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80–823 2013

HELP WANTED: THE SMALL BUSINESS STEM 

WORKFORCE SHORTAGE AND IMMIGRATION 

REFORM 

HEARING 

BEFORE THE

SUBCOMMITTEE ON CONTRACTING AND 

WORKFORCE 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

APRIL 25, 2013 

Small Business Committee Document Number 113–014 

Available via the GPO Website: www.fdsys.gov 

SBREP-219 with DISTILLER


Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

BLAINE LUETKEMER, Missour 

MICK MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

JAIME HERRERA BEUTLER, Washington 

RICHARD HANNA, New York 

TIM HUELSKAMP, Kansas 

DAVID SCHWEIKERT, Arizona 

KERRY BENTIVOLIO, Michigan 

CHRIS COLLINS, New York 

TOM RICE, South Carolina 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

YVETTE CLARKE, New York 

JUDY CHU, California 

JANICE HAHN, California 

DONALD PAYNE, JR., New Jersey 

GRACE MENG, New York 

BRAD SCHNEIDER, Illinois 

RON BARBER, Arizona 

ANN McLANE KUSTER, New Hampshire 

PATRICK MURPHY, Florida 

LORI SALLEY, Staff Director 

PAUL SASS, Deputy Staff Director 

BARRY PINELES, Chief Counsel 

MICHAEL DAY, Minority Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Richard Hanna ................................................................................................ 1 

Hon. Grace Meng ..................................................................................................... 2 

WITNESSES 

Mr. John Tyler, General Counsel and Secretary, Ewing Marion Kauffman 

Foundation, Kansas City, MO ............................................................................. 4 

Mr. Nagappa Ravindra, President, Ravi Engineering & Land Surveying P.C., 

Rochester, NY ....................................................................................................... 6 

Mr. Ryan Costella, Director of Strategic Initiatives, Click Bond Inc., Carson 

City, NV ................................................................................................................ 8 

Mr. Morgan Reed, Executive Director, Association for Competitive Technology, Washington, DC ...................................................................................... 10 

APPENDIX 

Prepared Statements: 

Mr. John Tyler, General Counsel and Secretary, Ewing Marion Kauffman 

Foundation, Kansas City, MO ..................................................................... 31 

Mr. Nagappa Ravindra, President, Ravi Engineering & Land Surveying 

P.C., Rochester, NY ...................................................................................... 36 

Mr. Ryan Costella, Director of Strategic Initiatives, Click Bond Inc., 

Carson City, NV ............................................................................................ 39 

Mr. Morgan Reed, Executive Director, Association for Competitive Technology, Washington, DC ............................................................................... 43 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

SBREP-219 with DISTILLER

SBREP-219 with DISTILLER

(1) 

HELP WANTED: THE SMALL BUSINESS STEM 

WORKFORCE SHORTAGE AND IMMIGRATION 

REFORM 

THURSDAY, APRIL 25, 2013 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

SUBCOMMITTEE ON CONTRACTING AND WORKFORCE, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:00 a.m., in Room 

2360, Rayburn House Office Building. Hon. Richard Hanna [chairman of the subcommittee] presiding. 

Present: Representatives Hanna, Amodei, Meng, Clarke, and 

Chu. 

Chairman HANNA. This hearing is called to order. 

Thank you for appearing today to discuss two topics of critical 

importance to small businesses and our national economy: the 

shortage of workers with educations and skills in Science, Technology, Engineering, and Mathematics, also known as STEM, and 

immigration reform. 

Small businesses are the backbone of the United States’ economy 

and the historic source of new jobs and innovation. Among American small businesses, high-tech firms that engage in STEM fields 

hold great promise in creating the kinds of jobs critical to helping 

rebuild our middle class. 

The potential of STEM-based firms to achieve this goal is evident 

in economic reports that show that even during the deepest troughs 

of the recession, many technology-dependent firms continued to 

grow and add jobs. In addition, wages paid in these industries outpaced those paid in most non-STEM occupations. 

Unfortunately, despite the great promise of technology to grow 

our economy and create solid middle class jobs, the share of degrees in STEM fields awarded by American universities has been 

in decline. In addition, a larger percentage of these degrees are 

earned by foreign students present in the United States on a temporary visa. 

As a consequence, 34 percent of small businesses surveyed reported difficulties finding qualified applicants for available positions. What we know is that we face a shortage and long-term gap 

between STEM jobs openings and qualified applicants. 

This Committee partially examined this issue at a September 

2011 hearing. During that hearing, small businesses and their representative associations testified that small businesses face shortSBREP-219 with DISTILLER

2 

ages of workers even with elementary skills in STEM-based disciplines. 

At the same time, many small businesses report an even more 

acute shortage of workers with post-secondary and advanced degrees in STEM disciplines. According to one estimate, by 2018, 

there will be more than 200,000 jobs requiring graduate STEMlevel training that businesses will not be able to fill with nativeborn workers. 

While the preference of many businesses and policymakers is to 

fill available jobs with American workers, it will take a great deal 

of resources and time to build up the pipeline of American students 

with advanced STEM skills. It can be done. I personally think we 

should pursue this task with urgency, and I have introduced legislation to do just that. 

In the meantime, however, in order to grow and remain competitive, small businesses need a reliable supply of skilled workers to 

meet their pressing workforce needs. Many have suggested that expanding programs for highly-skilled immigrants and guest workers 

could be a viable strategy to meet these needs while the United 

States improves its STEM education system. 

Today’s hearing will examine a number of issues pertaining to 

immigration reform and the skilled workforce needs of small businesses, including the extent of the STEM workforce shortage, its 

economic effects on small business, and whether immigrants and 

guest worker visas reduce or improve wages and opportunities for 

the American worker. American has always been welcoming to 

those who seek freedom and opportunity, and if you talk at any 

length of time with any member of Congress or their constituents, 

you will find an American immigrant story. 

In today’s global economy, small businesses are not just competing against larger rivals for market share; they are also competing for talent. Allowing small businesses to fill STEM job openings with foreign workers in the short-term will help those businesses grow and aid our economic recovery and make America 

more competitive globally. 

Once again, thank you all for being here today. I now yield to 

Ranking Member Meng for her opening statement. 

Ms. MENG. Thank you, Mr. Chairman. And thank you to all our 

witnesses for being here. 

Education is the foundation of America’s economy, providing the 

tools for discovery and the skills to participate in an evolving global 

economy. Perhaps no fields are more important to this reality than 

Science, Technology, Engineering, and Mathematics, the so-called 

STEM disciplines. For many small businesses, success is often dependent on being able to hire these STEM educated workers. Without them, small firms would be left without the workforce they 

need to innovate and grow. 

