WASHINGTON — At Duke University in North Carolina, where foreign nationals account for 60 percent of this year's master's class in engineering, Vivek Wadhwa is watching his students struggle to get jobs.
Some of them are getting employment offers withdrawn, while others are frustrated and ready to move back home. Wadhwa says it's the result of xenophobic messages coming out of Washington.
The culprit is a law passed by Congress in February. It forces banks that receive federal bailout money to hire American citizens over foreign guest workers.
Two months later, its reverberations are being felt across the country, particularly on college campuses.
The effect could be most acute in states such as California and New Jersey, national leaders in immigrant-founded engineering and technology businesses. In California, foreign nationals helped create more than half of the start-up companies in the Silicon Valley, according to a Duke University study. And in 2007, foreign nationals accounted for nearly two-thirds of all engineering doctorates awarded from the University of California and California State University, the study found.
Overall, the numbers are small: Only 65,000 of the visas are permitted each year, and another 20,000 are allowed as exemptions if the applicants have graduate degrees from American universities.
Immigration lawyers and educators warn that it could become much more difficult for universities to recruit foreign students, particularly if students fear there will be no jobs for them after they graduate.
"They'll go to the U.K., or Australia, or Asia, or whatever it may be," said Peter Roberts, a partner at McCarter & English, a corporate immigration law firm. "It's going to be a disincentive for foreign nationals to come to the U.S."
Wadhwa, an engineering professor at the Pratt School of Engineering at Duke and a researcher at the Harvard Law School, said it's part of a troubling pattern in the U.S.: "Whenever there's a downturn, you start blaming foreigners."
"This is making front-page news all across the world right now, much more than here," he said. "And the message it's sending to other counties is it's OK to raise trade barriers, it's OK to close your doors."
Yet for Republican Sen. Charles Grassley of Iowa, who added the language to the stimulus bill, it was an easy call. With unemployment so high, he said, "there is no need for companies to hire foreign guest workers" when there are qualified Americans who need jobs. His "Buy American" amendment, which passed unanimously in the Senate, requires banks over the next two years to favor U.S. workers over any immigrant with an H-1B work visa.
Recruiting could become similar to the situation universities faced after the attacks of Sept. 11, 2001, when it was harder to attract international students, said Sanjay Varshney, the dean of the College of Business Administration at Sacramento State University.
He sympathized with Congress, however, saying that Americans should benefit more in the long run if their taxes are paying for the aid to banks. "I think we're going through unprecedented times. . . . You can make a compelling case on either side," he said.
While the language was added to the economic stimulus bill, it applies only to banks and other companies that receive money under the Troubled Asset Relief Program, the federal law that provides aid to struggling banks.
"If you're getting money from the TARP bill, you — you've got to make sure that you make a good-faith effort to hire Americans first," Grassley said in a speech on the Senate floor. "And implied in it is if you're going to lay people off, you're going to lay off H-1B workers first before you lay off American workers."
Illinois Democratic Sen. Dick Durbin, who backed Grassley's effort, said the H1-B program was intended to be used only when qualified American workers couldn't be found.
"Our immigration policy should seek to complement our U.S. workforce, not replace it," he said.
Many officials are sensitive against any kind of attacks against the H-1B program. Without it, U.S. companies would shift more jobs overseas to get the kind of engineering and technical talent they need for specific jobs, advocates argue.
Wadhwa said the U.S. relies on foreign nationals because it's a huge exporting country and needs their expertise. At one time, he said, foreign nationals were good ambassadors and cheerleaders for the nation, but now many of them can't even get job interviews.
"Companies have told them privately it looks very bad for them to hire H-1Bs," Wadhwa said. "So they tell their friends back home that there's no jobs in America and we're being discriminated against. . . . They're telling their friends not to follow them here."
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