talent. That includes a sustainable pipeline of workers with an 
education in the fields of science, technology, engineering and math, 
or STEM. We must recruit from across the United States, but beyond our 
borders, too.
    Our education system in the United States is currently not 
producing a robust pipeline of students in STEM-related fields. A 
recent study by the National Association of Manufacturers found that 
manufacturing creates 65 to 70 percent of U.S. engineering jobs, but 
the number of U.S. graduates in the STEM fields has been declining 
since 2003. Meanwhile, other counties are producing far more engineers 
and scientists.
    Caterpillar has a long history of supporting educational 
opportunities that motivate and encourage STEM-field studies and is 
actively working to increase the supply of skilled STEM talent around 
the world. For instance, in 2013 more than 800 Caterpillar employees 
volunteered to mentor more than 2,000 students around the world 
participating on FIRST LEGO League, FIRST Tech Challenge and FIRST 
Robotics Competition teams. Caterpillar will contribute almost a half 
million dollars this year to support FIRST initiatives with the 
majority of this investment in the United States. However, we still 
fall short in meeting all of our needs in these jobs. That is where our 
immigration system comes into play by filling these gaps with much 
needed talent.
    There may be a perception that High Skilled Immigration Reform 
would only benefit Silicon Valley-type companies. That is certainly 
true, but it will also benefit Midwest manufacturers such as 
Caterpillar. Today, Caterpillar has more than 1,400 employees working 
in the U.S. on non-immigrant visas and an additional 300 employees who 
have obtained their green card through Caterpillar. The vast majority 
of these employees are working in STEM fields, particularly in 
engineering and IT positions. Many of these foreign nationals are 
working on research and development projects.
    However, our current system for high-skilled immigration is broken. 
From the cap on H-1B visas to the backlog of green card applications, 
there is much room for improvement. As Congress takes on Comprehensive 
Immigration Reform, I urge you to adopt sensible immigration reform 
that will allow Caterpillar to attract and retain world-class STEM 
talent.
H-1B Visas
    H-1B visas are the primary way a company like Caterpillar hires 
foreign workers who are in specialized occupations, such as science and 
engineering. The current annual cap for H-1B visas is set at 65,000 
(with an additional 20,000 exempted from the cap for those who have 
received a Master's degree or higher from a U.S. university).
    The United States Citizenship and Immigration Services (USCIS) 
begins accepting applications on April 1 of each year, yet those 
foreign nationals cannot begin working in the United States until the 
first day of the Fiscal Year (typically October 1). As you are probably 
aware, the cap was filled immediately this year. On April 1, 2013, 
there were actually more petitions received than the cap would allow, 
sending a number of petitions into a lottery. Accordingly, companies 
such as Caterpillar will not be able to recruit H-1B employees again 
until October 1, 2014. That's 18 months from now.
    This cap has not been permanently increased in more than 20 years. 
However, technology and innovation has dramatically changed since then. 
As the competition for STEM graduates has increased among U.S. 
companies in the last few decades, the number of foreign nationals we 
can hire through the H-1B program has virtually stayed the same-with 
only a temporary increase from 1998 to 2003.
    We feel strongly that the current cap and system for petitioning 
for new H-1B visas is outdated and must be changed. Not only would we 
like to see the overall cap increased significantly, but also we would 
like the number of H-1Bs allotted each year to accommodate demand. If 
demand increases, the cap should increase.
Green Cards
    After we hire a foreign national and sponsor his or her H-1B visa, 
we often want him or her to stay at Caterpillar as a permanent 
employee. In that case, we sponsor the individual for a green card 
(permanent legal resident).
    We recruit both Americans and foreign nationals from colleges and 
universities across the United States. Many foreign nationals receive 
advanced degrees from American universities in STEM fields, yet they 
are unsure if they will be able to stay here to work. As a result, 
these highly skilled and educated foreign nationals often have no 
choice but to return to their home countries and might end up working 
for one of our competitors. Any legislative solution should exempt STEM 
graduates from the annual cap.
    Further, there is a significant backlog on green card petitions 
based on a ``per country limit,'' which limits the number of green 
cards that can be approved annually from each county. Because of this 
backlog, particularly from foreign nationals from China and India, some 
of our employees have been waiting eight to 10 years to receive their 
green card! These are hard-working, educated, highly skilled employees 
who have assimilated into American culture. Their kids are in our 
schools. They have acclimated to their communities, and they are 
committed to staying here and making the United States their home. 
However, they are subject to a prolonged waiting period based solely on 
what country in which they were born.
    Modernizing our high-skilled immigration system will help American 
companies like Caterpillar to continue to innovate by having access to 
high-skilled workers when we need them. We are counting on this next 
generation of engineers and scientists to meet the world's needs while 
preserving the environment for future generations through innovation 
and collaboration.
I-Squared Bill
    In January, Senator Orrin Hatch (R-UT), along with a bipartisan 
group of senators including Senators Amy Klobuchar (D-MN) and Marco 
Rubio (R-FL) helping lead the effort, introduced S. 169, the Innovation 
and Immigration Act of 2013. This legislation is important because it 
establishes the link between the need for high-skilled immigration 
reform and the need for greater STEM education and funding in the U.S.
    As members of the inSPIRE Coalition, we feel strongly that those 
two issues go hand-in-hand. There is an undeniable link between 
education and immigration, and while we work to build up our pipeline 
of STEM talent in the U.S. for our long-term needs, we must also meet 
the needs of today through high-skilled immigration. I'd like to thank 
Senators Klobuchar and Rubio for their leadership on the bill's 
introduction. I'd also like to thank the other sponsors who are on the 
Commerce Committee: Senators Ayotte, Blumenthal, Blunt, Heller, 
McCaskill, Nelson, Schatz, Thune and Warner.
S. 744
    We also appreciate the hard work and continued resolve of the 
``Gang of Eight.'' Reaching bipartisan compromise on any issue is 
difficult, but their work signifies the importance of finding consensus 
on common sense immigration reform.
    The Gang of Eight bill, S. 744, the Border Security, Economic 
Opportunity and Immigration Modernization Act, was introduced two weeks 
ago and includes important elements of high-skilled immigration reform. 
It includes an increase of the H-1B visa cap, exempts many STEM 
graduates from the green card cap and repeals the ``per country 
limits,'' among other things.
    However, it also contains some potentially onerous provisions 
relating to recruiting, non-displacement and outplacement that could 
make it much more difficult for a company such as Caterpillar to obtain 
new H-1B visas for our employees and recruits. Please understand we 
agree with the intent of these provisions, but we are concerned that 
the language related to these provisions, if left unchanged, could 
actually create a piece of legislation that is more harmful then 
helpful to a company like Caterpillar.
Summary
    It's worth repeating that at Caterpillar, we know our people are 
our greatest asset. That's why we need immigration laws that help us 
attract--and keep--the best talent from around the world and allow us 
to serve our global customers.
    Our country's future competitiveness relies on reforming both our 
education system and our immigration system. It is not an either/or 
situation. We need both, and as business leaders, we stand ready to 
find solutions at the local and national level. If U.S. companies did 
not have the ability to recruit foreign nationals into these STEM 
positions, it would create significant challenges for companies in 
competing with foreign competitors to attract and retain world-class 
STEM talent. Increasing the number and availability of non-immigrant 
visas and green cards will lead to the creation of more jobs for U.S. 
citizens--not take them away. Further, it would incentivize companies 
such as Caterpillar to increase the number of operations facilities in 
the United States as well as increase its U.S.-based research and 
development spend.
    We look forward to working with you and your colleagues in both the 
House and Senate to pass meaningful, common sense immigration reform 
this year.
    Thank you, again, for the opportunity to be here today. I look 
forward to answering any questions you may have.

    The Chairman. Thank you very much. Thank you very much, 
indeed.
    Mr. Stuart Anderson, who is Executive Director of the 
National Foundation for American Policy.

  STATEMENT OF STUART ANDERSON, EXECUTIVE DIRECTOR, NATIONAL 
                 FOUNDATION FOR AMERICAN POLICY

    Mr. Anderson. Thank you, Chairman Rockefeller and Ranking 
Member Thune, for inviting me to testify. I appreciate the 
opportunity to discuss the contributions of immigrant 
entrepreneurs, engineers, and scientists and the immigration 
bill before Congress.
    The sponsors of S. 744, the Gang of Eight immigration bill, 
deserve credit for tackling the contentious issue of 
immigration and attempting to fix all parts of the immigration 
system. No immigration category exists for entrepreneurs, but 
S. 744 would change that by providing a way for foreign 
nationals to obtain a green card if they start a business and 
create jobs in the United States.
    I recently examined the top 50 venture-funded startup 
companies in America and found nearly half had at least one 
immigrant founder. Equally important, more than 75 percent had 
an immigrant in a top management or product-development 
position to help the companies grow and innovate.
    Startups and established companies need access to 
hardworking and talented individuals, both U.S.- and foreign-
born. Unfortunately, S. 744, as currently written, is likely to 
harm the ability of U.S. companies to grow, innovate, and 
compete against foreign companies.
    I understand in a large, bipartisan bill there are going to 
be provisions that not all the sponsors support, but while S. 
744 contains several very positive provisions on employment-
based green cards, some of which have been alluded to, it also, 
surprisingly, adopts numerous restrictive measures against H-1B 
and L-1 temporary visa holders and their employers.
    The new H-1B restrictions in the bill include applying 
attestations on recruitment and nondisplacement to all 
companies. These attestations may push more hiring and 
investment outside the U.S. because, otherwise, individual 
employers would likely need to defend at least hundreds of 
personnel decisions years after the fact to potentially 
unsympathetic Federal investigators.
    In addition, the bill requires H-1B visa holders to be paid 
thousands of dollars more in salary, I think, comparable to 
U.S. professionals. It will ban foreign nationals from being 
hired in the U.S. by companies with a high percentage of H-1B 
workers. It would limit or even prohibit foreign nationals from 
working on client sites. And it removes virtually all 
restrictions on the Department of Labor's investigative 
authority.
    For most skilled foreign nationals, it is simply not 
practical to become permanent residents or green card holders 
before starting to work in the United States. So despite S. 
744's positive green card provisions, H-1B and L-1 temporary 
visas will remain very important.
    I support legalization, but, to point out the irony of the 
bill as it is written, it would give an advantage to anyone who 
entered the country illegally over skilled foreign nationals 
who work in America in the future.
    If a software engineer from India flew to Canada in 2011, 
sneaked into the United States, and stayed here illegally, 
under the bill he would get legal status, and an employer could 
hire him without bureaucratic rules and send him to a customer 
worksite, for example, without any restrictions.
    In contrast, if in 2014 a software engineer from India 
doesn't qualify for an exemption from the green card quotas, to 
work in the U.S. his employer must hire him on an H-1B visa. 
But under S. 744, he could not work here unless his employer 
pays him an inflated salary and offers the job to anyone the 
company thinks Department of Labor may later think is, quote, 
``equally qualified.''
    And the company must make legally binding attestations 
about future layoffs or dismissals. If transferred into the 
country on an L-1 visa, he could not work on another company's 
site unless that second company legally attested it would not 
displace a U.S. worker 90 days before or after, a provision 
companies find unworkable to impose on their own customers.
    Far from producing harm, providing H-1B visas to skilled 
foreign nationals has helped the U.S. economy. H-1B visa 
holders contributed between 10 and 25 percent of the aggregate 
productivity growth that took place in the United States from 
1990 to 2010, according to economists Giovanni Peri, Kevin 
Shih, and Chad Sparber.
    Under GATS, the General Agreement on Trade in Services, the 
United States is committed to providing a specific degree of 
access to H-1B and L-1 visas. In 2010, our organization asked 
the law firm of Jochum Shore & Trossevin to perform a legal 
analysis on restrictions very similar to those in S. 744. And 
the firm concluded that nearly all the provisions I have 
mentioned here may violate GATS, which would lead to an 
unfavorable ruling potentially before the World Trade 
Organization and potentially retaliation against U.S. 
exporters.
    In closing, 25 U.S. senators, including 11 members of the 
Senate Commerce Committee, are cosponsors of the I-Squared Act, 
which would increase H-1B visas without the new restrictions 
proposed in S. 744. The best approach for innovation would be 
to substitute the I-Squared Act in place of the provisions on 
temporary visas in S. 744. Such an action would prevent 
Congress from adopting policies likely to shift much more work 
and investment and resources outside the United States, rather 
than achieving the goal we all share, which is creating more 
jobs and innovation in America.
    Thank you.
    [The prepared statement of Mr. Anderson follows:]

      Prepared Statement of Stuart Anderson, Executive Director, 
                National Foundation for American Policy
    Thank you, Mr. Chairman.