It is easy to see the importance of STEM to the United States’ 

economy. STEM occupations have lower unemployment rates and 

higher pay, showing a high demand for this workforce. Workers 

with an undergraduate major in STEM make a half million more 

over their careers than non-STEM majors. 

During the last 10 years, growth in STEM jobs was three times 

as far as growth in non-STEM jobs, and workers in these fields are 

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3 

less likely to experience joblessness than their non-STEM counterparts. As a result, it is clear that STEM education is playing a vital 

role in America’s economy. 

Over the long-term, its role will expand even further. According 

to research from Georgetown University, STEM occupations will 

grow far more quickly than the economy as a whole, and by 2018, 

there will be 2.4 million job openings in STEM fields. Finding 

workers to fill these positions will be essential, both to the companies in these sectors and the overall competitiveness of America’s 

economy. The primary way to fill these positions is through increasing education in these fields. In this respect, the federal government is playing a major role, providing more than $3 billion in 

STEM education funding through a wide range of agencies, including NSF, HHS, and the Department of Education. 

These initiatives are critical to improving two areas at the center 

of STEM education—graduate study and K–12 teacher training. 

Supporting graduate education in computer science, engineering, 

and mathematics will encourage more students to pursue a STEM 

path. Fellowships and stipends for graduate studies are crucial in 

this regard. Doing so will increase the supply of STEM workers, allowing the United States’ businesses to achieve their full potential. 

Similarly, increasing the quality of teacher training at the elementary and high school levels will help reverse the reluctance of 

many of our young students to pursue STEM education. This is important because the Lemelson-MIT Invention Index has shown that 

34 percent of young adults do not know much about these fields. 

A third of them said they were too challenging, and 28 percent said 

that their schools did not prepare them for STEM education. Simply put, investment in these teacher training programs can reverse 

these trends. 

Another important mechanism to filling STEM positions is 

through immigration. H–1B visas are the primary way that a foreign STEM worker would gain access to the U.S., but with only 

85,000 spots, this year’s limit was hit in just 10 days since taking 

applications. The result is that fewer foreigners trained in scientific 

fields are coming to work in America. Not only does this mean that 

it is harder to find qualified employees, but it means lower rates 

of entrepreneurship. To this point, according to research completed 

by the Kauffman Foundation, the proportion of immigrant-founded 

companies nationwide has slipped by 1 percent, and in Silicon Valley, the percentage of immigrant-founded startups declined by 

nearly 10 percent. Fewer startups mean less growth and fewer 

jobs, both of which we need. 

With these complex issues before us, I am looking forward to today’s hearing, which will provide insights into what our country 

can do to prepare and attract a STEM workforce. Doing so is essential for the U.S. to remain one of the most innovative and competitive economies in the world. Understanding how we can increase 

the quality of STEM education while encouraging greater participation in these scientific fields is imperative not just for America’s 

workers and businesses but for the U.S. economy overall. 

I thank the chairman for convening this hearing and I yield 

back. 

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4 

Chairman HANNA. If committee members have opening statements I would ask they be submitted for the record. 

The lighting system is fairly simple. You have five minutes to deliver your testimony. We will be flexible with that. We want to hear 

from you. When you see the light go yellow you have another 

minute, but relax. 

Our first witness is Mr. John Tyler. He serves as general counsel 

and secretary of the Ewing Marion Kauffman Foundation in Kansas City, Missouri. Among his areas of expertise are issues related 

to innovation and highly-skilled immigration. Thank you, Mr. 

Tyler, for being here today. You may now deliver your testimony. 

STATEMENTS OF JOHN TYLER, GENERAL COUNSEL AND SECRETARY, EWING MARION KAUFFMAN FOUNDATION; 

NAGAPPA RAVINDRA, PRESIDENT, RAVI ENGINEERING AND 

LAND SURVEYING, P.C.; RYAN COSTELLA, DIRECTOR OF 

STRATEGIC INITIATIVES, CLICK BOND; MORGAN REED, EXECUTIVE DIRECTOR, ASSOCIATION FOR COMPETITIVE 

TECHNOLOGY. 

STATEMENT OF JOHN TYLER 

Mr. TYLER. Thank you, Mr. Chairman. Good morning to everyone. 

As the chairman said, I am the general counsel and secretary for 

the Ewing Kauffman Foundation. The Kauffman Foundation focuses on fostering economic independence by promoting entrepreneurial success and educational achievement. 

Small businesses, and in particular young businesses, have been 

a significant driver of job growth, and they are a major source of 

innovative products, services, and processes. More new firms and 

more growth can mean more jobs, more innovation, and improved 

standards of living. As such, U.S. policy must support small businesses, and especially the entrepreneurial subset positioned for the 

transformative growth that keeps our nation’s economy vibrant. 

Among current policies that do not do that well is our immigration system, particularly for STEM businesses. According to the 

National Science Foundation, demand for STEM jobs has been 

growing, and part of the reason for that is not just demand within 

industry but also due to people retiring and the lack of native-born 

talent being educated in the relevant fields as the opening statements commented as well. 

According to data from the Department of Education and the 

Georgetown Center on Education in the Workforce, there is an estimate that the shortfall in STEM fields could be nearly 224,000 

workers by 2018 or about 25 percent of industry labor, that is if 

we just rely on a native-born workforce. 

Although these problems affect our economy and innovative capacity more broadly, they present distinct challenges for small 

business, which too often is at the mercy of an expensive process 

with too many businesses competing for too few visas that take too 

long to process. Small businesses frequently operate on limited 

budgets and personal sacrifice, particularly during the early stages. 

Survival, much less growth, can depend on a company’s ability to 

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attract and retain the right talent with the right skills and experience at the right time. 

Three changes in U.S. immigration law will help small business 

in this regard. First, increased numbers. All business will be 

helped by eliminating or raising the national caps on the EB series 

visas. Also, Congress should increase the annual H–1B visa allocation. Demand frequently exhausts supply before the visas are even 

available as the ranking member noted, including for the coming 

year. Moreover, increasing these numbers may increase jobs based 

on studies that show that an average of between two and five additional jobs are created in connection with each H–1B hired. 

More specific to small business, Congress should also consider 

setting aside a number or percentage of economic STEM visas for 

small business in recognition of the infrequency with which they 

generally engage the bureaucracy and the corresponding inability 

to realize efficiencies. 

