Each year approximately one million international students pay around $50 billion in the United States to attend American colleges or universities. A large number of them earn degrees in science, technology, engineering and mathematics (STEM). In what has become known as the “Brain Drain,” many don’t return home and end up contributing enormously to America’s technological progress and wealth. Approximately twenty-five percent of internet startups are started by immigrants. Over fifty percent of the internet startups that are valued at more than $1 billion, which are called unicorns, were started by immigrants or the children of immigrants. Well-known examples include Google (Sergey Brin), Tesla (Elon Musk), Yahoo (Jerry Yang) and eBay (Pierre Omidyar).
You may have noticed that our medical profession has benefited by retaining foreign doctors who specialize in all sorts of important areas. According to the American Medical Association (AMA) approximately twenty-five percent of U.S. medical doctors were born outside of the U.S. and then immigrated to the U.S. to practice medicine. This is an especially attractive option for doctors from India where English is one of the official languages.
More generally, immigrants make up approximately twenty-nine percent of U.S. healthcare workers. With the aging of the large baby boom generation, the need for more healthcare is rapidly increasing.
Why is President Trump imposing a $100,000 fee for skilled immigrants just when their skills are becoming more important, especially in healthcare? Recently President Trump announced a $100,000 fee for new H-1B visas. H-1B visas are for skilled foreign workers such as doctors and for those coming to the United States to earn advanced degrees. Perhaps this is part of President Trump’s efforts to discourage immigration and at the same time to help pay for his tax cuts. But the consequences of this and other such policies are much more profound.
Apparently, President Trump doesn’t want this foreign tuition money or foreign talent to continue to flow into the United States. Unfortunately, the Trump administration is trying to block federal money going to our universities for health and scientific research. Less cutting-edge research at American universities would discourage international enrollments. Cutting funding for the National Institute for Health (NIH) and the National Science Foundation (NSF) could free up money to reduce the federal deficit or facilitate income tax cuts that mostly benefit the wealthiest Americans.
In Germany almost every university is tuition free. Many other European countries offer a tuition-free college education. They recognize the spillover effects as revealed by economist William Baumol (1922 to 2017) where everyone benefits by being in a country with a well-educated population. Some of those countries limit the free tuition to citizens of the European Union while others are tuition-free to all of their students regardless of nationality. Other English speaking countries such as UK, Canada, Australia and New Zealand actively court people with advanced degrees to emigrate to their countries with clear pathways to permanent residency.
Tuition keeps going up at research universities in the United States at the same time that President Trump is trying to cut funding that has enabled many students to work as research assistants. If well-funded and well-respected foreign universities offer free tuition to American citizens, why not get your college education abroad? There are opportunities that don’t even require learning a foreign language. Many universities in the EU offer English-taught programs, especially at the master’s level. Countries like the Netherlands, Sweden and Denmark have a high number of English programs. Research universities such as the University of Amsterdam, Lund University and Copenhagen Business School offer English language programs.
Many of America’s smaller colleges are having difficulty finding enough students to keep operating. Raising children has become more and more expensive, especially if the costs of providing a child with a college education are taken into account. Birth rates in the United States are well below replacement. The 2.1 children per woman in her child bearing years is now down to 1.62 and falling. The number of college-age students is dropping. Many small colleges are unable to find enough students to continue to operate and are closing down. Researchers at the Federal Reserve Bank of Philadelphia predicted the closure of 80 colleges in the United States in the coming year.
President Trump is trying to deport as many illegal immigrants as possible. Along with the large number of baby boomers retiring, this should greatly shrink the labor force. Fewer workers means the production of fewer goods and services, especially hands-on services such as provided by doctors and nurses. The laws of supply and demand cannot be denied. With fewer workers and more retired people living longer, labor costs will rise, forcing up prices. Even getting your car fixed or your roof repaired will cost you more. This will be especially hard on people with fixed incomes.
A smaller labor force will also lower the total earnings of our population which funds Social Security. Just at the time when more Social Security money is needed to fund a larger and larger group of retired baby boomers, the earnings tax money for Social Security is drying up. The two biggest pieces of the federal budget go to Social Security and the Defense Department. Past Republican attempts to get rid of Social Security by “privatizing” it (to facilitate greater income tax cuts) have failed.
President Trump’s reversal of the brain drain to discourage other countries from sending us their best and their brightest while encouraging American citizens to look for education and work abroad, will ultimately have a big impact on the future of the United States. Reducing both the quantity and quality of our workforce will hurt everyone.