    I appreciate the opportunity to discuss the contributions of 
immigrant entrepreneurs, engineers and scientists and the immigration 
bill before Congress. The sponsors of S. 744, the Gang of Eight 
immigration bill, deserve credit for tackling immigration reform and 
attempting to fix all parts of the immigration system.
    For example, few people realize that although engineers and 
scientists can immigrate to America, no immigration category exists for 
entrepreneurs.
    S. 744 would change that by providing a way for foreign nationals 
to obtain a green card if they start a business that creates jobs in 
the United States. Analyzing the Startup Act 3.0, the Ewing Marion 
Kauffman Foundation concluded that adding immigrant visas for 
entrepreneurs ``has the potential to add, conservatively, between 
500,000 and 1.6 million new jobs over the next 10 years.'' \1\ That 
estimate was based on the 75,000 immigrant visas for entrepreneurs in 
the Startup Act 3.0 vs. the 10,000 a year in S. 744, but it shows the 
potential for such a provision.
---------------------------------------------------------------------------
    \1\ Dane Stangler and Jared Konczal, Give Me Your Entrepreneurs, 
Your Innovators: Estimating the Employment Impact of a Startup Visa, 
Ewing Marion Kauffman Foundation, February 2013.
---------------------------------------------------------------------------
    Part of the Kauffman Foundation's analysis was derived from 
research I undertook on the top 50 venture-funded startup companies in 
America.\2\ I found nearly half of the top 50 venture-funded companies, 
48 percent, had at least one immigrant founder, such as Ofer Shapiro, 
born in Israel, who worked with two other immigrants to establish Vidyo 
to make high quality video conferencing available over the Internet at 
a fraction of the cost of traditional conferencing methods. The company 
today employs over 200 people.
---------------------------------------------------------------------------
    \2\ Stuart Anderson, Immigrant Founders and Key Personnel in 
America's 50 Top Venture-Funded Companies, NFAP Policy Brief, National 
Foundation for American Policy, December 2011.
---------------------------------------------------------------------------
    Another was Alex Mehr, who nearly won an entrepreneurship contest 
at the University of Maryland but on what he describes as the ``worst 
day of his life'' an immigration attorney advised him to disband the 
company because the immigration service would never approve an H-1B 
visa for him and his friends as founders of their own company. The 
students went their separate ways. One left the country, but Alex 
eventually re-connected a decade later with his college roommate Shayan 
Zadeh. Over a weekend, they began developing Facebook applications for 
uploading videos and that eventually sparked another idea. So in an 
``only in America'' story, two immigrants born in the Islamic Republic 
of Iran started an online dating site called Zoosk, which now employs 
more than 100 people and has 15 million active users a month.
    What Alex Mehr, Ofer Shapiro and other entrepreneurs will tell you 
is that startups and long established companies need access to hard-
working and talented individuals, both U.S.- and foreign-born. Research 
on the top 50 venture-funded companies shows more than 75 percent of 
these cutting-edge companies have a foreign-born individual as a member 
of their management or product development teams to help the company 
grow and innovate.
Harming the Ability of Companies to Grow and Innovate
    S. 744, in its current form, is likely to harm the ability of both 
startups and established companies to grow and innovate in the United 
States. I understand in a large bipartisan bill there will be measures 
not all the sponsors support. But while S. 744 contains an entrepreneur 
visa and several positive provisions on employment-based green cards 
(for permanent residence), it also surprisingly adopts nearly every 
restrictive measure ever conceived against H-1B and L-1 temporary visa 
holders and their employers.
    The new H-1B restrictions in the bill include in Section 4211 
applying attestations on recruitment and nondisplacement to all 
companies, attestations that may force individual employers to defend 
potentially hundreds of personnel decisions years after the fact to 
unsympathetic federal investigators. In addition to forcing companies 
to make legally binding predictions about future layoffs or dismissals, 
it would permit a federal government agency to inject its own judgments 
into which employees a company should have hired. Under the bill, the 
Department of Labor would be empowered to determine whether an H-1B 
professional or another worker was the most qualified person for a job.
    The bill changes the law to require H-1B visa holders to be paid 
much higher wages than comparable U.S. professionals, in some cases 
about $10,000 to $18,000 more. (Section 4211) It places an eventual ban 
on petitioning for foreign nationals on companies with a high 
percentage of their workforce on H-1Bs. (Section 4213) It would limit 
or even prohibit foreign nationals from working on client sites. 
(Section 4211 and 4301) And it would remove virtually all current 
restrictions on the Department of Labor's investigative authority to 
enforce these and other provisions. (Section 4223)
    A premise of S. 744 appears to be that green cards are good but 
temporary visas are bad, and employers should be able to meet 
essentially all their employment needs through green cards. This 
premise is incorrect. First, to obtain their green cards, over 90 
percent of employment-based immigrants each year adjusted their status 
inside the United States from a temporary visa category, primarily H-1B 
and L-1 status.\3\ In fact, often the only way previous employment-
based immigrants could work in America prior to receiving their green 
cards was if they first obtained H-1B and L-1 status. In effect, since 
the new rules in the Senate bill would make it far more difficult to 
obtain a temporary visa, many individuals who in the past would have 
become permanent residents will be unlikely to do so in the future.
---------------------------------------------------------------------------
    \3\ 2012 Yearbook of Immigration Statistics, U.S. Department of 
Homeland Security.
---------------------------------------------------------------------------
    Moreover, individuals now waiting for green card processing could 
be forced to leave the country if they require a renewal of H-1B status 
to keep working and their new employer cannot meet the new conditions 
established in the Senate bill. The portability provisions in the bill 
would not help such individuals if a new employer were not able to 
comply with the bill's new H-1B provisions.
    Second, for most skilled foreign nationals it is not practical to 
become permanent residents (green card recipients) before being allowed 
to start work in the United States. According to Lynden Melmed, former 
chief counsel of U.S. Citizenship and Immigration Services, and now a 
partner at the law firm of Berry Appleman & Leiden, ``As an immigration 
attorney, in many circumstances I can tell you an H-1B will be the only 
appropriate visa category to allow a person into the United States to 
work.'' \4\ He lists situations such as lateral hires of experienced 
people from overseas, acquisitions, individuals who come to work on 
time-limited projects, as well as anyone who does not fit into one of 
the exemptions from the green card quotas in the bill or does not plan 
to live the rest of their life in the United States.
---------------------------------------------------------------------------
    \4\ Remarks of Lynden Melmed on teleconference releasing report on 
H-1B visas, National Foundation for American Policy, May 1, 2013.
---------------------------------------------------------------------------
Green Card Reforms in S. 744 Are Welcomed
    The green card reforms in S. 744 are welcomed because they address 
a significant problem--long wait times discourage highly skilled 
individuals from making their careers in America. The long waits for 
employment-based green cards are caused by two primary factors: (1) the 
140,000 annual quota is too low and (2) the per country limit, which 
restricts the number of green cards available to skilled immigrants 
from one country to 7 percent of the total. Due to the per country 
limit, skilled foreign nationals from India and China, who make up most 
of the applicants, wait years longer than nationals of other countries.
    Analyzing data in 2011, I estimated that a highly skilled Indian 
national sponsored today for an employment-based immigrant visa in the 
3rd preference could wait potentially 70 years to receive a green 
card.\5\
---------------------------------------------------------------------------
    \5\ Stuart Anderson, Waiting and More Waiting: America's Family and 
Employment-Based Immigration System, NFAP Policy Brief, National 
Foundation for American Policy, October 2011. The 70-year theoretical 
wait time is derived from estimating the backlog of Indians in the 
employment-based 3rd preference (EB-3) and dividing that by the number 
of Indians who receive permanent residence in the category each year.
---------------------------------------------------------------------------
    In addition to the problems experienced by Indians, many skilled 
foreign nationals from China have been waiting 6 or 7 years for an 
employment-based green card and can expect to wait additional years 
without a change to the law. Skilled foreign nationals from countries 
other than India and China have been waiting one to 6 years in the 
employment-based third preference and some may wait another four years 
or more. In the EB-2 category (second employment-based preference), 
skilled foreign nationals from India and China may wait 6 years or 
more, although nationals of other countries typically receive green 
cards in the category with little or no wait.
    While I have not completed a new analysis of green card wait times 
since 2011, a recent examination of the State Department Visa Bulletin 
and other data indicates that the wait times have not improved or have 
even worsened for individuals from India, while there has been some 
improvement for skilled immigrants from China in the employment-based 
third preference.
    The reforms in S. 744 will eliminate wait times for many skilled 
immigrants and reduce the wait times for nearly all, which will 
encourage additional highly skilled people to stay in the United 
States. As noted earlier, despite these positive reforms we should keep 
in mind that almost any immigration attorney can provide examples of 
why it is impractical to move toward a ``green card only'' immigration 
system for high skill work in the United States.
Disadvantaging Skilled Foreign Nationals Seeking to Work Legally in the 
        Future
    An important premise of S. 744 is to ensure that those who came 
into the country illegally do not receive an advantage over those who 
have already applied to live and work in America. And it appears the 
bill accomplishes that through a variety of means, including backlog 
reduction, recapture of unused green cards from previous years, and 
exemptions from the employment-based immigration quotas for STEM 
(science, technology, engineering and math) graduates from U.S. 
universities and dependents of employer-sponsored immigrants.
    However, the bill gives an advantage to anyone who entered the 
country illegally over many skilled foreign nationals who would want to 
work in America through legal means in the future. Let's take the 
example of two software engineers who graduated from a top university 
in India. The first individual, in 2011, flies to Canada, sneaks into 
the United States and stays here illegally. Under the bill, he will get 
legal status and be able to work for any employer in the United States. 
And that employer will be able to hire him without undue bureaucracy, 
can pay him the market wage, and can send him to a client or customer 
worksite without restriction.
    In contrast, if in 2014, a software engineer from India doesn't 
qualify for an exemption from the green card quotas, he will find, like 
most skilled foreign nationals today, his employer must hire him on an 
H-1B visa. But before he can start work in the United States, under S. 
744, his employer must agree to pay him significantly more than a 
comparable U.S. professional. Before that an employer must advertise 
the position for 30 days and offer the job to anyone the company thinks 
the Department of Labor may later believe is ``equally qualified.'' The 
employer must also attest that any dismissal the company has made in 
the recent past or will make in the future (for at least 3 months) will 
not be interpreted as being in the ``essentially equivalent'' job as 
the new H-1B hire.
    If an employer has 15 percent or more of its workforce on H-1B 
visas, the software engineer could not work on projects at any other 
employer's site; employers below the 15 percent threshold must pay $500 
for him to work at another site. If his potential employer has 50 
percent or more of its workforce on H-1Bs it must pay large fees (up to 
$10,000), cannot send him to any other site, and cannot even hire him 
or anyone else on an H-1B visa after 2016 because they would be banned 
from doing so.
    Under S. 744, if the engineer was transferred into the country on 
an L-1 visa for any employer, he could not do any work on another 
company's worksite unless that second employer attested it would not 
displace a U.S. worker 90 days before or after, a provision companies 
find to be unworkable for their clients and customers.
    In sum, the software engineer who sought to come here legally would 
have been better off if he had entered the country illegally in 2011, 
because many skilled foreign nationals who want to work in the United 
States in the future likely will be out of luck under S. 744.
    The scenario is not intended to suggest I oppose legalization. I 
think legalization of those here in the country out of legal status 
represents an important legislative compromise if it helps achieve what 
should be the two most important goals of immigration reform 
legislation: 1) expanding the number of employment-based green cards 
and high skill temporary visas, without undue regulations, to keep jobs 
and innovation in the United States, and 2) providing sufficient legal 
temporary visas for low-skilled workers to prevent future illegal 
immigration, provide available, legal workers, and save the lives of 
those who otherwise would attempt to enter the country illegally.
Significant Likelihood of Trade Violations in S. 744
    Related to the proposed restrictions on H-1B and L-1 visas, it is 
important to consider the potential of unintended consequences, not 
only in the bill shifting more hiring outside the United States but 
also in how the legislation would affect the ability of U.S. companies 
to compete in foreign markets. Under the General Agreement on Trade in 
Services (GATS) the United States is committed to provide a specific 
degree of access to H-1B and L-1 visas. As such, certain restrictions 
on H-1B and L-1 visas could place the United States in violation of 
that agreement and subject the U.S. to a challenge before the World 
Trade Organization (WTO). ``Such a challenge, if successful, could lead 
to retaliation against U.S. exporters and harm America's reputation on 
trade issues,'' noted a legal analysis by Jochum Shore & Trossevin PC 
for the National Foundation for American Policy. ``As such the analysis 
and its conclusions should be considered in deliberations over possible 
changes to U.S. immigration policy.'' \6\
---------------------------------------------------------------------------
    \6\ Jochum Shore & Trossevin, Legal Analysis: Proposed Changes to 
Skilled Worker Visa Laws Likely to Violate Major U.S. Trade 
Commitments, National Foundation for American Policy, June 2010.
---------------------------------------------------------------------------
    The 2010 legal analysis examined a number of provisions in previous 
legislation that are the same or similar to those in S. 744 and 
concluded there was a ``significant likelihood the provisions would be 
found inconsistent with U.S. commitments under GATS.''
    Among these provisions included in the current Senate bill:

   Changing the H-1B wage rules.

   Changing the 90-day nondisplacement rule for H-1B to 180 
        days for H-1B dependent employers.

   Prohibiting employers with more than 50 employees from 
        employing another H-1B or L-1 nonimmigrant if the sum of their 
        H-1B and L-1 visa holders is more than 50 percent of their 
        total workforce.

   Outplacement restrictions on L-1 visa holders. (A similar 
        restriction on H-1B visa holders was not examined but raises 
        similar issues.)

   Large increase in H-1B visa fees.