A second change would be to provide a predictable path to permanent residency for foreign students who receive graduate or 

even bachelor degrees in STEM disciplines from U.S. colleges and 

universities. These visas could help in at least three ways. First, 

they permit holders to become small business owners, entrepreneurs, and job creators themselves. Second, the visas would presumably be portable because there is no employer to protect who 

has made an investment in obtaining the visa. Finally, these visas 

better position our nation to directly benefit from permitting a high 

quality education at a U.S. college or university instead of forcing 

those benefits overseas. 

My third recommendation recognizes that other changes will 

likely be of little value without changes in the process. The current 

process is too cumbersome, too time-consuming for all business, but 

especially so for small business. As evidence of that distinction, the 

service is more likely to recognize a longstanding large business as 

a ‘‘trusted employer,’’ entitled to expedited processing, which is 

fine, but Malcolm Goeschl asserts that the service is operated with 

the presumption that businesses could not have a legitimate visa 

need if they meet any two of the following three criteria, all of 

which are likely to encompass small business. Those criteria are 

having 25 or fewer employees, having annual gross income of less 

than $10 million, and/or being less than 10 years old. Congress 

should ensure against such an ill conceived presumption, which 

this Committee might do directly given its responsibilities. 

In addition, the service should be required to afford presumptive 

status to H–1B holders and EB series applicants who original employer closes, particularly if they have a similar job or have started 

a legitimate company. Too often, those people lose their visa status 

and must leave or start over if they can. 

Given that only about 44 percent of firms founded since 2003 

survive after five years, there are significant risks for foreign employees of the other 56 percent, which because they are less than 

five years old are likely to be small businesses. 

Other nations are increasingly eager to welcome high-skilled and 

entrepreneurial immigrants, particularly those trained at our colleges and universities. Without the types of changes I suggest, U.S. 

participation in the global brain circulation is more likely to be 

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one-sided, meaning that knowledge and innovation will leave but 

do not circulate back, and small businesses will suffer. 

Thank you for the invitation to submit this testimony, and I look 

forward to your questions. 

Chairman HANNA. Thank you, Mr. Tyler. 

Our next witness is Nagappa Ravindra. 

Mr. RAVINDRA. Yes. 

He is president of Ravi Engineering and Land Surveying, 

headquartered in Rochester, New York. Mr. Ravindra began his 

business in 1995 and employs approximately 90 people. A native of 

India, he earned his master’s degree in structural engineering from 

Syracuse University and has become a United States citizen. 

Mr. Ravindra, thank you for appearing here today. I would like 

to acknowledge your wife who is also here with you and drove 

down from Rochester. 

You may begin your testimony. 

STATEMENT OF NAGAPPA RAVINDRA 

Mr. RAVINDRA. Thank you. Chairman Hanna, Ranking Member 

Meng, and members of the Committee, I appreciate the opportunity 

to testify in today’s hearing on how the STEM workforce shortage 

is affecting small firms. 

My name is Nagappa Ravindra and I am the president of Ravi 

Engineering. We are a small engineering consulting firm based in 

Rochester, New York. I am here today to testify about how H–1B 

visas are essential to small engineering firms that need to hire engineers with specific skill sets in order to serve our clients’ needs. 

I also want to tell you my story and how my firm would not exist 

without work visas for engineers. 

I am a member of the American Council of Engineering Companies, the voice of America’s engineering industry. ACEC, for short, 

members—numbering more than 5,000 firms representing hundreds of thousands of engineers and other specialists throughout 

the country—are engaged in a wide range of engineering works 

that propel the nation’s economy and enhance and safeguard America’s quality of life. Over 70 percent of ACEC’s members are small 

firms. 

My firm, Ravi Engineering and Land Surveying, has been in 

business since 1995. I came to this country in 1980 after graduating from the Indian Institute of Technology in Madras, India, 

with a Bachelor of Science degree in Civil Engineering. I got my 

Master’s degree in Structural Engineering from Syracuse University and started my career as a structural engineer in a consulting 

firm in Syracuse, New York. I was able to get a green card within 

nine months with the help of my employer and became a citizen 

at a later time. After training for eight years, I moved to Rochester, 

New York to accept a high position in another consulting firm and 

worked another five years before starting my own business in 1995. 

I started a consulting engineering firm providing structural engineering services and went on to add employees and offer other 

services such as bridge design and inspection, land surveying, construction inspection, environmental and geotechnical engineering. 

Currently, we average 90 employees and have three offices in New 

York and one in Pittsburgh, Pennsylvania. 

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As a member of ACEC, we advocate a quality-based selection 

process and we compete for work based on the strengths and talents of our employees. To win projects, we need to demonstrate exceptional qualifications and experience. So, in order to grow and 

succeed, we need experienced, as well as entry-level engineers who 

are exceptional and talented individuals. Our growth is limited because of a lack of qualified people in our industry. Currently, we 

have vacant positions we cannot fill due to lack of experienced engineers. 

Because there are not enough engineers with the skill sets we 

need, we currently employ one engineer on an H–1B visa and a 

student on an OPT visa. We had hoped to transfer the student to 

an H–1B visa, but as you know, the current cap of 65,000 was met 

in five days and our labor certification could not be completed in 

time. 

Engineers and the engineering industry are major economic drivers and play an essential role in helping the U.S. compete in the 

global economy. Engineers are in high demand, but the output of 

new engineers from the nation’s universities is not keeping up with 

the needs of the industry and the nation. 

Bachelor’s degrees in engineering have declined by nearly 20 percent since 1985. The workforce is also getting older. Nearly 30 percent of all engineering and science degree holders in the labor force 

are 50 or over and are headed toward retirement. 

There is also greater competition for the diminishing pool of engineering graduates, particularly from the information technology industry seeking the skill sets that engineering graduates provide. 

Only half of engineering degree holders work in the engineering 

field. According to Duke University, between 30 and 40 percent of 

graduates from the University’s Master’s of Engineering Management program take jobs outside of the engineering profession. 

Moreover, the proportion of foreign students earning engineering 

degrees at American universities is quite high. According to the 

American Association of Engineering Societies, for the 2008–2009 

academic year, foreign nationals comprised 43.9 percent of the 

Masters and 54.6 percent of the Ph.D.s awarded in engineering by 

U.S. universities. 

With so many engineering graduates from American universities 

working in other fields, it does not make any sense to send trained 

foreign engineers home to work for our competitors in the global 

marketplace. If I had not been given the opportunity to stay and 

work in the United States, 90 American workers would not have 

the job opportunities provided by my firm. My story is not unique. 

