Foreign Graduate Students and Industry Employment

I read an article in Bloomberg (PDF) recently; it was titled: "How Foreign Students Hurt U.S. Innovation". (The URL for the article reveals a more aggressive title: "Glut of Foreign Students Hurts U.S. Innovation".)

The article builds the following case:

1. Though there are plenty of domestic STEM (science, technology, engineering, and math) undergraduates, there are very few domestic graduate students.  
2. Domestic graduate students are virtually non-existent because
1.  Wages in the STEM fields (academic and industry) are lower than they should be due to the oversupply of foreign graduate students.
2. Universities choose foreign students over domestic students "because they can pay" (versus those students who pay the much reduced, tax-dollar subsidized in-state rates).
3. Domestic STEM holders of bachelor's degrees are being diverted into non-STEM fields due to lower wages in STEM fields.
4. To encourage development of our STEM talent pool, we should focus on the domestic students by removing competition from foreign students.  This will reduce the supply of STEM workers, raise wages, and provide an economic incentive for domestic students to continue in their STEM education.

I am a STEM graduate student now, worked for eight years previously in a STEM job, and since I am working towards being a professor in a STEM field, I think I can safely say I have the means, motive, and thanks to this blog, the opportunity to speak to this issue. Here are my opinion-neutral observations (as much as such things exist).

Item 1 - There are a lot of foreign students in the graduate program at Wichita State.  All of my graduate classes here have had far more foreign students than domestic. I would guess that most have been over 80% foreign students. In some, I am the only domestic student in the class.  Most of the faculty in our department are foreign-born.  I would expect this to be the case in many universities around the nation though I only have my experience at conferences to extrapolate from; no hard data.

My time in the engineering workforce also showed that there are a lot of foreign workers.  Not near as high as Wichita State but I would guess a that one-quarter to one-third the department was employed through a work visa. I don't know exactly how these visas are granted but it is clear that my employer was going to some amount of legal effort to get these foreign-born engineers jobs in the US.

Item 2 - Universities do enjoy getting the extra funds that foreign students provide.  As state support of public universities and colleges has diminished over the years, these institutions have become more dependent on private donations and student-derived income to continue as a going concern. The amount of student-derived income is much larger for foreign students than domestic (in-state) students so universities have an incentive to admit more of these higher-paying students. 

Item 3 - Wages in the STEM fields are lower for those who posses STEM skills.  For reasons that are still not clear to me, the invisible hand of capitalism has recently valued positions in finance (for example) over those in engineering and if a student is simply looking for the highest-paying job, they won't choose STEM.  For the amount of effort and difficulty it takes to graduate with a respectable STEM degree, the STEM industry pay does not seem proportional.  This is not to say that STEM workers are universally impoverished, just that the cost/benefit trade-off does not provide a strong incentive for students to pursue STEM fields.

In these fundamental ways I can agree with the article. I don't know enough to speak very well to many of the specific facts cited in the article but my experience generally echos sentiments alluded to by the author, an academic himself.  My personal experience makes it easy for me to believe the general trend of items 1 through 3 above.  Its item 4 that gives me pause.

The author believes that limiting the number of foreign students will reduce competition for domestic students who desire to enter graduate school and allow them to continue on with their education.  To make this case well, the author would need to provide some evidence of a direct connection between reduced domestic graduate student enrollment and increased foreign graduate student enrollment. In other words, are domestic graduate students being pushed out?  The article implies this is the case but provides no evidence.  My question: do domestic students want to go to graduate school but can't get in because all the slots are taken by foreign students?  I don't know.  

Clearly universities have the financial incentive to admit more of the higher-paying foreign students.  If the financial needs of the universities are the only barrier for domestic students, the solution is simple: remove the incentive for universities to balance their books through income from foreign students by providing more public funds. If the admissions office is being run with the university finances as the key factor, tax money from the states will change the equation. This will only work, though, if money is truly the only barrier for domestic graduate students; I suspect it is not.

The author also seems to equate a strong STEM workforce with a strong STEM academic workforce.  The F-1 visa program is for students and the article deals strictly with this type of visa.  The H-1B is the common foreign worker visa and is completely separate from the student visa. A glut of F-1 visas may in fact be the core factor in the lack of domestic STEM graduate students but what about all of the STEM employment options outside the university? It is entirely possible for the U.S. to have a thriving STEM industry that is achieving many of the things the politicians want while having a limited representation of domestic STEM students in graduate school.

Said simply: I believe the power of the American STEM industry does not primarily lie in advanced degrees.  Those degrees help and may even be a central piece in forming a the business but it takes more than an academic understanding of an issue to make a company successful. Entrepreneurship, risk-taking, and daring ideas don't come simply from working towards a PhD; the gap between a good idea well proven through a dissertation and a game-changing company is large.  The problem with the STEM industry in this country cannot be so simply tied to foreign graduate students.