    The list above is not intended to be inclusive of all potential or 
likely GATS violations in the Senate bill. A more thorough analysis 
than permitted here would be necessary. For example, the recruitment 
requirements may be inconsistent with U.S. commitments under GATS. But 
in sum, the bill raises significant issues for its practical impact on 
employers and the U.S. economy, as well as for U.S. trade obligations 
that Congress should consider.
Economic Benefits of Admitting Skilled Foreign Nationals to Work in 
        America
    The economic record shows far from producing harm, providing H-1B 
visas to skilled foreign nationals has helped the U.S. economy. 
Moreover, many of the premises upon which restrictions have been 
proposed are not supported by data and research.
    First, H-1B visa holders contributed ``between 10 and 25 percent of 
the aggregate productivity growth . . . that took place in the United 
States from 1990 to 2010,'' according to economists Giovanni Peri, 
Kevin Shih and Chad Sparber.\7\ Peri, Shih and Sparber also found, ``An 
increase in foreign STEM workers of 1 percent of total employment 
increased the wage of native college educated workers (both STEM and 
non-STEM) over the period 1990-2000 by 4 to 6 percent.'' \8\ Economist 
Madeline Zavodny found each additional 100 approved H-1B workers were 
associated with an additional 183 jobs among U.S. natives from 2001 to 
2010.\9\
---------------------------------------------------------------------------
    \7\ Giovanni Peri, Kevin Shih and Chad Sparber, ``STEM workers, H-
1B Visas and Productivity in U.S. Cities,'' January 29, 2013.
    \8\ Ibid.
    \9\ Madeline Zavodny, Immigration and American Jobs, American 
Enterprise Institute and the Partnership for a New American Economy, 
December 2011.
---------------------------------------------------------------------------
    Second, S. 744 would artificially inflate the minimum required wage 
paid to H-1B visa holders under the belief that H-1B professionals are 
generally paid below that of comparable U.S. workers. Under the law, 
when hiring an H-1B professional, companies must pay the higher of the 
prevailing wage or actual wage paid to ``all other individuals with 
similar experience and qualifications for the specific employment in 
question.'' \10\ Moreover, the Government Accountability Office found 
the median salary for H-1B visa holders age 20-39 was $80,000 compared 
to $75,000 for U.S. workers in Electrical/Electronics Engineering, and 
$60,000 for H-1B professionals age 20-29 in Systems Analysis/
Programming vs. $58,000 for U.S. workers.\11\ Other studies, including 
by University of Maryland economists Sunil Mithas and Henry C. Lucas, 
Jr., find H-1B professionals in information technology (IT) earned more 
than their native counterparts with similar experience and do not harm 
the prospects of U.S.-born workers.\12\
---------------------------------------------------------------------------
    \10\ Section 212(n)(1) of the Immigration and Nationality Act.
    \11\ H-1B Visa Program: Reforms Are Needed to Minimize the Risks 
and Costs of Current Program, Government Accountability Office, GAO-11-
26, January 2011.
    \12\ S. Mithas and H.C. Lucas, ``Are Foreign IT workers Cheaper? 
U.S. Visa Policies and Compensation of Information Technology 
Professionals,'' Management Science (56:5) 2010. See also Magnus 
Lofstrom and Joseph Hayes, ``H-1Bs: How Do They Stack Up to U.S. 
Workers?'' IZA Discussion Paper #6259. December 2011, pp. 14-15. 
Lofstrom and Hayes concluded, ``Overall, the data point towards a 
picture of comparatively highly skilled workers with earnings at least 
on par with those of U.S. born workers.''
---------------------------------------------------------------------------
    Third, employment in Computer and Math occupations rose by 12.1 
percent between 2007 and 2012, the second highest of any U.S. job 
category during that period, according to the Bureau of Labor 
Statistics.\13\ Some argue the size of the average wage growth in 
certain technology fields means companies are not having a difficult 
time filling positions. But wage growth can be hidden when the number 
of jobs in a sector grows. Statistically, adding more employees in an 
occupational category tends to limit average wage growth (newer workers 
tend to earn less than incumbent workers), while a field like 
construction, which lost 25 percent of its jobs between 2007 and 2012, 
shows reasonable average wage growth, since newer, lesser paid workers 
are usually the most likely to lose their jobs. Also, it is not really 
possible to gauge the demand for professionals with technology skills 
by counting only ``STEM occupations,'' as suggested in a recent 
Economic Policy Institute report. According to the National Science 
Foundation, over 4 million people in America use their science & 
engineering degree in their jobs even though their occupation in not 
formally classified as a science & engineering occupation.\14\
---------------------------------------------------------------------------
    \13\ Bureau of Labor Statistics Occupational and Employment 
Statistics.
    \14\ National Science Board, Science and Engineering Indicators 
2012, National Science Foundation, 2012, p. 3-10.
---------------------------------------------------------------------------
    The competition for labor in high tech fields is global, which 
means employers can fill vacancies or complete projects outside the 
U.S. that would not appear in domestic ``shortage'' data. Still, large 
technology companies today report many job openings.\15\
---------------------------------------------------------------------------
    \15\ Written Testimony of Brad Smith, General Counsel and Executive 
Vice President, Legal and Corporate Affairs, Microsoft Corporation, 
Before the Senate Judiciary Committee, on the Border Security, Economic 
Opportunity, and Immigration Modernization Act, S.744, April 22, 2013. 
Smith lists 10,000 job openings among five well-known tech companies.
---------------------------------------------------------------------------
    Fourth, India-based companies do not use up most of the yearly H-1B 
allotment, as some believe. Between FY 2006 and FY 2011, the top 25 
India-based companies utilized between 6 and 15 percent of the new H-1B 
visa approved for initial employment, and 19.9 percent in FY 2012.\16\ 
In FY 2012, the 26,865 new H-1B visas approved for the top 25 India-
based companies equaled only 0.017 percent of the U.S. labor force.\17\ 
Many of these companies perform services under contract for U.S. 
companies attempting to focus on core business functions.
---------------------------------------------------------------------------
    \16\ National Foundation for American Policy analysis of USCIS H-1B 
data. Note: Figures would be higher if included some U.S. companies 
with significant operations in India.
    \17\ USCIS H-1B data and Department of Labor data on U.S. labor 
force.
---------------------------------------------------------------------------
    Fifth, education levels for new H-1B visa holders are high, with 58 
percent having earned a master's degree or higher. New H-1B visa 
holders in the United States accounted for 0.087 percent of the U.S. 
labor force in 2012.\18\
---------------------------------------------------------------------------
    \18\ Characteristics of Specialty Occupational Workers (H-1B): 
Fiscal Year 2011, Department of Homeland Security, March 12, 2012, p. 
10; 0.087 percent is derived from USCIS H-1B data on approved initial 
employment and DOL labor force statistics.
---------------------------------------------------------------------------
    Sixth, rather than harming U.S. students, as some contend, a large 
proportion of the approximately $4 billion in government fees paid by 
employers since 1999 for H-1B visa holders have provided over 63,000 
scholarships for U.S. students in science and technology fields, 
according to the National Science Foundation.\19\ Key members of the 
next generation of outstanding scientists and engineers are the 
children of H-1B visa holders, who accounted for 60 percent of the 
finalists at the 2011 Intel Science Talent Search competition for top 
U.S. high school students.\20\
---------------------------------------------------------------------------
    \19\ FY 2013 National Science Foundation Budget Request to 
Congress, EHR--19-20.
    \20\ Stuart Anderson, The Impact of the Children of Immigrants on 
Scientific Achievement in America, NFAP Policy Brief, National 
Foundation for American Policy, May 2011.
---------------------------------------------------------------------------
    Seventh, significant government oversight of H-1B visas currently 
exists. In FY 2010 and FY 2011, U.S. Citizenship and Immigration 
Services conducted approximately 30,000 on site audits of employers of 
H-1B visa holders. In FY 2010, only 1 percent of the audit visits 
resulted in referrals for a fraud investigation. Many companies receive 
multiple visits in a year. ``A large U.S. professional services 
provider reports well over 100 site visits in calendar year 2011. In 
all cases, no fraud was found and no compliance issues were found.'' 
\21\
---------------------------------------------------------------------------
    \21\ USCIS Fraud Detection & National Security (FDNS) Directorate 
Answers AILA Administrative Site Visit & Verification Program (ASVVP) 
Questions, June 7, 2011, and AILA Verification and Documentation 
Liaison Committee, USCIS NDNS Meeting, March 28, 2012. According to 
USCIS, ``14,433 H-1B site visits were conducted in FY 2010'' and 15,648 
were conducted in FY 2011.
---------------------------------------------------------------------------
The Way Forward
    The premises on which new restrictions have been proposed for H-1B 
visas are often based on incorrect information and flawed assumptions. 
Congress should expand the number of green cards and H-1B visas but 
without burdening employers or visa holders with new rules and 
limitations that will harm the ability of U.S. companies to compete and 
grow in this country.
    Twenty-five U.S. Senators, including 11 members of the Senate 
Commerce, Science, and Transportation Committee, are sponsors of the I-
Squared Act of 2013. That legislation would increase the annual 
allotment of H-1B visas and make other changes to enhance innovation in 
America without imposing any of the new restrictions proposed in S. 
744. The best approach would be to substitute the provisions of the I-
Squared Act in place of the current provisions on temporary visas in S. 
744. Such an action would prevent Congress from adopting policies 
likely to shift much more work, investment and resources outside the 
United States, rather than achieving the goal we all share--creating 
more jobs and innovation in America. Thank you.

                 Table 1.--H-1B Statistics in a Snapshot
------------------------------------------------------------------------

------------------------------------------------------------------------
H-1B-Led Productivity    Growth in foreign STEM workers ``may explain
 Gains                    between 10 and 25 percent of the aggregate
                          productivity growth . . . that took place in
                          the U.S.'' from 1990-2010.'' (Peri, Shih,
                          Sparber)
------------------------------------------------------------------------
H-1B and Increased U.S.  Each additional 100 approved H-1B workers
 Jobs                     associated with an additional 183 jobs among
                          U.S. natives from 2001-2010. (Zavodny)
------------------------------------------------------------------------
H-1B and Increased U.S.  ``An increase in foreign STEM workers of 1
 Wages                    percent of total employment increased the wage
                          of native college educated workers (both STEM
                          and non-STEM) over the period 1990-2000 by 4
                          to 6 percent.'' (Peri, Shih, Sparber)
------------------------------------------------------------------------
H-1B Professionals Earn  Median salary Electrical/Electronics
 Comparable or Higher     Engineering age 20-39 H-1B: $80,000 vs. U.S.
 Wages Than U.S.          worker: $75,000. Median salary Systems
 Workers in Same Age      Analysis/Programming age 20-29: H-1B: $60,000
 Grouping                 vs. U.S. worker: $58,000. (GAO)
------------------------------------------------------------------------
H-1B and Patents         ``A 10 percent growth in H-1B admissions
                          correlates with an 8 percent growth in Indian
                          invention'' relative to firms outside of the
                          computer sector less reliant on H-1Bs. (Kerr
                          and Lincoln)
------------------------------------------------------------------------
New H-1B Visas in U.S.   New H-1B visa holders are 0.087 percent of U.S.
 Labor Force              labor force. (DOL)
------------------------------------------------------------------------
H-1B Employer-Paid H-1B  $4 billion in H-1B fees paid since 1999
 Fees                     (estimate) (USCIS)
------------------------------------------------------------------------
H-1B Employer Fees for   63,800 scholarships for U.S. students since
 Scholarships             1999. (NSF)
------------------------------------------------------------------------
3H-1B and Taxes          Foreign-born with B.A. pays $9,335 more a year
                          in taxes than benefits received; $20,254 more
                          with M.A. (Zavodny)
------------------------------------------------------------------------
Onsite Audits of H-1B    14,433 H-1B site visits in FY 2010 and 15,648
 Employers                in FY 2011. (USCIS)
------------------------------------------------------------------------
Percent of H-1B Visa     1 percent (USCIS)
 Audits Referred for
 Fraud Investigations
 (FY 2010)
------------------------------------------------------------------------
Months Employers Wait    15 to 18 months to start work on new H-1B for
 for a Foreign            FY 2013 and FY 2014; FY 2003 last year annual
 Professional When H-1B   cap not reached. (USCIS)
 Unavailable
------------------------------------------------------------------------
2011 Intel Science       60 percent of the 2011 finalists had a parent
 Talent Search            who entered U.S. on H-1B visa; 30 percent of
 Finalists With H-1B      the finalists had U.S.-born parents. (NFAP)
 Parent
------------------------------------------------------------------------
Source: National Foundation for American Policy. Sources listed in
  testimony.


                           Table 2.--Job Growth in Major Occupation Groups: 2007-2102
----------------------------------------------------------------------------------------------------------------
                                                                               Percentage Change in Employment,
                           Major Occupation Group                                        2007 to 2012
----------------------------------------------------------------------------------------------------------------
Personal Care and Service Occupations                                                               14.1 percent
Computer and Mathematical Occupations                                                               12.1 percent
Healthcare Practitioners and Technical Occupations                                                  11.2 percent
Healthcare Support Occupations                                                                       8.0 percent
Business and Financial Operations Occupations                                                        6.7 percent
Management Occupations                                                                               6.4 percent
Community and Social Service Occupations                                                             5.0 percent
Protective Service Occupations                                                                       3.9 percent
Legal Occupations                                                                                    2.4 percent
Food Preparation and Serving Related Occupations                                                     2.4 percent
Education, Training, and Library Occupations                                                         0.7 percent
Arts, Design, Entertainment, Sports, and Media Occupations                                          -0.6 percent
ALL OCCUPATIONS                                                                                     -3.0 percent
Sales and Related Occupations                                                                       -3.5 percent
Building, Grounds Cleaning and Maintenance Occupations                                              -3.6 percent
Farming, Fishing, and Forestry Occupations                                                          -4.5 percent
Architecture and Engineering Occupations                                                            -5.2 percent
Installation, Maintenance, and Repair Occupations                                                   -5.9 percent
Office and Administrative Support Occupations                                                       -8.2 percent
Transportation and Material Moving Occupations                                                      -8.9 percent
Life, Physical, and Social Science Occupations                                                     -12.1 percent
Production Occupations                                                                             -15.3 percent
Construction and Extraction Occupations                                                            -25.8 percent
----------------------------------------------------------------------------------------------------------------
Source: Bureau of Labor Statistics Occupational and Employment Statistics


 Table 3.--Median Reported Salaries of H-1B and U.S. Workers: Systems Analysis, Programming, and Other Computer-
                                               Related Occupations
----------------------------------------------------------------------------------------------------------------
               Age Group                                H-1B                             U.S. Workers
----------------------------------------------------------------------------------------------------------------
20-29                                                              $60,000                              $58,000
30-39                                                              $70,000                              $70,000
----------------------------------------------------------------------------------------------------------------
Source: H-1B Visa Program: Reforms Are Needed to Minimize the Risks and Costs of Current Program, Government
  Accountability Office, GAO-11-26, January 2011, Table 1. Salaries are 2008.


   Table 4.--Median Reported Salaries of H-1B and U.S. Workers: Electrical/Electronics Engineering Occupations
----------------------------------------------------------------------------------------------------------------
               Age Group                                H-1B                             U.S. Workers
----------------------------------------------------------------------------------------------------------------
20-39                                                              $80,000                              $75,000
----------------------------------------------------------------------------------------------------------------
Source: H-1B Visa Program: Reforms Are Needed to Minimize the Risks and Costs of Current Program, Government
  Accountability Office, GAO-11-26, January 2011, Table 1. Salaries are 2008.

    Stuart Anderson is Executive Director of the National Foundation 
for American Policy, a non-partisan public policy research organization 
focusing on trade, immigration and related issues based in Arlington, 
Virginia (www.nfap.com). From August 2001 to January 2003, Stuart 
served as Executive Associate Commissioner for Policy and Planning and 
Counselor to the Commissioner at the Immigration and Naturalization 
Service. Before that Stuart spent four and a half years on Capitol Hill 
on the Senate Immigration Subcommittee, first for Senator Spencer 
Abraham and then as Staff Director of the subcommittee for Senator Sam 
Brownback. Stuart has published articles in the Wall Street Journal, 
New York Times, and other publications. He is the author of the book 
Immigration (Greenwood, 2010).