Speaking from my personal experience, nearly half of my graduating class of 220 students from Indian Institute of Technology in 

Madras, India, came to the United States in 1980 to pursue higher 

education. Out of that pool of 110 engineers who came to this country, today, nearly 30 percent have their own businesses employing 

a large number of Americans; about 20 percent are CEOs, CTOs, 

general managers, and senior officers in Fortune 500 companies; 20 

percent of professors, deans, and educators in premier institutions; 

and the remaining have become venture capitalists and successful 

investors. 

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I strongly believe that the United States needs to invest in talented and young engineers similar to investing in our roads, 

bridges, and infrastructure as a long-term strategy for growth and 

prosperity. I urge Congress to strengthen and expand the H–1B 

visa program so that firms like mine will be able to hire the necessary engineering talent to serve our clients’ needs and continue 

to grow and thrive. 

Thank you for the opportunity to participate in today’s hearing, 

and I would be happy to respond to any questions from Committee 

members. 

Chairman HANNA. Thank you, Mr. Ravindra. 

I now yield to a visiting colleague, Mr. Amodei, who will introduce our next witness. 

Mr. AMODEI. Thank you, Mr. Chairman and Madam Ranking 

Member. I was excited about doing this until I heard the last witness refer to people over 50 as getting older, so I am still dealing 

with a little bit of that. But I will drive on nonetheless. 

I appreciate your courtesies. It is a privilege to appear before you 

here today, not only as a member of the Immigration Subcommittee 

of the Judiciary Committee to get a little cross-pollenization on 

what your fine Subcommittee is doing, which will be helpful in our 

work also, but also to introduce a fellow Carson High School graduate in the form of Mr. Costella. 

Now, in keeping with chronological accuracy that Mr. Ravindra 

has started, Mr. Costella, to make no mistake about it, went 

through that high school about two and a half decades after I did 

and has obviously made much better use of his high school start 

in his career than I have. But it is with some pride that I introduce 

not only a constituent but a person who represents a company that 

is a constituent company—a leader in national defense, aerospace, 

transportation; not only a major impact on local commerce but nationally, the fabric of our community; a company that employs over 

some 300 people in Nevada and Connecticut; folks that are 

innovators not only in their particular product line but also in 

terms of everything they are faced with—and that includes not 

only their product but also the way they manage, recruit, and administer the people that work for them, our most important resource. 

So with that, Mr. Chairman, I would yield back. Thank you for 

your courtesy, and I look forward to hearing from Mr. Costella, 

hopefully without any indications on how much younger than I he 

happens to be and how much more productive his professional career has been to date. 

Thank you. 

STATEMENT OF RYAN COSTELLA 

Mr. COSTELLA. Thank you, Congressman Amodei. It is great to 

see you here. Thank you. And Mr. Chairman and Ranking Member 

Meng, thank you guys for the invitation. It is great to be here. 

This is a really important issue. As Congressman Amodei alluded 

to, I am the director of Strategic Initiatives at Click Bond, Inc., and 

we are headquartered in Carson City, Nevada, which is actually 

the state capital, for those of you who might think it is Las Vegas. 

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We employ about 250 people in Carson City and then another 60 

or so in Watertown, Connecticut. 

We are a family-owned business. This past year we celebrated 

our 25th anniversary. We are a very, very proud manufacturer in 

the United States. We are a company that is in transition. Since 

we are talking about generations and ages, our owners are actually 

transitioning toward handing the company to the next generation, 

to their son, and we are a company in transition. We are growing. 

There is no shortage of opportunities. We are the global leader in 

the design and manufacture of adhesive-bonded fasteners, primarily for the aerospace industry but we also do a lot of work in 

naval and marine, and increasingly other transit vehicle sectors. 

And for the laypeople, basically our parts are mechanical fasteners 

that we use adhesives to put into place that hold in all the electrical systems and planes and trains and ships and those kinds of 

things. 

As we look into the future, we have an incredible workforce that 

has done amazing work to make us the global leader, but a large 

number of our folks are baby boomers, and very similar to other 

companies, especially small businesses in this country, those folks 

are going to be leaving the workforce soon, and we have to replace 

them somehow. And on top of that, as I said before, we have major 

growth opportunities in front of us and we have to find the people 

that can help us achieve those goals. 

Unfortunately, in Nevada we have challenges with respect to 

education, and we have challenges with respect to retaining folk 

even in our state, and that is a totally different subject, but the 

point is when we look out into the future, filling those jobs is not 

going to be an easy task. Now, we have made some major investments in Nevada on trying to address this problem. We, as a company, have partnered with the Manufacturers Association in Nevada, as well as our fellow manufacturers themselves to partner 

with higher education institutions across the state, the Workforce 

Development System, the Economic Development Apparatus, as 

well as the K–12 education system to really define what the needs 

are that we have. 

Historically, we have pounded our fists on the table and said we 

cannot find the people we need, and we were very good at pointing 

our fingers at the education system and anyone else that would 

allow us to point at them to tell them that we are not getting what 

we need. And I would say probably over the past three to five years 

we have really had a change of mind where we have said maybe 

we need to look in the mirror a little bit and we need to be a bit 

more proactive about defining what our needs actually are. 

And so we have been very involved in our work in Nevada in 

really saying, look, let us talk about with STEM skills really are. 

Everyone hears STEM and the first question is usually what the 

heck is STEM? And then they hear Science, Technology, Engineering, and Math. Okay, what does that mean? 

For us, STEM are the basics—reading, writing, the ability to do 

math, the ability to problem solve. And those things paired with a 

propensity to show up on time, to communicate effectively and 

work in teams, if someone has those skills, we can train them to 

do any job in our company. We can put them through school and 

SBREP-219 with DISTILLER

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they can become an engineer who invents the next greatest thing. 

Without those basics, there is not a very bright road ahead. And 

so we have really focused our work on trying to set that as the 

minimum standard—those basic reading, writing, and math skills. 

We tend to actually look at the National Career Readiness Certificate granted by ACT as a solid indicator of that. 

And then as you move up the chain, we have to realize that as 

manufacturers and as employers, when we want to tell the world, 

hey, we need these specific skills, we have to use some sort of common language so people understand what you are talking about. So 

we have really got behind the idea of using nationally portable, industry-driven credentials to particulate what our needs are. 

So at Click Bond we have a huge need for machine operators 

that can one day become journeyman-level machinists. So we align 

our needs with the National Institute of Metal Working Skills Credentials, and we have seen tremendous success in a program that 

has taken people literally from unemployment to full-time jobs with 

benefits and national credentials. So I would love to talk a little 

more about that. 

In closing, I see my red light is on here, as far as the immigration piece goes, when we need a person with a specific skill set, we 

look for someone who is the right fit who has got the skills, and 

if there is a way to build a larger pool of people as we grow and 

as other small- and medium-sized businesses grow, if we can have 

a larger pool of people to pick from that is more competitive, that 

just drives how much more excellent and competitive we can be in 

this global economy. 

So I look forward to your questions and telling you a little bit 

more about our company if you would like to know more. Thank 

you. 

Chairman HANNA. Thank you, Mr. Costella. 

I now yield to Ranking Member Meng, who will introduce the 

next witness. 

Ms. MENG. I am happy to welcome Morgan Reed, who is the executive director of the Association of Competitive Technology. ACT 

represents more than 5,000 small- and medium-sized information 

technology firms and helps them leverage their intellectual assets 

to raise capital, create jobs, and continue innovating. Mr. Reed specializes in issues involving application development relating to privacy, intellectual property, competition, and small business innovation. He also serves on the SBA’s Office of Advocacy Advisory 

Council. Welcome. 

STATEMENT OF MORGAN REED 

Mr. REED. Thank you. And thank you for the introduction. 

Chairman Hanna, Ranking Member Meng, and distinguished 

members of the Committee. As you heard, my name is Morgan 

Reed, and we represent over 5,000 software and other high-tech 

small businesses throughout the world. Our members are at the 

forefront of the revolutionary changes happening today through 

mobile apps, cloud computing, and data management. And the best 

news is I am here to tell you today my members are hiring, or 

rather trying to hire. 

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Chairman Hanna noted in his op-ed yesterday that small businesses are the engine of job creation. Well, for the mobile apps 

economy, we are dominated by small business; 70 percent of the 

top selling mobile apps, small businesses or micro businesses. 

Moreover, this is not a Silicon Valley-only phenomenon. In fact, the 

study we did in 2012 showed that 60 percent of the app companies 

are actually outside of California. 

And of course, the growth that we have all talked about—you 

have heard everyone at the table talk about—I want to put some 

numbers to that—$92,000—$92,000 is the current median pay according to the Bureau of Labor Statistics for a software engineer. 

Ninety-two grand. I know a lot of people who consider that a great 

living wage. And, of course, BLS predicts that there will be 120,000 

new computing jobs annually through 2020. Unfortunately, my 

numbers cannot grow their companies if they are unable to hire the 

workers they need to make the next game or the next game changing application. 

But instead of talking BLS numbers or Department of Labor 

averages, I thought I would be a little more specific. So Congressman—Chairman Hanna, in your district, Enesco Avionics is looking 

for a software engineer to work in Endicott; BAE, looking for engineers. Congresswoman Meng, Hoptin Media, which is on Austin 

Street in Forest Hills, they are looking for a software engineer. Aurora Games in Jackson Heights, looking for a mobile app developer. 

Congressman Amodei, you obviously heard from Mr. Costella, but 

guess what? Hodges Transportation is looking for two engineers— 

a design engineer and a test engineer. Congresswoman Clarke, in 

your district I have got Cardwell Beach Marketing. They are looking for an interactive design engineer. 

All of these openings have been available for some time. And 

with these openings commanding high salaries one would expect 

that, well, America must be spiking in people pursuing computer 

science degrees. Remarkably, that is not happening. The primary 

reason is the steep decline in schools teaching computer science. 

Only one in 10 high schools offer the class. Students are less likely 

to major in a technical subject if they did not study it in high 

school. And with fewer computer science majors graduating from 

universities, we are woefully short on the talent our U.S.-based 

tech industry needs. 

Now, we know that improved STEM education can produce results. A National Science Foundation supported effort called Young 

People’s Project is already out in the field working to improve math 

and science scores in schools in underserved communities. For example, Aria Fleming was a middle school student when YPP 

reached out to her in the Mississippi Delta. She clearly was not on 

a path to math and science education, yet she has now graduated 

from Tennessee State University with a degree in electrical engineering and works for Procter and Gamble. CodeNow is an afterschool program in New York that is taking high schoolers after 

school and teaching them how to code, and its graduates are winning national science awards and studying computer science in college. 

Now, we have seen the investment in STEM education at the 

secondary level has positive results, but this begs some obvious 

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questions. One, does STEM education solve today’s problem; and 

two, how do we pay for it? I mean, we all love the idea of putting 

more money into something but we have got to find some revenue 

to make it happen. And the reality is the tech industry is willing 

to step up. Right now we know that the tech industry has said 

something we rarely hear, which is charge us more, please. We are 

looking at the need for H–1B visas and saying double our fees for 

H–1B visas if that helps us get more workers today to solve problem number one, and also if that money goes to help solve problem 

number two, which is the STEM education need that we have. 

One of the key elements of the I–Squared Act, of course, it will raise $500 million annually over 10 years for STEM programs. This 

funding represents a fraction of the positive economic impact for future generations who can fill these jobs that are currently going 

overseas or worse, remaining unfilled. 

So I urge members of this Committee to help small businesses 

succeed by charging us more so that we can get the tech visas that 

we need now and get the STEM education that we need to grow 

America’s workforce to meet our needs tomorrow. 

Thank you very much. 

Chairman HANNA. Thank you, Mr. Reed. I appreciate your time 

and testimony. 

Mr. Tyler, you said that the—maybe I misunderstood, but in 

order to qualify for the program, the immigration program, H–1B 

visas, the minimum is 25 employees, $10 million gross? 

Mr. TYLER. No, I am sorry, I may have misspoke, Mr. Chairman. What I was referring to was a practice at the USCIS that was 

documented at least in 2010, where the USCIS seemed to have a 

presumption that if a business had fewer than 25 employees, if it 

had less than 10 million in annual revenue, or if it was less than 

10 years old, any two of those three, that there was a presumption 

at the service that the company did not have legitimate visa needs. 

Chairman HANNA. On its face that seems absurd to me knowing 

that most companies start with one employed or, like Mr. 

Ravindra, start by himself. Can you elaborate on that? Maybe Mr. 

Reed would also because the tech companies in my community, 

most companies, start as a very small business with an idea and 

expand. So basically, we are limiting our helping small businesses 

simply by those rather arbitrary and capricious rules. 