    The Chairman. Thank you.
    I will start with the questions. And it is sort of a human 
question.
    I mean, you talked about waiting for 10 years, and you got 
a green card, but what good does that do you.
    And you have indicated the same thing, just the years and 
years of waiting. And I am trying to figure out, why is it that 
you put up with all that waiting?
    And do you ascribe it to sort of typical government 
bureaucracy in America, sort of the unfamiliarity with the 
whole concept of immigration law, which is, you know, 
definitely a new subject for most Americans? Or do you think it 
is sort of a statement that we don't want you here, hidden, 
masked by law?
    I mean, I am really interested in how you have--you said 10 
years, and you just roll it off as if it was 10 months. And yet 
your whole career is--you know, the future gets dimmer if you 
don't end up as a citizen, but that is a long wait. And I am 
just wondering what your emotions are about why it is that this 
happens. Is there any other country in which this does happen?
    Ms. Sanghvi. So I came to the U.S. because I wanted to 
study at one of the premier institutions for computer science 
and computer engineering, and that was Carnegie Mellon. I 
stayed because it was only here that I could find the 
opportunities that I was looking for.
    When you ask me about how I feel about these things, a lot 
of the wait is about uncertainty. And as I mentioned in my 
testimony, it is not just uncertainty about my professional 
life but my personal life as well. And there is a lot of 
anxiety associated with that uncertainty.
    Sometimes it is frustrating. Despite all my hard work, all 
my contributions, paying taxes, et cetera, I do sometimes feel 
like an outsider. But I have struggled because of the 
opportunities that were available here, and the tech industry.
    The Chairman. What about you, sir?
    Mr. Bussgang. I see this through the lens of the companies 
I invest in and through the lens of my students at Harvard 
Business School. Forty percent of Harvard Business School are 
students that come from outside the country. I also do some 
work at MIT; 40 percent of the MIT students also come from 
outside the country.
    And the reason they wait, the reason they are patient, as 
frustrating as it is, is because they know this is the absolute 
best place in the world to start a company and they love our 
entrepreneurial ecosystem. They want access to our capital, 
they want access to our teams, they want access to our people. 
They love the culture that America represents and the symbolism 
of America. These are probably the most patriotic people we 
could imagine, in terms of what they go through in order to 
come here and build companies here.
    So it is very frustrating, but the carrot is so appealing 
that they are willing to go through it.
    Now, you mentioned, Mr. Chairman, that other countries are 
pursuing other activities to try to lure those great engineers 
and those great entrepreneurs away. And I see that on the 
ground. I see what the U.K. has done, and the U.K. has put some 
provisions in place to attract entrepreneurs. I see what Canada 
is doing. I see what Ireland is doing. Start-Up Chile was 
recently created.
    So it is a very competitive world, and the competition for 
talent is brutal. And that patience of the great entrepreneurs 
that we see here today will only last so far in the future.
    The Chairman. All right. Thank you.
    Senator Thune?
    Senator Thune. Thank you, Mr. Chairman.
    Mr. Anderson, there is a Kauffman Foundation study on 
immigrant entrepreneurship that suggests that the growth rate 
of immigrant-founded companies nationwide has plateaued and 
appears to be declining. You note in your prepared testimony 
that the comprehensive immigration bill adopts, and I quote, 
``nearly every restrictive measure ever conceived,'' end quote, 
for the H-1B program.
    And I am wondering, do you believe that these proposed 
restrictions to that H-1B visa program would worsen the 
apparent decline in immigrant-founded companies?
    Mr. Anderson. I think it would have to, because one of the 
sources of immigrant entrepreneurs are the H-1B and L-1 visa 
holders who later come into our system.
    The bill does have some pretty good provisions on immigrant 
entrepreneurs. It gives a 10,000 green card allotment. I 
believe there are other bills that have a much larger 
provision.
    But the other thing is that startup companies, as we have 
heard, need talent. And to the extent that they aren't going to 
be able to hire some of that talent because of all the 
different rules and restrictions, it is going to make it much 
harder for them to grow in the United States. It really is 
impractical.
    And I encourage any of the members to talk to an 
immigration attorney in their state about how many 
circumstances there are going to be where sponsoring someone 
directly on a green card is just not going to be practical as 
their first way to start working in the United States.
    Senator Thune. You have suggested striking the H-1B 
restrictions in the comprehensive bill and replacing them with 
the I-Squared provisions.
    I guess, other than a complete strike-and-replace approach, 
do you have any other specific changes in the comprehensive 
bill's provisions that you might recommend?
    Mr. Anderson. Well, again, the green card provisions are 
very good, and hopefully they would stay in throughout the 
whole process. But, certainly, the L-1 visa holder restrictions 
and the recruitment and nondisplacement restrictions are 
probably the biggest priority, I think, to remove from the bill 
and to become more realistic in terms of how companies actually 
operate.
    I mean, for example, to have your customer have to make a 
legally binding attestation about their future workplace 
practices if you are going to transfer someone to work to help 
install a product or a service just doesn't seem to have any 
relationship to how the real world works.
    Senator Thune. You mentioned that some of our foreign 
economic competitors have begun to take actions to lure highly 
skilled immigrants to their countries. Could you provide a few 
specific details about those, what countries are doing, and 
some examples of high skills immigration policies that we might 
want to seek to emulate?
    Mr. Anderson. Well, Canada, you know, has a startup visa 
that they are putting in place. Chile is actually attracting 
entrepreneurs, as well. Australia and some Canadian provinces 
also have a type of provisions in which they make it much 
easier for someone to become a green card holder right away.
    I know in the past there have been Canadian commercial 
officers who have had--Maclean's magazine had a leaked memo 
about how they were coming to the Los Angeles area and trying 
to recruit to Canada people who wanted to get H-1Bs but 
couldn't get them because of the cap being reached.
    So, you know, I think other countries are seeing that 
really the most valuable resource that there is out there is a 
human resource, and they are trying to take advantage of that.
    Senator Thune. Ms. Sanghvi, are you personally aware of 
other immigrant entrepreneurs who have left the United States 
due to current immigration law and are competing against U.S. 
technology companies?
    Ms. Sanghvi. Yes, I know a few people who have left the 
U.S. after getting an education here. And I also know of a few 
people who just didn't want to put up with the hassles of 
getting an H-1B. These people have gone on to lead businesses, 
to manage businesses elsewhere.
    I agree with Mr. Bussgang that things are getting 
competitive. A lot of people come here to get educated, and it 
is going to be up to America to figure out a way to keep them 
here.
    Senator Thune. Let me ask, if I might, Ms. Henricks, in 
terms of all the things that you deal with as far as keeping 
America competitive in the global marketplace, where does the 
access to highly skilled immigrants fall in terms of issues 
that affect your ability to continue manufacturing here in the 
United States?
    Ms. Henricks. I would say it ranks very, very highly, 
because the reason that customers anywhere around the world 
take our products, buy our products, is because of the value 
that we create in them. The way that we create value in those 
products is by the way that we produce the designs of those 
products to create extra value.
    So without having access to the right talent around the 
world, we will not be able to remain competitive around the 
world. So, certainly, how we build our talent pipeline, 
particularly in the STEM fields, is one of the top strategic 
issues that we work with and that I am charged to work with.
    Senator Thune. All right.
    My time has expired. Thank you, Mr. Chairman.
    Thank you all.
    The Chairman. Actually, you had a few more seconds.
    Senator Heller?

                STATEMENT OF HON. DEAN HELLER, 
                    U.S. SENATOR FROM NEVADA

    Senator Heller. Mr. Chairman, thank you.
    And I want to thank those who are here as witnesses today, 
and thanks for your time and energy, and those that are here, 
also, listening to the testimony.
    I am one of the original cosponsors of the I-Squared 
proposal by Senator Hatch and also a member of the Senate 
Republican High-Tech Task Force. So I think this is an 
important issue. Skilled immigration I believe is important, 
and I want you to know that I am very supportive of the 
concerns that you have shared with us today.
    So, Mr. Chairman, thank you very much for this discussion. 
I am encouraged by what I am seeing.
    But I would just raise a question to you, Ms. Henricks at 
Caterpillar. Are you saying that there are not enough U.S. 
citizens that are being educated today by American 
universities, that you have to go outside what we are producing 
here in America?
    Ms. Henricks. That is absolutely the case.
    Senator Heller. Do you have any numbers?
    Ms. Henricks. So the way I could bound this--I can give a 
specific example, but starting generally, I would say, you 
know, the rate at which STEM-related jobs have been created 
over the last decade is three times the rate at which non-STEM-
related jobs have been created. At the same time, since 2003, 
we have been graduating fewer and fewer U.S. people in STEM-
related careers from our universities. So while the job 
opportunities increase, the number of students graduating with 
these has been decreasing.
    So I can give you a specific example, and this is just one 
of many. We had need of some people to do very highly 
analytical modeling requiring mechanical engineering and some 
high skills areas. We initially said we want to not sponsor 
someone to fill this position. We put those jobs out there and 
advertised. Eight months later, we gave up because we couldn't 
find a candidate.
    We decided, OK, fine, we will sponsor someone. And within 3 
months, we found someone who had graduated from a U.S. 
university with an advanced degree who could fill that role. 
And that is just one of many examples that we would have.
    Senator Heller. You talk about mechanical engineers. How 
about civil engineers? Are they considered STEM?
    Ms. Henricks. When I say STEM, I am speaking of all kinds 
of engineering--metallurgical, electrical, mechanical, civil, 
mining.
    Senator Heller. OK. The reason that I raise this question, 
you know, the recession has hit a lot of states pretty hard, 
but particularly the state of Nevada has been hit pretty hard. 
And today at least 50 percent, maybe closer to 60 percent, of 
the engineers in the state of Nevada are either unemployed, 
underemployed, or, frankly, have left the state.
    And so the argument is always made that, why would we go 
outside if you see that kind of unemployment with engineers? I 
would argue that most of them are related more to commercial 
building, more to housing and those kind of engineering issues.
    But how would you argue back? Not related? Apples and 
oranges? Not trainable? Retrainable?
    Ms. Henricks. Yes. So I would say, apples and oranges.
    You know, to put this in context, we have hired 400 
engineers out of college over the last 3 years. Three percent 
of those have been on H-1B visas. So we are hiring American 
people wherever we can. But often when it comes to specific job 
requirements in specific skills areas, we cannot find the 
people that we need with those skills.
    Senator Heller. OK.
    I do have a son graduating with his engineering degree this 
fall. Thank goodness we are finally getting him out of school.
    [Laughter.]
    Senator Heller. And I am not asking you to recruit him 
because he did find a job, but thanks----
    Ms. Henricks. Good. Good.
    Senator Heller.--thanks for your information.
    Mr. Anderson, let's go back to some of the questions Mr. 
Thune was asking, specifically, do you believe that the caps 
set on this comprehensive immigration proposal will 
sufficiently meet our nation's growing technical needs?
    Mr. Anderson. Well, I think the caps in the bill for H-1Bs 
are not going to be enough. I mean, right now they come to 
about the total that was used up in the first week of this past 
April. So I think, clearly, the numbers aren't enough.
    But I would say that it is really, in looking at some of 
these visa categories, what we have seen historically is it not 
just the numbers; it is the rules.
    In H-2A, agriculture, as many members know, there is 
actually no quota on them. There is an unlimited number, 
potentially, of agricultural workers that could be sponsored 
each year, or petitioned for. And the numbers often are 40,000, 
60,000, 80,000, even though there are hundreds of thousands of 
people working in the country illegally, as we know, in 
agriculture. And the reason is, the rules are so bureaucratic 
and so difficult to use.
    And so it is ironic that in the way the current bill is 
before Congress is actually making good efforts to improve the 
agricultural program for immigration, but then moving the H-1B 
program toward the way the agricultural program works.
    Senator Heller. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Rubio?

                STATEMENT OF HON. MARCO RUBIO, 
                   U.S. SENATOR FROM FLORIDA

    Senator Rubio. Thank you for holding this hearing.
    Thank you for being here.
    A couple of points. One of the things in the conversation 
as the bill was being negotiated is the argument about two 
separate things about the programs businesses use.
    One is the structure of the program, and the bureaucracy 
and the costs associated with complying with it. And our goal 
was to try to simplify that, balanced with a desire to protect 
American workers, in essence, to make sure jobs are offered to 
Americans first, hence some of these advertising requirements.
    The other is an argument toward just the sheer numbers. And 
we had a pretty vibrant debate, and I think that will continue 
through the Judiciary Committee and beyond. And that is why I 
thought it was so important this committee had this hearing, 
because those numbers in some of the industries that utilize 
these programs are probably too low. And we are hearing that 
everywhere we go, and they need to be adjusted.
    Here is the resistance that we get, and I want all four of 
you to address it. The argument that we get back--two things. 
One is that immigration reform will only work if it is good for 
the American economy.
    And from what I am hearing from the testimony you have 
given today, but also from everyone we have spoken to before, 
is that if we can get a legal immigration system that works, in 
particular one that allows our job-creating industries to 
attract and retain, not just attract, but retain the world's 
best talent, that will have an exponential effect throughout 
the economy. One of the figures I have heard cited is, if we 
are able to keep people in the STEM field, for every one STEM 
worker that we attract or keep in the U.S., X number of jobs 
are created.
    So I guess what I am trying to get for purposes of being 
able to share with others, so for people either so bored that 
they are watching C-SPAN right now----
    [Laughter.]
    Senator Rubio.--or we can send this later in a YouTube 
video, explain to someone back in Florida or Nevada or anywhere 
else how exactly that works.
    In essence, why is having a world-class immigration system, 
how will that help create jobs for people that are here now, 
who may not be the direct beneficiary of that visa or of that 
green card or of that what-have-you program, but will benefit 
from the jobs and the prosperity and the growth that is created 
as a result of that talented individual being here?
    As part of that--I know this is a long question, but they 
are related--as part of that discussion, in particular what I 
have heard is that these are jobs that are being created 
anyway. In essence, you are in business; you have X number of 
jobs you need to fill. You would prefer to fill them in the 
United States because of doing business here, our workers are 
productive, et cetera. But you are going to fill that job 
somewhere, and if it isn't here, then that job could 
potentially be opened in a facility or operation you have 
elsewhere, because that is where the talent is.
    In particular, I have heard stories of people going to a 
college, recruiting workers, and as they sit down and interview 
these graduates, they realize most of these are foreign 
students that will not be able to stay in the U.S. unless there 
was a program in place to allow them to stay.
    So I think that is related to my general question, which 
is: How does this, by creating economic growth, lead to job 
opportunities for people who are in the United States today?
    Whomever wants to go first is fine.
    Mr. Bussgang. I can take a crack at it, Senator.
    You know, as a venture capitalist studying the 
entrepreneurial ecosystem, what you learn is that 
entrepreneurship is not a zero-sum game. Entrepreneurs create 
businesses and entrepreneurs grow businesses, and when you grow 
and create a business, you create jobs.
    So at my venture capital firm, we have invested in over 70 
companies, and those 70 companies have created over 3,000 jobs. 
That is 70 entrepreneurs who have created companies from 
nothing and thousands of jobs from nothing.
    And if those entrepreneurs were kicked out of the U.S., as 
many of the stories that I told is happening, or as those 
entrepreneurs don't have the ability to start their companies 
here, they don't create those companies, they don't create 
those jobs. We have talked about eBay and Google and Intel 
being companies that were founded by immigrants. If those 
companies didn't exist, those jobs wouldn't exist. And there is 
a huge multiplier effect therein.
    Mr. Anderson. Go ahead.
    Ms. Henricks. If I could add to that, from Caterpillar's 
perspective, we are a huge net exporter, and so about 70 
percent of the products that we produce in the United States go 
overseas. And yet about 80 percent of the product development 
work that we do is done here in the United States.
    So when we hire an engineer to design a new manufacturing 
process or design a new component or design our equipment, that 
creates jobs here in the U.S. because when we manufacture that 
component, when we assemble that large mining truck and export 
it somewhere else in the world, we are creating not only the 
manufacturing jobs but all the support jobs that go along with 
that.
    Mr. Anderson. And as I mentioned earlier in the testimony, 
that about half of the top 50 venture-funded companies had an 
immigrant founder, but I thought more importantly that about 
three-quarters of them had an immigrant or foreign national who 
was in a key product development position.
    And for the smaller companies especially, they don't 
necessarily have the same options of pushing work outside the 
United States. And so particularly when you look at some of 
those restrictions in the bill, for example on recruitment, if 
you are going to say that the company has to offer a job to 
someone who is equally qualified, you know, you might get a 
situation where an employer is not sure, are they going to be 
able to meet that legal standard 2 years after the fact from 
the Department of Labor, particularly if they are interviewing 
someone maybe 20 times. Is the Department of Labor going to 
come back later and say, well, you know, this person has a 
master's, that person has a master's?
    And I think startup companies or even established companies 
are going to, you know, think twice about some of the growth in 
the United States if they find that many of their decisions end 
up being questioned after the fact and they become in legal 
peril, essentially, from simply making personnel decisions.
    Ms. Sanghvi. Senator, I don't have much more to add than 
the panel have already said.
    From my own personal experience just starting a company 
myself and working at other companies, we are constantly, to 
build the best product, we are looking for the best people. And 
it is only possible to build a great company if you have the 
best product.
    So when we do hire that one STEM person or that one 
engineer and you start building toward this product, you are 
creating opportunities for everyone, not just those in STEM. 
And then, additionally, you are contributing back to the 
economy, and that just goes to say they are increasing spending 
power.
    The Chairman. Thank you, Senator Rubio, very much. I wanted 
to give you extra time because you--he is such a critical 
person in this whole debate, which I hope and pray will lead to 
a bill.
    Senator Klobuchar?