Mr. TYLER. I agree. And Malcolm Goeschl in his article goes at 

some length to describe that process and how the presumption 

hurts. With that fundamental presumption in place it denies those 

businesses that meet those criteria the opportunity to hire talent, 

denies them the opportunity to grow and to advance their products, 

much less to advance the company’s—— 

Chairman HANNA. Well, Mr. Ravindra, who started with one 

himself, would not be able to be anywhere he is today at all. He 

would have to wait for years and years to grow to that size which 

almost by definition means he will never get there. 

Mr. TYLER. That is the impediment. 

Chairman HANNA. Mr. Reed. 

Mr. REED. I mean, let us be very specific. The high-tech industry is built off of companies that are incredibly small. We all know 

recently Instagram was purchased for $1 billion. They had 12 emSBREP-219 with DISTILLER

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ployees—12. Instagram. Huge. A lot of these tech companies as you 

say would not even hit that threshold even when they have hit true 

success. And the really key part—and you know, Mr. Ravindra 

here is a perfect example of that—is finding the right person. 

There is all this discussion about, well, we need STEM skills. We 

also need the right skills. Mr. Costella already referenced that 

about making sure that he has got the right kind of person to do 

the job. 

So the problem with that number is it arbitrarily limits small 

business to find that one right person who has that right skill that 

can make the difference between your company going public, being 

acquired, or failing. And so that is a huge part of the problem that 

we see with this artificial limit on the side. 

Chairman HANNA. So you would suggest then or that would 

suggest that there be no requirements whatsoever; that one person 

would be enough and one dollar and no years? Ten years is a long 

time to be in business in my view. 

Mr. REED. Well, a lot of the tech companies we work with have 

actually either been in business in one form or another for far 

longer than that. I think, and the Kauffman Foundation can weigh 

in, obviously the ideal would be to have the ability to get the right 

person instantaneously with no wait and no requirements. We are 

also pragmatic and we know that finding a solution that will meet 

435 members’ approval of the House and 100 members of the Senate will be difficult, so there is ideal and what we think we can 

work with. 

Chairman HANNA. Let me ask you one other question. When 

tens of millions of people are out of work in this country or have 

simply given up or are under employed, how does the guest worker 

program—this is for any witness—help those people find work? 

Mr. REED. I will do a quick one. We have a member company 

in Illinois, and this is a horrible story because it actually talks 

about seven people who lost their job, but it fits with your model. 

This was a company that did service and they had a person from 

Britain who was in the United States on a H–1B visa. The visa expired and there were seven people that helped support that person 

on the bids that they did for large enterprise-level companies in the 

Chicago area. They lost their H–1B visa person who was the team 

head, and those seven people could not go to work. So when you 

look at that number, I might have one H–1B visa, but if he is the 

key—or she is the key to making the rest of that bid possible, completing that RFP on time, then it is worth it to have that one person because that provides 7, 8, 10 more jobs to support the overall 

contract. 

Chairman HANNA. Thank you. 

Mr. TYLER. Mr. Chairman, if I might add to that, there are a 

couple of additional ways that the H–1B program can help but also 

needs to be changed. One of the ways that it currently helps is that 

there are studies that show for every H–1B that is hired there is 

an average of between two and five other jobs that are created to 

support the H–1B. So hiring the H–1Bs can, in fact, contribute to 

employing other folks as well. 

One of the ways in which the H–1B visa would need to change 

to get to your point about the unemployment rate, currently folks 

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who are here on an H–1B have difficult, if not absolute barriers, 

to starting and growing their own company as an H–1B. And yet 

when we look at the impact of immigrants on the economy, if we 

look at the impact of immigrants on startups and new jobs and 

growth companies, 40 percent of the Fortune 500 companies had 

immigrant founders that were part of them. Between 25 and 50 

percent of various companies depending on the studies in Silicon 

Valley and biomedical industry in Boston, publicly traded companies with venture capital input. So between 25 and 50 percent of 

these companies have had immigrant founders. 

We need to do a better job. We need to do more to allow immigrants to start and grow companies, and the H–1B has impediments to that. 

Chairman HANNA. One other question, just generally. 

So what I have learned and I am pretty confident that we would 

all hear this, that STEM-related jobs are solidly middle class jobs. 

In a world where we see declining incomes, diminishing lifestyles, 

the American dream as we understand it generally becoming mere 

elusive and harder to attain, STEM educated workers, regardless 

of their origin, are people who pay taxes, and add value at all levels. 

I would like to yield to Ranking Member Meng for her questions. 

Ms. MENG. Thank you. I have a question for Mr. Costella. 

Community colleges can play a significant role in training STEM 

professionals. What experience does your company have with employing these types of graduates? And anyone can answer also. 

Mr. COSTELLA. Thanks for the question. 

Community colleges, I mean, they are such a godsend for us, especially in Nevada. I will tell you a little bit about some success 

we have had. 

We have a need, like I said before in my opening remarks, for 

machine operators. These are folks who—the machine operator, 

just for folks who do not know, is the entry-level point for a career 

in machining. So if you want to be a journeyman-level machinist 

that gets paid quite a bit of money to do your work, the entry point 

is a machine operator. We are not unique in the Northern Nevada 

area. A lot of small- and medium-size manufacturers have that 

need. So what we were able to do was come together as a community of employers and say we have the specific need, as I said before, we need to use the National Institute of Metalworking Skills 

credentials to validate that skill set. Then what we did is partnered 

with two of the community colleges up in Northern Nevada— 

Truckee Meadows Community College and Western Nevada College. We got them engaged in understanding what these credentials were and what they validate, and they agreed because these 

credentials are nationally portable and industry driven, and thirdparty validated and driven by longitudinal data, that they could actually grant academic credit along with the credential for anyone 

who would go through a program to receive it. 

We then partnered with the workforce system so that the community colleges could get their facilities up to par to be able to 

train towards the National Institute of Metalworking Skills standard, and then we partnered as a community basically to go look at 

the unemployment lines and screen people to say, okay, who has 

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got the basic skills—reading, writing, math, problem solving—and 

who can pass a drug test? It is serious. People laugh but it is a 

problem. 

So the folks who could do that, who could earn the National Career Readiness certificate, be drug-free, were then interviewed. And 

the folks who made it through that process—I think somewhere 

around 40 folks ended up going through this program initially. In 

16 weeks, they went through eight weeks of in-classroom training 

on measurement, safety, materials, five days a week, eight hours 

a day. The second eight weeks they did three days a week in the 

classroom and the last two days of the week were spent in on-thejob internships with the employers who had the need, who articulated that need upfront, paid internships, and in 16 weeks they 

went from being unemployed, went through a training program at 

the community college that had a demand-driven equation from the 

employers, and ended up I think over a 90-something percent success rate in becoming employed with benefits. And again, we are 

talking about the first level of a career machining, $12–$14 an 

hour with benefits. And it is up from there. 

And I am happy to say Click Bond, we actually hired four people 

out of that program and they are outstanding employees. I spoke 

with our vice president of production before I came out here and 

asked him how are these folks performing? And he said they are 

outstanding. They have got very, very bright futures. So that is a 

model that we saw a lot of success with in Nevada. 

Mr. RAVINDRA. If I may add, we hire a lot of construction inspectors who most of them come from community colleges and they 

are graduates of community colleges and there is a severe shortage 

of these inspectors that we hire and community colleges are a great 

place to produce these graduates. 

Ms. MENG. A question for Mr. Reed. 

You proposed to increase visa fees and use the additional revenue to pay for STEM education, and maybe Mr. Ravindra would 

want to answer, too. Do you believe that smaller firms would be 

able to afford these visas or would large businesses end up being 

at an advantage because of their deeper pockets? 

Mr. REED. The cost, when you look at an employee for the software sector, the cost of an H–1B visa—and worst of all, the time 

that it takes—remember, as you have all talked about, it was a 

matter of days until we hit that cap. So if you look at lost productivity, a few thousand dollars more is nothing compared to the cost 

of the acquisition of a talented software engineer. So if I am going 

to pay somebody $92,000 and you are going to say I am going to 

have to pay $2,000 or $3,000 more to acquire them, that is nothing. 

The legal fees that go into H–1B far exceeds the actual visa account. So whether you double our fees or more, it is not a significant portion of getting that right person. And so absolutely, unequivocally when I have talked to our members, they have said if 

I get the right person out of the deal I will take it in a heartbeat. 

Mr. RAVINDRA. Well, I do not know about that. As a small business, we are certainly watching our dollars and whenever we hire 

people we try to hire through the Internet and through trade journals, and realizing ourselves we do not even go through a head 

hunter. So any cost increase would not be looked upon kindly by 

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the small firm industry. So it does affect our bottom-line. If that 

is what it takes to bring in more educated people with the right 

skill set we probably will, you know, pay for it but definitely it is 

not a good idea. 

Mr. TYLER. If I could add in, it may be worth considering some 

sort of or exploring some sort of a compromise similar to what the 

U.S. Patent and Trademark Office has done. They now have multiple tracks by which you can get patents through the PTO. And 

one of the tracks you get an expedited track if you pay a higher 

fee. So rather than increasing the fee on everyone, there is a possibility that a multi-tracked system could help. But particularly, considering the effect on small business, a track for small business 

could also be useful. 

Mr. REED. And I will amend mine to say yes, we all are watching our bottom dollar but right now the desire to get a product to 

market is really critical for us, and so there is another element of 

it that I think is important and that is that large businesses will 

actually be helping to build our domestic developer workforce. So 

I did not want to make it sound cavalier but I want to keep our 

eye on the prize, and our eye on the prize is getting talented work, 

American workforce built here in this country by any means that 

we can get it done. 

Mr. RAVINDRA. I just want to add one thing. I do agree when 

it comes to the cost allocation, the major cost is spent on the lawyers who help get the research together. So if we simplify the process we can simply save a lot of money and then the part that goes 

to pay for the H–1B visa itself is not a big portion of the whole 

process. So yes, I do agree with Reed. We can absorb some cost increase in the processing of the H–1B visa. If it is simplified quite 

a bit, then we save a lot of money on lawyers. 

Ms. MENG. Question for Mr. Tyler. 

While the number of foreign students in STEM fields has increased by 50 percent in the last 20 years, the percentage of the 

students receiving the temporary visas has remained the same. If 

more of these students were able to remain in the U.S. on H–1B 

visas, how would this affect American students’ ability to secure 

employment in STEM fields? 

Mr. TYLER. That is an excellent question, and there have been 

a number of studies related to crowding out as it is. The Kauffman 

Foundation has not done those studies so I am not directly involved 

with those studies. But a number of the studies do show that there 

is not only not a crowding-out effect with regard to those jobs, but 

there is actually in some ways a crowding-in effect because with 

the foreign students getting jobs it is creating other opportunities. 

I mean, with the foreign students getting jobs there is still a need 

for teams. There is still a need for people to complement each other 

and to complement each other’s skill sets. And there are studies 

that show that there is, in fact, a crowding-in effect as opposed to 

a crowding-out effect. 

Ms. MENG. Another question for Mr. Reed. 

The steep drop-off mentioned in computer science education at 

the high school level is very troubling. Is this a supply issue—are 

there not enough qualified teachers? Or demand issue—demand 

issue—students are not interested enough? Or both? 

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Mr. REED. It is a little A plus B. You are exactly right. My own 

personal story fits this very much. My father was a computer 

science and mathematics teacher and I actually took AP math from 

my dad. So I am exactly what is part of this. 

What is interesting about that is if I look at my classmates in 

my dad’s AP class from a high school in Alaska with 116 kids in 

it, I can name five of us that are now in the software industry in 

one form or another. And the problem that we are facing is that 

folks like my dad are retired. It is harder to find qualified math 

and computer science teachers that are willing to take that pay. I 

mean, the good news is a good software engineer earns $92,000. 

The bad news is it is really hard for a math and computer science 

teacher to make $92,000. So basic economics says if you are good 

at computer science, you are going to find a computer science job 

with one of us here at the table rather than teaching. So yes, A 

is part of the problem. And then B, we need to do more to encourage students to see the advantage from taking computer science 

even at a younger age. And so that is why we look at programs like 

CodeNow and others that help incent people and make them understand, hey, there is not only a job here but a bright future that 

can change the way you look at the world. 

Mr. COSTELLA. Just on that note with STEM careers in general, one of the things we have seen some major success with is 

employers themselves taking the responsibility to communicate 

what we do. Historically, we have just assumed that counselors and 

teachers and everyone knows what we do and they will somehow 

drive people magically into our factories and we will all be happy. 

Well, if we do not open our doors and we do not ask students and 

parents and teachers and folks to come through our facilities, 

whether it is in the IT world or manufacturing, they do not know 

any better. And what we have seen is when we do that it does significantly increase the likelihood that people want to pursue these 

careers. And then if you can attach to that sophisticated marketing 

and advertising and fund that through kind of associations and 

whatnot, you actually can make some inroads. 

Ms. MENG. Thank you, Mr. Chairman. I yield back. 