               STATEMENT OF HON. AMY KLOBUCHAR, 
                  U.S. SENATOR FROM MINNESOTA

    Senator Klobuchar. Thank you very much, Chairman.
    Thank you, Senator Rubio, for your work, and also a number 
of people in this room, Senator Warner and Senator Heller and 
everyone that helped us, Senator Nelson, that helped us with 
the I-Squared bill that Senator Hatch and I introduced, which 
was really important, as you have all noted, in terms of making 
sure our economy keeps running.
    We are a country of immigrants. I have loved the examples 
you have all used. I will give you numbers to use with them, 
and that is that 90 of the Fortune 500 companies that exist 
today were formed by immigrants, were started by immigrants. 
Two hundred of them were started by immigrants or kids of 
immigrants. And 30 percent of U.S. Nobel laureates were 
foreign-born. So we have to remember back through history how 
important this has been to our innovation economy.
    Ms. Henricks, I loved your stories. I have a very happy 
memory of speaking on the Caterpillar factory floor in 
Minnesota, where they gave me a pink hat. And I talked to all 
of the factory workers, and I remember being all ready with all 
these answers about manufacturing, and the first three 
questions were about fishing in Minnesota and whether the Asian 
carp were going to destroy our fishing of walleye.
    [Laughter.]
    Senator Klobuchar. So we had a great discussion, and they 
were a great group of workers.
    I also am aware of the problems in our state, where we have 
a 4.6 percent unemployment number. We have had issues with job 
openings at many of our factories, including one of your 
competitors, AGCO, that couldn't find a welder for a long, long 
time.
    And that is one of the reasons why I believe so much in 
this bill, with the H-1B, obviously those things, but also the 
green card piece of it.
    And hearing Ms. Sanghvi's story and knowing how hard it is, 
knowing students at our own university, who, when they were 
interviewed for a story by the University of Minnesota daily 
newspaper, the college reporter told me that they could only 
talk to her off the record. I thought, ``What are they hiding? 
They are all here on student visas.'' She said they couldn't 
say they wanted to stay in the United States because it would 
have violated the provisions about not showing a dual intent.
    And that was just a shocking minor thing to me, that that 
is where we are right now, where you have students at our 
universities that are afraid to say they want to stay and work 
here. It doesn't mean they can't apply for jobs and try to find 
some other way, but it is a crazy situation when you look at 
what has made this country great.
    So one of the questions I had is, Senator Hatch and I have 
introduced an amendment in the Judiciary Committee--as you 
know, we are having our markup tomorrow, and we both serve on 
that committee--to bring back one of the concepts that Senator 
Rubio had supported in our bill, to make sure some of the funds 
coming out of H-1B visas go to educations for our students in 
this country.
    And I wondered how you felt about that, if you think that 
would be helpful, at the same time we are running the track of 
the green cards, the H-1Bs, the path to citizenship, that we 
are also working on this issue of doing a better job of 
educating our children in science, engineering, technology, and 
math.
    I don't know if, Ms. Henricks, if you want to answer.
    Ms. Henricks. Yes, absolutely. We strongly support 
allocating some of those funds to reinvest at the state level 
to help us with encouraging American children to become excited 
about science and math.
    This is something that we do a lot at our company anyway. 
Just last year, 800 of our engineers were out working in the 
schools and touched over 2,000 young people, just helping to 
transfer to them their passion for the great things that can be 
done with innovation if you pursue careers in science and 
technology. And this is absolutely what we need for the long-
term health and success of our country.
    Senator Klobuchar. OK. Very good.
    Anyone else want to answer?
    Mr. Anderson. Well, you know, the current H-1B fees have 
actually gone--some of them have gone toward scholarships and I 
think have funded about 63,000 scholarships, according to the 
National Science Foundation, since 1999. So anything additional 
would obviously, you know, to the extent that on the margin you 
could make it more affordable for someone to go into these 
fields, it seems like a great reform.
    Senator Klobuchar. We have some students back there in 
their graduation caps that I am sure would like one of these 
scholarships. I see them back there. Very good.
    Ms. Sanghvi, I just had a question about, under current law 
there is no transition period for H-1B holders--Senator Warner 
and I have talked about this before--if they want to change 
jobs. And this means that many highly skilled foreign workers 
are unable to leave their employer because they are fearful of 
losing their visa status.
    The I-Squared Act included a 60-day grace period, which we 
didn't have before, that has been incorporated in the 
immigration bill. Could you talk about why that is an important 
worker protection?
    Ms. Sanghvi. Yes, Senator. Thank you for asking that 
question.
    As I said in my statement, where you work, where you live, 
choosing a profession should be choices that everyone should 
have, and they are all fundamental choices. I didn't want to 
work on Wall Street, but I had to look for a new job before I 
could quit my old one. It is really difficult as an immigrant 
to be able to make those choices. So I do believe that the 
grace period will help significantly.
    Senator Klobuchar. Thank you very much.
    The Chairman. Thank you, Senator Klobuchar.
    Senator Fischer?

                STATEMENT OF HON. DEB FISCHER, 
                   U.S. SENATOR FROM NEBRASKA

    Senator Fischer. Thank you, Mr. Chairman. And thank you for 
your leadership in holding this committee hearing today. I 
appreciate it.
    Ms. Henricks, you stated in your testimony that our 
education system in the United States is currently not 
producing a robust pipeline of students in STEM-related fields.
    I can tell you, in visiting with people at the University 
of Nebraska, they are looking at offering veterans the 
opportunity to come and receive advanced degrees in this area 
to try and produce more graduates. You mentioned having 
individuals attend schools and to spread the good word about 
science and the benefits of science.
    Do you see more positive trends in that area?
    Ms. Henricks. Absolutely. And I applaud the concept of 
encouraging veterans to pursue degrees in these advanced 
fields. We do hire a lot of veterans of the military where we 
can because they already have great leadership skills that they 
have developed.
    So far, we do, in our work at the younger ages in the 
schools, we do find a lot of enthusiasm, but we have yet to see 
this work all the way through, such that high school students 
are choosing STEM-related studies at the college level and such 
that, you know, we see college graduates coming out the end of 
the pipeline.
    Senator Fischer. Do you see a move toward companies trying 
to help direct students into the areas of science by offering 
scholarships and job opportunities, internships, in order to 
keep them focused in that area?
    Ms. Henricks. Yes. Yes, absolutely. A number of our peer 
companies do those kinds of things, as do we, offering 
internships. We do sponsor scholarships, and they do, as well. 
We also do research with the universities in partnership. Many 
of us will even establish work centers near the university 
campuses so that we can give students the opportunity to see 
and experience what it is like to do the work related with 
engineering.
    Senator Fischer. Thank you.
    And, Mr. Anderson, in your testimony, when you were 
discussing different countries and their immigration systems, 
many of those countries have employment-based immigration 
systems, where here in the United States we have more of a 
family based immigration system.
    Do you believe if we would move toward more of an 
employment-based system that that would make immigration easier 
and help with these industries that are searching for STEM 
graduates?
    Mr. Anderson. Well, I think it is possible to have both. I 
think, largely, the bill does that, S. 744. I mean, it does 
eliminate the siblings category, which is a concern for a lot 
of people. It does retain the other categories. And it 
significantly expands employment-based immigration in a way 
that I think is very positive.
    Again, the main concerns are not the green card sides, 
which are really terrific and have as many reforms as I think 
businesses expected on the green card side, but it is whether 
or not it is practical to have a system where only people 
would--you might end up with a system where you are encouraging 
almost everyone to get permanent residence to work in the 
United States. And I don't think that is really what I think a 
lot of members would intend to have, and I don't think it is 
really practical for mobility purposes in a global economy to 
have such a system.
    Senator Fischer. On the countries you mentioned, do you 
have any specific examples of their employment-based 
immigration system and if that has an effect on the workers in 
those countries? Has it been disputed by native born workers in 
the country?
    Mr. Anderson. Well, I would imagine in every country there 
are always some concerns under the belief that there is a fixed 
number of jobs, which we know really isn't the case 
economically.
    But, I mean, it is interesting, in Canada they have a point 
system, and they have, actually, on a percentage basis, a 
higher percentage of immigration on an annual basis. They don't 
seem to have the same political controversies exactly that we 
have here. I am not sure why. It is something unique about the 
Canadian culture, maybe, that they have developed or they are 
coming from a lower population base, I don't know. But I am 
sure there are still complaints there, but they don't seem to 
rise to the same level that we sometimes hear.
    Senator Fischer. What percentage of workers do they have 
that are immigrants compared to citizens in Canada? Do you know 
that? I heard percentages earlier when I came in.
    Mr. Anderson. I don't have the exact percentage. I just 
know on an annual basis their flow, I believe, is somewhat 
higher as a percentage of the population than the U.S. flow.
    Senator Fischer. OK. Thank you very much.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Warner?

                STATEMENT OF HON. MARK WARNER, 
                   U.S. SENATOR FROM VIRGINIA

    Senator Warner. Thank you, Mr. Chairman. Let me thank you 
for holding this hearing.
    And I want to pick up where, actually, Senator Rubio--some 
of the questions he asked. As somebody who spent a career in 
venture capital before coming here, the economic growth 
potential that immigration offers--and I think Senator Thune 
mentioned this as well, the recent Kauffman Foundation study 
that showed 80 percent of all net new jobs created in America 
in the last 20 years have not come from large entities or even 
traditional small business but from startups.
    So the fact that the legislation that has been proposed has 
got both an expanded H-1B program, a STEM program, and an 
entrepreneurs visa--and I would add one other piece that I know 
we have some representatives in the room. You know, some of 
those entrepreneurs, some of those STEM graduates are dreamers 
right now and people who are trying to further their education 
here in the United States, perhaps here undocumented. And the 
fact that there is going to be a legal path for those 
individuals, as well, is, to me, so obviously additive to our 
economy, to me, that it seems almost a no-brainer.
    And I think the best evidence, and I know Canada has been 
cited, but what is remarkable is that if you look at Canada, 
Australia, and the U.K., they have all changed their 
immigration policies in the last 5 years to take advantage of 
our anti-growth immigration policies we have in America.
    We have policies right now where we train the world's best 
and brightest. Or if they are here on an H-1B that, until 
Senator Klobuchar's good work, and then they wanted to go 
become an entrepreneur, they couldn't leave that job.
    So they have all opened up the opportunities, and we have 
been funding our economic competitors because of our broken 
immigration system. And, again, as a business guy, you know, 
extraordinarily frustrating, extraordinarily shortsighted in 
our country.
    And, again, I want to commend the Gang of Eight for their 
efforts. We may pick at different pieces, but anybody that 
believes that this isn't going to be done in a comprehensive 
way or that it can be done piecemeal I don't think recognizes 
the reality and the totality of what an enormous drag this has 
on our economy right now.
    So I commend the work that has been done and am hopeful, 
like I think so many of our colleagues, that we can show the 
rest of America, we can show these dreamers, but, frankly, we 
can show our economic competitors we are going to get back in 
the game in terms of continuing to be a magnet for both capital 
and talent. Those are the two determining factors for any 
business in a global economy.
    I am going to get to a question. You know, the one 
challenge I would have--and I, again, want to commend the 
work--I think Mr. Bussgang mentioned the work that Senator 
Moran and I have done on the--and Senator Rubio has been part 
of this--on the startup legislation we have had that builds 
upon the H-1B program with a STEM program and with an expanded 
entrepreneurs visa.
    I do have one question on the entrepreneurs visa. And I 
know there were tradeoffs made, so, again, I am very conscious, 
having been involved in previous gang efforts---- the only 
place in the country where being a gang member is a good thing 
is right here in Washington, D.C.
    [Laughter.]
    Senator Warner. But the fact that there were only 10,000 
entrepreneur visas and the fact that the first crack was that 
those entrepreneur visas would have to create jobs that pay 250 
percent of Federal minimum wage.
    The challenge I feel--and I guess maybe we will start with 
Mr. Bussgang and then any that want to offer this--because the 
nature of a startup is it is tough to find the financing, you 
know, there may be other ways that we can demonstrate that we 
are paying more than a minimum-wage job for these startup 
ventures with either stock options or deferred comp or other 
things that might be criteria so that we really try to get 
these entrepreneurs--most of the ones that I have funded, the 
most aggressive were the ones that were the poorest, 
oftentimes.
    So perhaps you might want to comment on how we could make 
sure we make this program successful.
    Mr. Bussgang. Sure. Thank you, Senator.
    I think you are right that the INVEST visa program needs to 
be as unrestrictive as possible and as flexible as possible, 
both in terms of how much capital represents a qualified 
investment from an angel or a venture capitalist, what the wage 
is that is paid.
    Many of our entrepreneurs--and I am not proud to say this, 
but many of our entrepreneurs don't pay themselves anything 
because they want to put all the capital we give them into 
their company and they want to hire as many engineers as they 
can and as many salespeople as they can.
    So I can't give you the specifics with regards to a 
recommendation from a policy standpoint; that is not my area. 
But I can tell you that, on the ground, as an investor, the 
most flexibility that we can allow for these entrepreneurial 
companies with the Invest visa program, the better.
    Senator Warner. And I would simply just add, and I know my 
time has expired, but there may be ways to get at the same goal 
so that we are not--again, I think the group has really tried 
to balance making sure that we can rebut the arguments, I think 
fallacious arguments, that we are taking jobs away from 
Americans. But there may be other ways, in terms of deferred 
comp or stock options or others, that could be part of the 
criteria.
    Thank you.
    My time is up, I can see, but Mr. Anderson was anxious to 
answer.
    The Chairman. Be cool.
    [Laughter.]
    The Chairman. I ask unanimous consent to insert--this is, 
of course, before I call on Lord Nelson here. I ask unanimous 
consent to insert in the record the written statement of Mr. 
Luis Arbulu.
    He was born and raised in Peru. Mr. Arbulu came to the 
United States with a Fulbright fellowship to study at the 
University of Kansas. He stayed in the United States to work as 
an engineer at Google and other companies. He currently runs an 
investment fund and innovation ideas lab in San Francisco, 
California.
    Mr. Arbulu was invited to appear but could not appear at 
our hearing today because of a family obligation but wanted to 
share his views. And I assume there are no objections.
    [The prepared statement of Mr. Arbulu follows:]

                   Prepared Statement of Luis Arbulu
    Dear Chairman Rockefeller, Ranking Member Thune, and Members of the 
Committee, thank you for the opportunity to submit testimony to the 
Committee.
    Born and raised in Peru, I came to the U.S. to study engineering 
through the Fulbright program. I worked as an engineer building large 
scale infrastructure projects in the U.S. and abroad, was the head of 
engineering operations at a startup and then held a number of senior 
roles at Google. As a founder and managing director at Hattery, a seed 
stage investment fund and ideas and innovation lab based in San 
Francisco, I work with entrepreneurs from all around the world who have 
come the United States to start their businesses. Recently, I was 
appointed as an Entrepreneur in Residence with the U.S. Citizenship and 
Immigration Services in order to help the agency understand the 
realities and nuances of high impact entrepreneurship when they look to 
adjudicate visas. I understand the trials of these struggling 
entrepreneurs because I have lived them; that's why I support the 
Senate's efforts to pass comprehensive immigration reform.
Startups--the Drivers of Our Economy
    As a result of my experiences, I joined the Board of Engine 
Advocacy. Engine's mission is to create an environment where 
technological innovation and entrepreneurship thrive by educating and 
working with startups and lawmakers to construct smarter public policy. 
Engine has more than 500 members, from young companies making products 
ranging from semantic search tools to heart scanning technologies, to 
MIT physicists building satellites and thriving businesses such as 
Yelp. Across the country, Engine members are driving our economy.
    ``High growth entrepreneurial companies'' are responsible for all 
new net job growth since 1980, according to research from the Kauffman 
Foundation. Our own Tech Works research \1\ has found that employment 
in the STEM occupations of science, technology, engineering, and 
mathematics, has been continually robust, gaining 27 jobs for every 1 
job gain in all other occupations between 2002 and 2011. These jobs 
have also boosted local communities; for every job created in the high 
tech sector, 4.3 additional jobs are projected to be created in the 
local goods and services economy, including barbers, lawyers, and 
health care professionals.
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    \1\ https://s3.amazonaws.com/engineadvocacy/TechReport_LoRes.pdf
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INVEST Visa
    As risky investments, startups are unlikely to receive, or even 
investigate the possibility of receiving, conventional bank loans. 
Instead, startups rely on angel investors and venture capitalists who 
are willing to take the financial risk in exchange for equity. To 
ensure that these fledgling businesses can prosper, angels and VCs will 
often offer advice and mentoring in addition to financial investment. 
Investors steer companies toward success by literally being present as 
the startup grows. These interactions, together with hard work and late 
nights, grow truly innovative companies.
    These networks and access to capital and talent are the reasons why 
so many of the world's entrepreneurs flock to the U.S. to start and 
grow their companies. Unfortunately, our current immigration system 
makes this prohibitively difficult. Fabien Beckers, for example, has 
created a 3D heart imaging system that could revolutionize the way we 
diagnose and treat heart disease. He has a PhD from Cambridge and an 
MBA from Stanford. Despite having funding contingent on his ability to 
stay in the country Fabien was not technically employed and so did not 
fit the requirements for an H class visa. Instead of working on his 
product, Fabien had to spend months being rejected by visa category 
after visa category. Finally, he proved he was ``exceptional'' enough 
in his ability (as defined by the visa class) to receive an O visa that 
allowed him to stay in the country.
    Columbia business school graduate Sumit Suman, on the other hand, 
has not been as fortunate. His online mentoring startup Mentii is being 
used by universities around the country to help better connect alumni 
networks. In order to qualify for an H1B visa, Sumit had to relinquish 
control of his company to a member of his Board. But Sumit lost out in 
this year's visa lottery so was forced to return to India. Though still 
building Mentii from Delhi, Sumit is no longer able to meet possible 
clients and actively build the community.
    Foreign-born startup founders continually struggle to stay in the 
country. Some, like Fabien, eventually find a visa category that fits. 
Some, like Sumit however, relinquish control of their companies. Still 
others use L visas to travel back and forth from their home country as 
their business demands. But this is one of the costliest visas because 
startup founders must incorporate their business, and maintain staff 
and offices, in two countries.
    The INVEST visa remedies this problem by allowing startup 
entrepreneurs with funding to stay here and grow their businesses. We 
believe that the requirements in S.744 are reasonable: an investment of 
$100,000 in the previous three years for a nonimmigrant visa. This 
investment can be easily verified by the regulatory and enforcement 
agencies.
High Skilled Workers
    As startups grow, it is also important to make sure that they are 
able to hire the right talent. A recent study by Engine Advocacy shows 
that STEM workers continue to be in high demand. Inflation adjusted 
wages for STEM workers have grown faster than for non-STEM over the 
last two decades, despite the recession. The number of computer and 
math and science jobs have also increased by 5.2 percent annually over 
the last decade, with an unemployment rate below 1 percent and a job 
openings rate of around 8 percent.\2\ Moreover, despite claims that 
foreign workers are paid less than their American counterparts, foreign 
born IT workers earn 6.8 percent more than those with U.S. 
Citizenship.\3\
---------------------------------------------------------------------------
    \2\ http://engine.is/blog/posts/its-all-relative-stem-workers-are-
in-high-demand
    \3\ http://www2.itif.org/2010-h1b-visa.pdf
---------------------------------------------------------------------------
    According to USCIS data, the number of H1B applications correlates 
with economic growth; in good growth years, there are more applicants 
than during recession years. It is for this reason that Engine 
advocates for an H1B system that is responsive to the needs of the 
marketplace rather than arbitrary caps.\4\ While the comprehensive 
immigration bill makes great strides toward reducing the burden on the 
H1B system, the existence of a cap, and the preference for workers with 
graduate degrees will continue to cause difficulties for startups. For 
startups, the right talent is not defined by what degree they have.
---------------------------------------------------------------------------
    \4\ http://www.engine.is/blog/posts/how-the-gang-of-eight-
immigration-bill-impacts-startups
---------------------------------------------------------------------------
    As startups struggle to find highly skilled workers who can lead 
the technology revolution, each H1B worker makes a substantial impact 
on the growth of the business. According to a 2011 GAO report, the H1B 
caps did not impact larger firms who were able to move workers to a 
foreign office and then use L visas to join their team in the United 
States as needed.\5\ Startups, on the other hand, do not have the 
flexibility to locate their workers are around the world. The same GAO 
study noted that for startups, being denied a H1B visa could mean 
moving the whole company abroad, or abandoning the startup entirely.
---------------------------------------------------------------------------
    \5\ http://www.gao.gov/new.items/d1126.pdf
---------------------------------------------------------------------------
Conclusion
    S.744 makes great strides towards reforming the current immigration 
system. The INVEST visa allows entrepreneurs from around the world to 
start their businesses in the United States. Reforms to the H1B system, 
however, stop short of allowing these businesses to prosper. Startups 
can power the next generation of growth in the American economy if we 
let them. Entrepreneurs and innovators need Congressional support to 
continue to build the businesses of the future. We hope that you will 
consider these measures that will allow for that future, our future, to 
be prosperous.

    The Chairman. Senator Nelson?

                STATEMENT OF HON. BILL NELSON, 
                   U.S. SENATOR FROM FLORIDA

    Senator Nelson. I want to note the presence of Dreamers 
from Florida who are in the audience and just state that this 
past week I was--there they are.
    I want you all to know, last week I was at Immokalee High 
School and met with students. And all the students, this 
incredible poverty and sacrifice they have come through and 
where they are all going to school under a tutoring program 
there. And then we came to this one young lady. She is the 
valedictorian in the class. She has been accepted at a number 
of major of universities. But because she is a Dreamer, they 
cannot give her a scholarship. And so she is having to put off. 
And, of course, we are in it now.
    And I will work with your office, Senator Rubio, to see if 
there is any way of getting her any financial assistance. She 
is the valedictorian of the class.
    I wanted to ask Mr. Bussgang, what is being proposed in the 
immigration reform is a compendium of these things: the Invest 
visa, the new EB-6 visa, and the current EB-5 visa, trying to 
capitalize on every bit of investment and entrepreneurship and 
startup potential that we can from foreigners. Have we left 
anybody out?
    Mr. Bussgang. I don't think so, Senator. I think if the 
question is implying, have we left out elements of the policy 
or have we left any people out with respect to our 
consideration of the bill----
    Senator Nelson. Both.
    Mr. Bussgang. No, I think the bill is well-constructed. I 
think the comments made by Mr. Anderson are well-taken with 
respect to making sure that we don't have too onerous a set of 
regulatory burdens on the businesses that are trying to comply 
with the new bill that want to hire the additional workers.
    I think with respect to Senator Warner's comments, making 
sure that the Invest visa bill is flexible in the language to 
allow for investors to come from angel investors, incubators or 
accelerators that may exist in all of your states that may not 
be normally characterized as qualified venture capitalists but 
in our world are becoming important sources of capital and 
important sources of knowledge.
    But I think it is a very--with those provisions aside, I 
think it is a very well-constructed bill.
    Senator Nelson. The EB-5 program has been around for a 
while. Give me your analysis of whether or not it has been 
successful. And working in tandem with these other new 
programs, will that cause it to be more successful?
    Mr. Bussgang. Senator, I am not an expert on the EB-5, but 
I do know that the backlog has been very detrimental to the 
success of entrepreneurs. Senator Rockefeller earlier made 
reference to how is it these entrepreneurs are hanging around 
for 8 years, 10 years, 12 years and still seem to want to 
pursue their green cards.
    I think if we can eliminate that backlog and streamline 
that process, in addition to the work in the law that is being 
put forward--and I know that is an administrative point, maybe 
not a legal point--from a bureaucratic standpoint, I think that 
would be incredibly important and valuable.
    Senator Nelson. You are talking about the backlog in 
granting them the EB-5 in the first place?
    Mr. Bussgang. Yes.
    Senator Nelson. Well, that is an interesting thing, 
because, you know, we are in an era that we have to worry about 
our national security. And in a number of those backlogs are 
the extensive checks that they have to go in to see if somebody 
is trying to enter for some purpose other than legitimate 
investment.
    Mr. Bussgang. Yes, coming from Boston, I am unfortunately 
painfully aware of that concern, and I think it is a very valid 
one. And so I can't tell you the tradeoff that needs to be made 
by the bureaucratic system to make sure that we streamline as 
much as we can those checks while at the same time preserving 
our security, but I think it is a very fair point. We have to 
keep that balance in mind.
    Senator Nelson. You are an immigration specialist. What do 
you think about the people who wait in line to get a green card 
and someone can come in and buy their way in, as a matter of 
policy?
    Mr. Bussgang. I am not sure if I understand the question, 
Senator. With respect to whether it seems fair? Is that a 
fairness question?
    I know that some of the provisions being considered are 
merit-based and skill-based. And I think we have to do what is 
in our economic interests, and we have to do what will generate 
the greatest amount of entrepreneurial activity. And so I am, 
as a capitalist, quite in favor of merit-based systems and 
putting in place a structure that rewards people who are from 
backgrounds and have skills and academic backgrounds that we 
want in this country.
    I can't speak to the actual financial equation, but more in 
terms of the philosophy, I do believe in a merit-based system.
    Senator Nelson. And do you think the present standards for 
the merit-based system on EB-5 are what are fair?
    Mr. Bussgang. Senator, I am not an expert enough in that 
area and in the intricacies of the EB-5 standards to comment.
    Senator Nelson. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Nelson.
    I want to ask two questions. One will appear not to be 
germane, but I sorely hope that it is.
    I had mentioned in my opening statement how it took me 12 
years after I went to West Virginia as a VISTA volunteer, being 
brought up in that City of New York, which West Virginias just 
don't like, and having a last name which most West Virginians 
didn't like, and it took me 12 years. And it is no equivalency 
whatsoever to what we are talking about here, but for me it 
was. It was a sense of having a temporary visa in West Virginia 
to live but not necessarily to prosper or get into what I 
wanted to do.
    It is curious to me about the American people--why is it? 
Is it the two oceans, these large bodies of water that separate 
us from most of the rest of the world?--why we are so 
suspicious of people who come from afar to try to do good, when 
that is what all of us are trying to do here. But if somebody 
else, somebody of color, somebody not of color, tries to do it, 
somehow we sort of get agoggled.
    And, you know, you talk about immigration reform. In West 
Virginia, it is not very popular. I, frankly, don't care. It 
has to happen. It has to happen. And it is the Scotch-Irish 
tradition of West Virginia. So many of those folks are, you 
know, from Scotland and Ireland and from Italy and all over the 
world, and they come to work in our coal mines or wherever.
    But then I note in India that you have those marvelous 
national institutes. And I am trying to think of, how is it 
that we lift up the whole subject of immigration to a higher 
plane, to a less threatening plane, by simply suggesting that 
STEM, in this case, is something to be sought after, is like a 
guaranteed ticket to success, whether you are American-born or 
not? And it really works, I think, in India and other countries 
where you have, you know, in the process of education, the 
highest thing you can get to is a national institute. And if 
you graduate from that national institute--you know, you have 
to be really smart to get in and to get out--you are on your 
way. What that does, it certifies to all the people in any 
other countries where this may be going on that this is a high-
order priority and excellence.
    And so, therefore--and then I look at America, and I look 
at the absolute appalling power of sports and all the 
television time it takes and all the money that is involved in 
it and how, you know, kids go to college and spend 1 year, then 
they are off to the professionals, where they get cut after 2 
years and they have nothing left, which I referenced in the 
opening statement. But it is really partly an attitude.
    And, Senator Rubio, actually, I would be interested in your 
view on this too.
    But I think the whole question of doing immigration reform 
would be much easier if we could think of it as in all of our 
interests, in all of our interests. This is not a threat. This 
is an addition.
    As it is today, if we are--the government could very well 
be funding, probably is funding, $250,000 to help somebody get 
a Ph.D., and then the person goes back home. As I said, there 
is nothing wrong with that, but that should not appeal to the 
average American as a good return on American tax dollars.
    So what I am really asking is, if--I am just positing that 
if we lift the whole subject of sophisticated education, STEM, 
to a very much more visible level, we didn't have TV programs 
called ``Law and Order'' but we had TV programs called 
``Science and Engineering and Math and Technology''--now, that 
is a stretch, but----
    [Laughter.]
    The Chairman. I think it really comes down to some of those 
human factors. So what is it that holds us back?
    The two of you, and the two of you. And I may try to get 
Senator Rubio at the end, too.
    What is it that holds us back? Why are we so reluctant on 
this subject when it is so much in our self-interest, when it 
screams out to be dealt with, and in the dealing of it, all it 
does is help everybody?
    Mr. Bussgang. Senator Rockefeller, I think you are 100 
percent right, it is all of our interests. And it is also a 
social justice issue.
    I think what we could be doing better as a country will be 
achieved through this bill, because I think, through the 
passing of this bill, you are sending a symbol to the world 
that America is open for business, that we want the best and 
the brightest to come and stay here and that we value the know-
how and we value the entrepreneur.
    Right now, the entrepreneurs I spoke about earlier in my 
testimony, the entrepreneurs I invest in, the signal that we 
give them is that we don't value them, that they have to 
scratch and claw to stay in this country. And that makes no 
sense. We want to be attracting them and fighting for them just 
like the NCAA Division I recruits. When the coaches come and 
visit the high schools, that is how this country should be when 
it comes to the best and the brightest.
    The Chairman. Cash in hand.
    [Laughter.]
    Mr. Bussgang. Cash in hand. People joke about stapling a 
visa with every Ph.D. We should be stapling also a $100,000 
scholarship if they want to start a company and seed capital, 
which is what a lot of accelerator programs are doing around 
the country now.
    So I fully agree with what you are saying.
    I will also observe, though, that the culture is changing. 
As digital devices are in the hands of more and more young 
people, being a geek is more cool than it has ever been. And I 
think we are seeing a generational shift. That facility with 
digital devices and the Net-native generation is taking over. 
And as those young people take over, they are going to demand 
even more from this country in terms of facility with this 
technology.
    The Chairman. See, I would argue--and then, actually, I 
really want to call on you, Senator Rubio--that you are not 
wrong but not necessarily right, that Americans are incredibly 
adept at all uses of technology, and 3-year-olds are, you know, 
inventing better moons than Mars is, but that it is not 
necessarily a commitment to the discipline and the follow-
through of STEM education, which in turn is what creates the 
admiration among American people of this fact, which then in 
turn makes the whole question of how are we dealing with 
immigration, how are we really getting the best and brightest 
and keeping the best and brightest, you know, involved so we 
all move forward together. I mean, I feel so sad about it.
    Senator Rubio, do you have some thoughts?
    Senator Rubio. Well, I appreciate the chance to comment. A 
couple points.
    As to the point that you have raised about it being in the 
interest of the country, I actually have a letter that was 
delivered just a few hours ago from the Office of the Chief 
Actuary of Social Security. They looked at the bill and the 
assumptions that are in the bill as far as the restrictions and 
other provisions that are in it.
    The chief conclusion of this letter is summarized in the 
last line, where it says, ``Overall, we anticipate that the net 
effect of the bill on the long-range actuarial balance of 
Social Security and Medicare will be positive.'' And the point 
being--and I think if you look deeper into the subtext of it, 
it talks about 3 million jobs being created over the next 
decade, growth in GDP as a result of that growth.
    We need to understand that what we are talking about, 
particularly in the realm of what you are outlining, is people 
that are going to be making significant salaries above the 
median wage in the United States, many of whom will be paying 
into the system in Medicare and Social Security but, because of 
their status on temporary visas, will never access that system 
for years to come. So just from that perspective, it is a net 
positive on the country.
    And I would just say, Senator, that as far as the general 
view on immigration reform, the sense that I get is that the 
American people across the political spectrum are ready for 
immigration reform. And I think that is true even of the vast 
majority of people in my own party. There is a desire to ensure 
that the problem we have now never happens again. People are 
ready to deal with the issue that we have now of 11.5 million 
human beings living in the United States in violation of the 
immigration laws. They are prepared to deal with that reality 
in the best way possible for the country.
    What they don't want to see is a second wave in the future. 
They don't want to see this happen again. And our argument to 
that is that there are a lot of things we need to do to secure 
the border and other measures. But one of the things that we 
can do to ensure that it never happens again is have a legal 
immigration system that works; have a system of legal 
immigration so that people can come here legally. Because at 
the end of the day, people would rather come here legally.
    One of the underappreciated facts in this whole debate is 
how hard it is sometimes to legally immigrate to the United 
States. And 40 percent of the people that are here today in 
violation of the immigration laws did not enter illegally. They 
entered legally.
    And you would be shocked at the number of people that have 
been victims of fraud. They go out and they hire someone who is 
a notary who claims to be an immigration lawyer, who claims to 
fill out their paperwork. The paperwork never gets filed. Now 
they are illegally here.
    How many people just can't afford it? I mean, you have to 
get lawyered up sometimes for this stuff. I can't tell you the 
number of people I have met who would shock you, I mean, in 
terms of, they have been here legally, all of a sudden they are 
out of status, and they just didn't realize, because someone 
either didn't give them good information or it was so 
complicated to follow the law or otherwise.
    So one of the best things we can do to prevent illegal 
immigration in the future is create a system of legal 
immigration where the demand for these jobs can meet the supply 
of these workers in an orderly way. What we have now is a very 
simple issue of supply and demand. We have a demand for these 
jobs in the United States, and we have a supply of people 
willing to fill them. And we do not have a way for those two 
things to meet in an orderly fashion. They will always meet; 
supply and demand will always meet. They will either meet 
through an orderly process, which is what I hope we can do 
through immigration reform, or they will meet in a chaotic 
process, which is what we have today.
    So I think that if we can convince the American people that 
we are taking measures to ensure that this never happens again, 
we will have immigration reform this year. And if we fail to do 
that, I think it will be very difficult. So that is my hope, 
and that is what I hope we are working on.
    The Chairman. Thank you.
    Senator Thune?
    Senator Thune. Thank you, Mr. Chairman.
    I am curious to know, just because we have talked a lot 
about the number on H-1B visas and each of the various bills 
attempts to address it in a different way, generally with some 
sort of a cap and some sort of an index, what you think that 
number should be of H-1B visas in terms of whatever legislation 
Congress ultimately approves.
    Mr. Anderson. Well, I think the I-Squared bill has a pretty 
good framework in which they set a particular number and then 
it can go up based on how early the cap is hit each year.
    So I think that is at least one that probably could get 
political support. The fact that about a quarter of the Senate 
signed on to the bill indicates that it has bipartisan support. 
So that might be a good way to start to look at what the 
possible number should be.
    Senator Thune. OK.
    And I know the I-Squared bill addresses it through a 
market-based escalator, and I am interested if that is an 
approach that you think makes sense. The comprehensive 
immigration reform bill I think goes from 65 to 110, can go up 
to 180, but limited, I think, to 10,000-person increments per 
year increase.
    Mr. Anderson. Right.
    Senator Thune. And just as a case in point, in 2013 we hit 
the visa cap in 5 days. In 2012, it took 10 weeks. But, you 
know, either way, that is a pretty--I mean, we are capping that 
thing out in a hurry.
    So does a market-based escalator approach that is in the I-
Squared bill make the most sense in terms of how you address 
this?
    Mr. Anderson. I mean, I think so, but----
    Ms. Henricks. Yes, I think from a business perspective, 
from our point of view, that that is what would make the most 
sense, market-based escalation.
    Senator Thune. OK. But nobody wants to say exactly what 
that number should be today?
    All right. Well, good. Gives us a lot of flexibility there, 
Mr. Chairman.
    [Laughter.]
    Senator Thune. One other question, and that is, one of the 
arguments against increasing that number is that people in this 
country, you know, are not going to get paid the same as a 
result of--if we get more and more people coming in here on H-
1B visas, there is this sort of assumption that somehow there 
is going to be this wage gap.
    But there was a 2011 Government Accountability Office 
report that compared median reported salaries of U.S. workers 
to H-1B professionals in the same fields and age groups. The 
report found that H-1B professionals generally earned the same 
or more than their U.S. counterparts.
    And so I guess my question is, is this a case where you get 
a few of those anecdotes that are driving this debate? Because 
it doesn't seem like there is that gap there that we hear talk 
about all the time.
    Mr. Anderson. I mean, I would say that, yes, that there 
have been actually two or three or four other academic-oriented 
studies that confirmed the same thing. And also the law 
requires that companies pay the higher of the prevailing or 
actual wage. While there are always going to be some bad 
actors, of course, I think in general companies want to comply 
with the law. And you need to compare apples and apples, you 
need to compare workers that have the same relative experience.
    And one of the things that is really not known in this 
debate, which has always surprised me, is that the U.S. 
Citizenship and Immigration Service has an incredible amount of 
oversight of H-1Bs that never gets mentioned. They have 
conducted over 30,000 onsite audits of employers of H-1Bs 
between 2010 and 2011.
    And there is one company in particular that had said that 
they had had 100 site visits in a year. I don't know about your 
Senate offices; you may not want to get 100 visits from, you 
know, an investigator in a year. You know, it seems like a lot 
of oversight.
    I don't think companies were complaining so much. They just 
weren't sure that even if they didn't have any problems, they 
just kept getting these site visits over and over. And, 
overall, in 2010, only 1 percent of those cases, of those 
audits, were referred for fraud investigation to ICE for 
further investigation.
    So, again, there is oversight there. The bill that we are 
talking about would exponentially increase the oversight but 
would also do about a dozen other things, too, that would make 
it, you know, more difficult for employers.
    Senator Thune. OK.
    Is anybody aware of examples where you have foreign 
workers, H-1B workers being paid less than U.S. workers would 
be and that being an argument for why companies want to hire 
lower-wage workers and why we ought to have some restrictions 
on the H-1B program?
    Ms. Henricks. Yes, so that is absolutely not the case, at 
least with our company. We have a very structured approach to 
compensation practices, so for a particular job there is a 
particular range of salaries that are paid for that job. An 
entry-level worker might come in near the bottom of that range, 
but as their performance merits, they will get raises.
    So, again, as we apply for H-1B visas or green cards, we 
definitely must demonstrate that we are paying the standard 
wage rates for that particular kind of a job. So that is not an 
issue in our company at all.
    Mr. Anderson. I mean, I would say----
    Mr. Bussgang. I would----
    Mr. Anderson. I am sorry. Go ahead.
    Mr. Bussgang. Oh, I would echo that. Across our portfolio, 
companies that are hiring H-1B visas workers, we are just 
trying to hire the absolute best talent into the company, and 
the wage is the wage. We don't see any evidence of H-1B visa 
workers being paid any less than green card workers.
    Mr. Anderson. I would say there obviously are violations 
every year, and the Department of Labor investigates those, and 
people have to pay heavy fines.
    But one of the things that is in this bill, it would 
actually require companies to pay much higher wages for H-1Bs. 
And what is interesting is, if that provision sticks in the 
bill, then it calls into question why you would need to also 
have recruitment requirements and nondisplacement requirements. 
Because why would, logically, a company, if they have to pay 
someone $10,000 or $20,000 more than a comparable U.S. worker, 
would they, you know, not want to hire the U.S. worker or try 
to lay off a U.S. worker to hire someone that they would be 
paying $10,000 or $20,000 more?
    So if you are going to have one of these provisions in, it 
seems not to make a lot of sense that you would need to have 
three or four additional provisions, as well.
    Senator Thune. Thank you.
    Thank you, Mr. Chairman. I want to thank our panel.
    The Chairman. Yes, thank everybody.
    But now Senator Nelson.
    Senator Nelson. Mr. Chairman, I just want to offer a 
concluding thought for you and Senator Thune.
    Since the topic of this hearing is the role of immigrants 
in America's innovation economy, one of the great historical 
examples of the success of immigrants in the field of STEM--
science, technology, engineering, and mathematics--is the fact 
that the Soviets beat us into space with Sputnik and then with 
Yuri Gagarin, first human to orbit the Earth. The fact that we 
were able to catch up and overtake them and then land on the 
moon in a feat that the Soviets could not do but tried very 
hard. We raced and got most of the German rocket scientists 
from Peenemunde right at the conclusion of World War II.
    And it was when all of our attempts to get into space had 
failed that the President turned to Wernher von Braun, and the 
group of Germans ensconced in Huntsville, Alabama, and said can 
you get us into space with the first satellite Explorer, and he 
said, give me 6 months.
    The Chairman. Wow.
    Senator Nelson. And the rest is history on the American 
space program.
    So there is, clearly, an example of a historical fact of 
the subject of your hearing today.
    The Chairman. I want to close with a statement, but I have 
to point out that Senator Nelson was an astronaut. And he was 
so good that his spaceship, which was headed toward Mars, 
actually went right through the middle of Mars, wiped it out 
completely. So when he wants to get something done--this, of 
course, is a joke.
    [Laughter.]
    The Chairman. But I want to close on a non-joke. I was 
talking yesterday with a person who came to see me because this 
person has been put in charge of the best, the most likely 
STEM-related educational college in West Virginia. And she is 
just totally new on the job, and do you know what she has 
already done? She has abolished football.
    So, with that thought dangling in the air, I thank you all 
for your courtesy and for your brains and for your creativity 
and for your effort to help us all.
    Hearing adjourned.
    [Whereupon, at 4:18 p.m., the hearing was adjourned.]
                            A P P E N D I X

Response to Written Questions Submitted by Hon. Frank R. Lautenberg to 
                             Ruchi Sanghvi
    Question 1. We all want to ensure that the U.S. remains a beacon of 
innovation and growth. That requires striking the right balance between 
providing immigration opportunities for the best talent--both studying 
in our universities and abroad--and ensuring that we are not bringing 
foreign workers to the U.S. in order to reduce labor costs and displace 
American workers. How do you suggest our immigration policies best 
strike this balance?
    Answer. Any immigration policy should protect opportunities for 
Americans while at the same time providing companies access to talent 
when there is a deficit in the labor force. The major problem all of us 
see is that there simply isn't enough supply to fulfill the demand for 
high skilled, qualified workers. Today's economy based on knowledge and 
ideas can only grow if we add more talented, skilled and hardworking 
people to it and if America is to remain competitive it needs to find a 
way to keep the best people here. The fact is that the current system 
results in more than 40 percent of math and science graduate students 
leaving the United States after educating them. The economic reality is 
that 40 percent of Fortune 500 companies are started by immigrants and 
their children. If we made it easier for the world's talent to stay 
here, we would be creating more opportunities for everyone.

    Question 2. Some have suggested that allowing visa holders to 
switch companies without restriction would ensure that these 
individuals are not taken advantage of and those companies are not 
displacing U.S. workers in favor of hiring non-Americans at depressed 
wages. Do you believe that both Americans and visa holders are better 
off when portability is included in work visas?
    Answer. I believe that everyone is better off if work visas are 
portable. Where you work, where you live are all fundamental choices 
everyone should have and having portable work visas will give non-
Americans the freedom to make those choices. Moreover, companies will 
have to compete to keep their employees (both Americans and visa 
holders) and ensure they are happy.
    However, I believe the real problem is the green card backlog. 
Employees have to stay with employers sponsoring their green cards for 
many years until the backlog clears. If they switch employers they lose 
their place in line and have to start the process all over again. If we 
cleared the backlog then the problem would go away. You would be able 
to get a green card quickly and change employers whenever you want. Any 
effort in clearing the backlog would greatly alleviate the problem.

    Question 3. Do you believe that American companies have a 
responsibility to fill positions with American workers, if possible?
    Answer. Any immigration policy should protect opportunities for 
Americans while at the same time providing companies access to talent 
when there is a deficit in the labor force. From my personal 
experience, there simply aren't enough high-skilled, qualified people 
to recruit. Each candidate probably has 2-3 companies competing for him 
or her. We can't build the best products without employing the best 
people to build them. Every company wants to hire the best people 
whether they are U.S. citizens or immigrants.

    Question 4. Last month, the Wall Street Journal reported that 
``Indian IT professionals working in the U.S. are typically paid about 
25 percent less than their American counterparts.'' How do you respond 
to the criticism that H-1B employees are paid significantly less than 
their American counterparts?
    Answer. In my experience wages for people in the tech industry have 
only increased. The BLS data shows that wages for IT workers grew by 44 
percent over the last 11 years, while price levels only increased 36 
percent. Empirical analysis has also found that immigration does not 
decrease American wages. On the contrary, I believe granting H-1B visas 
to highly skilled immigrants will increase jobs, productivity and 
economic output.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to 
                          Jeffrey J. Bussgang
    Question 1. We all want to ensure that the U.S. remains a beacon of 
innovation and growth. That requires striking the right balance between 
providing immigration opportunities for the best talent--both studying 
in our universities and abroad--and ensuring that we are not bringing 
foreign workers to the U.S. in order to reduce labor costs and displace 
American workers. How do you suggest our immigration policies best 
strike this balance?
    Answer. Immigration is not a zero sum game. If we attract the best 
talent in the world to come to America, they will create jobs, not 
displace them. As a result, the U.S. policy should be to welcome as 
many highly talented immigrant entrepreneurs as possible.

    Question 2. Some have suggested that allowing visa holders to 
switch companies without restriction would ensure that these 
individuals are not taken advantage of and those companies are not 
displacing U.S. workers in favor of hiring non-Americans at depressed 
wages. Do you believe that both Americans and visa holders are better 
off when portability is included in work visas?
    Answer. Yes. The more portable the visa, the more likely the visa 
holder will be able to start their own business or join a start-up. We 
should encourage the most talented people to freely pursue the most 
promising opportunities.

    Question 3. Do you believe that American companies have a 
responsibility to fill positions with American workers, if possible?
    Answer. American companies have a responsibility to create wealth 
for their shareholders. If they can find American workers to do the 
job, they will hire them. If we restrict the flow of capital and talent 
to the best American companies, those companies are going to be at a 
competitive disadvantage to foreign companies who are attracting global 
capital and talent.

    Question 4. Last month, the Wall Street Journal reported that 
``Indian IT professionals working in the U.S. are typically paid about 
25 percent less than their American counterparts.'' How do you respond 
to the criticism that H-1B employees are paid significantly less than 
their American counterparts?
    Answer. We need more H-1B visas to fuel our country's start-ups and 
fill in the huge gap that we have for technical talent. These 
additional visas need to be spread out across companies small and 
large, and not be concentrated in a few Indian IT offshore 
organizations who may be abusing the core intent of the system.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to 
                           Gwenne A. Henricks
    Question 1. We all want to ensure that the U.S. remains a beacon of 
innovation and growth. That requires striking the right balance between 
providing immigration opportunities for the best talent--both studying 
in our universities and abroad--and ensuring that we are not bringing 
foreign workers to the U.S. in order to reduce labor costs and displace 
American workers. How do you suggest our immigration policies best 
strike this balance?
    Answer. Please note that many balances are already in place. As 
part of the H-1B petition process, we are required to file a Labor 
Condition Application (LCA) with the Department of Labor (DOL)--
establishing that we pay the H-1B employee or recruit wages that are 
consistent with the market for that occupation in that geographic area. 
There is no incentive for companies to hire a foreign national if there 
is a qualified U.S. applicant. When a qualified U.S. worker applies for 
a position, we hire that applicant.
    In addition to the balances already in place, Caterpillar is 
supportive of the provision that allows a portion of H-1B visa fees to 
be reinvested into U.S. STEM programs. This supports the development of 
a sustainable STEM talent pipeline in the U.S., while still addressing 
the critical skill shortage we face today.

    Question 2. Some have suggested that allowing visa holders to 
switch companies without restriction would ensure that these 
individuals are not taken advantage of and those companies are not 
displacing U.S. workers in favor of hiring non-Americans at depressed 
wages. Do you believe that both Americans and visa holders are better 
off when portability is included in work visas?
    Answer. After the labor market test is passed and PERM is filed, 
our current immigration laws allow for limited lateral mobility, upward 
mobility or ability to accept a position with another company. This 
significantly impacts Indian and Chinese foreign nationals in the EB-2 
and EB-3 categories, who may spend four to ten years waiting for their 
green card after the PERM has been filed. As a result of the current 
laws, these employees will likely spend this entire period in the same 
position at the same company. This stunts their careers, limits their 
ability to learn new skill sets and severely reduces their mobility 
both inside and outside of the company. Caterpillar is supportive of 
any provisions that would increase mobility of highly skilled foreign 
nationals.

    Question 3. Do you believe that American companies have a 
responsibility to fill positions with American workers, if possible?
    Answer. Caterpillar would prefer to hire Americans to work here in 
the U.S. The reality is the U.S. isn't graduating enough students in 
these fields to meet demand. STEM jobs are expected to grow by 17 
percent during the decade ending in 2018, compared to just 9.8 percent-
growth in non-STEM jobs. But at the current pace, the U.S. won't be 
able to produce enough workers to fill the jobs. In 2008, just four 
percent of all bachelor's degrees were awarded in engineering.
    Caterpillar relies on immigration to fill these gaps.
    We continue to be challenged to fill all of our STEM talent needs 
without sponsoring a limited number of hires. For example, we posted 
three openings for our high end simulation division in fall 2011. The 
posting required a Masters or PhD in Mechanical Engineering with a 
strong analytical, mathematical and simulation background. It was 
limited to candidates who did not require sponsorship. After eight 
months, no qualified candidates were identified. At this point, the job 
was reposted for about a month with sponsorship allowed. A number of 
successful candidates were identified and three were hired. All three 
successful candidates required some form of sponsorship.

    Question 4. Last month, the Wall Street Journal reported that 
``Indian IT professionals working in the U.S. are typically paid about 
25 percent less than their American counterparts.'' How do you respond 
to the criticism that H-1B employees are paid significantly less than 
their American counterparts?
    Answer. I can only speak to H-1B employees at Caterpillar. 
Caterpillar has a very structured salary schedule that is based on 
employee position, experience and performance. From a compensation 
standpoint, foreign nationals are treated the same as their U.S. 
counterparts.
    There is already a safeguard in place with regard to compensation. 
As part of the H-1B petition process, we are required to file a Labor 
Condition Application (LCA) with the Department of Labor (DOL)--
establishing that we pay the H-1B employee or recruit wages that are 
consistent with the market for that occupation in that geographic area. 
There is no incentive for companies to hire a foreign national if there 
is a qualified U.S. applicant. When a qualified U.S. worker applies for 
a position, we hire that applicant.
    However, it is possible that flaws in our current immigration 
system would cause H-1B employees, on average, to be compensated less 
over time. Many H-1B employees at Caterpillar and other large companies 
eventually pursue permanent residency. After the labor market test is 
passed and PERM is filed, our current immigration laws allow for 
limited lateral or upward mobility for H-1B visa holders. This 
significantly impacts Indian and Chinese foreign nationals in the H-1B 
category, who may spend four to ten years waiting for their green card 
after the PERM has been filed. As a result of the current laws, these 
employees may spend this entire period in the same position while their 
U.S. peers enjoy unlimited lateral and upward mobility. Accordingly, 
the current laws are structured in a way that impedes foreign nationals 
to be compensated the same as their U.S. counterparts.

    Question 5. You state in your testimony that there are provisions 
in the comprehensive immigration reform bill that would be onerous and 
more harmful than helpful. Please respond with the specific provisions 
that concern you and explain what about them is concerning.
    Answer. As initially drafted, Caterpillar found the language 
regarding recruitment, non-displacement and outplacement of H-1B 
employees problematic.
    Recruitment--The initial language did not reflect real-world human 
resources systems currently in use. It would require us to develop a 
new methodology and documentation system to prove position-by-position 
results for every job we fill with an H-1B visa worker. On campus 
recruiting is a good example. When we visit a college, we recruit for 
many specialized positions at one time. It would be challenging for us 
to go back and prove why we didn't hire an American.
    There is already a safeguard in place with regard to recruitment. 
As part of the H-1B petition process, we are required to file a Labor 
Condition Application (LCA) with the Department of Labor (DOL)--
establishing that we pay the H-1B employee or recruit wages that are 
consistent with the market for that occupation in that geographic area. 
There is no incentive for companies to hire a foreign national if there 
is a qualified U.S. applicant. When there a qualified U.S. worker 
applies for a position, we hire that applicant. There are simply not 
enough qualified U.S. workers in STEM fields to meet demand.
    Non-Displacement of American Workers--It was our understanding the 
bill initially stated we could not hire an H-1B worker unless we proved 
we did not displace an American worker somewhere else in the company. 
The language has since been clarified for us. After receiving 
clarification on that particular language in the bill, we now 
understand the bill states we cannot hire an H-1B worker unless we 
prove we did not displace an American worker in the same job category 
within the company.
    Outplacement--The initial language stated we will be limited in 
using workers from another company if we reduce our workforce in any 
way. For example, we work with IBM to develop software. If layoffs 
occurred, we may not be able to continue this work. This type of 
language could have a significant negative impact on both hiring 
companies (Caterpillar) and third party companies (IBM in this case).
    Hatch Amendments--Since the initial bill was drafted, the Judiciary 
Committee has amended these provisions to soften the language. This 
addressed most of our concerns and, while not perfect, strikes a 
reasonable balance to make the language workable for companies like 
Caterpillar.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to 
                            Stuart Anderson
    Question 1. We all want to ensure that the U.S. remains a beacon of 
innovation and growth. That requires striking the right balance between 
providing immigration opportunities for the best talent--both studying 
in our universities and abroad--and ensuring that we are not bringing 
foreign workers to the U.S. in order to reduce labor costs and displace 
American workers. How do you suggest our immigration policies best 
strike this balance?

    Question 2. Some have suggested that allowing visa holders to 
switch companies without restriction would ensure that these 
individuals are not taken advantage of and those companies are not 
displacing U.S. workers in favor of hiring non-Americans at depressed 
wages. Do you believe that both Americans and visa holders are better 
off when portability is included in work visas?

    Question 3. Do you believe that American companies have a 
responsibility to fill positions with American workers, if possible?

    Question 4. Last month, the Wall Street Journal reported that 
``Indian IT professionals working in the U.S. are typically paid about 
25 percent less than their American counterparts.'' How do you respond 
to the criticism that H-1B employees are paid significantly less than 
their American counterparts?
    Answer. The best approach is to maintain a process that allows 
employers to petition for skilled foreign nationals, sponsor them for 
green cards, and ensure labor mobility for foreign-born professionals. 
Current law, while allowing a worker to move to another employer, could 
be improved by increasing portability for those waiting for employer-
sponsored green cards. The wait times can last for many years for those 
sponsored for green cards. The measures in the Senate bill to increase 
the annual quota and eliminate the green card backlog will be important 
to both America and its ability to retain skilled professionals, as 
well as to many foreign-born individuals and their families.
    Companies should hire the best person for the job and should not 
discriminate. In the vast majority of companies only a small percentage 
of employees are foreign nationals on visas. There are many reasons why 
an available and qualified U.S. worker would be hired over a foreign 
national, including language skill, cultural knowledge, lack of legal 
difficulty when hiring, and no delays in the hiring process. But 
sometimes employers find the best person for the job is an individual 
who was not born in the United States. This is not surprising given 
that on many U.S. campuses half to two-thirds of the graduate students 
in key technical fields are foreign nationals who need a visa to work 
in the United States.
    Under the law, it is illegal to pay a foreign national in H-1B 
status in the same geographic area ``significantly less'' than a 
comparable U.S. worker for that job, as the question posits. As noted 
in my written testimony, several studies have concluded H-1B 
professionals are paid the same or more than their U.S. counterparts.

                                  
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