Chairman HANNA. Ms. Clarke. You have five minutes or a little 

more if you like. 

Ms. CLARKE. Thank you very much, Mr. Chairman. And thank 

you, Ranking Member Meng. And I would like to thank our witnesses for your testimony here today. 

I want to refer back to a point that was raised by you, Mr. Tyler. 

You spoke about the barrier to H–1B visa employees to establishing a business in the United States. What would you see as a 

remedy for this challenge to a nonresident, noncitizen entrepreneur? 

Mr. TYLER. It may not be necessarily changing the H–1B itself, 

but actually creating a new visa class that would allow for entrepreneurial visas. And there have been a couple of various bills introduced to do these sorts of things. But to more specifically allow 

foreign—— 

Ms. CLARKE. Nationals? 

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Mr. TYLER.—nationals to start and grow companies and to allow 

H–1B recipients to transition into that status or to allow foreign 

nationals to enter that status directly. 

Ms. CLARKE. So what would that business be classified as? 

Would it be an American business or what type of business would 

it be? 

Mr. TYLER. The presumption is that it would be an American 

business starting in America, and presumably, one of the bills requires that you hire various numbers of people, nonfamily members, in jobs in America. But I would not necessarily want to say 

that the business could only operate in America. In today’s global 

economy it is important for growth and opportunity that if a business can, in fact, be multinational—— 

Ms. CLARKE. I just think that this is sort of a new paradigm. 

Mr. TYLER. True. 

Ms. CLARKE. Right. And it is an intriguing one because I certainly understand the global nature of business these days, but one 

of the challenges has been I guess American employment. 

Mr. TYLER. Correct. 

Ms. CLARKE. And so the question becomes are we ready to embrace that new paradigm or in the alternative, do we provide a 

pathway to either residency and/or citizenship for H–1B visa holders? Have you given any thought to that? 

Mr. TYLER. Well, in some ways—and there are studies that 

show that right now the alternative for a lot of these folks is not 

to start their companies in America; it is to leave America and 

start their companies somewhere else. So they go back to their 

home countries and they start and grow their companies there. 

And a lot of these countries are very eager and they are very intentional and strategic about trying to recruit these people back to 

their country. 

Ms. CLARKE. Right. Part of the challenge is the brain drain, 

right? 

Mr. TYLER. Correct. 

Ms. CLARKE. Of any of these nations. So what I am saying is 

in terms of ultimately anchoring someone in the United States. We 

want the talent. We want the business. There is a tension, a natural tension between a national of another nation and the United 

States in terms of that talent, right? So I am trying to get a sense 

of just in terms of creating this new paradigm, if you will, is what 

is it that we would use as I guess the magnet? Is it to become on 

a pathway to becoming American? Or is it just sort of a global, this 

is a good place for you to start a business mentality? And I will 

open that up for the rest of the panel because I am just trying to 

get a sense as we go through reform or what I call a new system, 

how we would manage that. 

Mr. TYLER. Well, America continues to be the best place to start 

and grow a company, and we need to retain that status. And I 

think if we allow opportunities for foreign nationals to start and 

grow their companies here, not necessarily—or not on temporary 

visas—maybe provisional, but certainly permanent residency at a 

minimum, in starting and growing a company you are attracting 

capital, you are attracting talent, you are attracting customers and 

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suppliers. A temporary status adds risk, a high degree of risk to 

an already risky venture. 

So in addition to the ecosystem that supports starting and growing businesses for the foreign national and their ability to start and 

grow their business, to hire people, there needs to be some degree 

of certainty around their status. 

Mr. REED. I wanted to give you a quick specific answer. As you 

know, the president supported something called the Start-up Visa 

Act of 2013, and I was using my handy dandy mobile device to 

make sure who the sponsors were. But it gets to the heart of your 

question—how do we find a way to bring them in? You mentioned 

the brain drain. Well, the good news is so far the brain drain has 

worked in our favor. Folks have come to America. We have been 

the beneficiary of it. So you are right. It acts like the Startup Visa 

in finding ways as part of the immigration reform bill. Any form 

of immigration reform that helps us continue to win the brain 

drain war is absolutely essential. And so I would encourage you to 

look at some of the suggestions through the Startup Visa Act that 

the president has supported and others. 

Mr. COSTELLA. I would just say we do not really deal with the 

H–1B visa specifically but as a manufacturer that is growing, that 

has a really intense design capability, we want the best and brightest in the world to come here to live, to work in our companies, to 

build their families, to pay taxes, and we do not want to educate 

them here in our universities and then sit across the negotiating 

table from them. We want them on our side of the negotiating 

table. So whatever can be done to allow that to happen, and that 

is what you all are diving into, that is something that I think 

small- and medium-size businesses in general are probably supportive of. 

Ms. MENG. Thank you very much. Mr. Chairman, I yield back. 

Chairman HANNA. Thank you. 

Ms. Chu, are you prepared to ask a question? 

Ms. CHU. Yes. 

Chairman HANNA. Go ahead. 

Ms. CHU. Mr. Reed, I have heard—well, actually maybe for the 

whole panel, I have heard many of you address the solution for 

STEM job shortages via immigration reform, but no one has mentioned the large pool of potential STEM workers that are women. 

Currently, women hold less than 25 percent of STEM jobs and as 

discussed by many of you directing visa fees to bolster an improved 

STEM education at the K–12 level certainly is key to increasing 

the native STEM workforce population that we have for the long 

term. But we also need to make sure that some of this money is 

directed at increasing the number of women getting STEM degrees. 

So in what ways could we do that—could we increase the presence of women in STEM jobs and therefore increase the supply of 

STEM workers to alleviate these shortages? 

Mr. REED. Well, I will start with a little bit of a personal side 

of the story. My wife is actually a veterinarian, so she is actually 

a STEM professional and went through school to take math and 

science classes all throughout and become a doctor. And I watched 

her class over the time that she has been in it. Veterinary medicine, for example, started out with almost all men. Her class when 

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she graduated had 90 students. Four, I think, were men; the rest 

were women. So we are, in fact, seeing a lot of women in medical 

professions and others that are, in fact, STEM-based, that are 

heading towards women. I believe the last statistic I saw was that 

there were more women in medicine—in medical school right now 

than there are men. 

So I think it is good to see that growth, but you point to something a little more specific, which is my industry, the software industry, where we are not still seeing the growth. And I think it is 

absolutely worth looking at to find ways to increase the diversity 

through how we spend the money that comes out of the H–1B program. I think there is a lot to learn from some of the nonprofit 

work that has already been done and we should use that as we figure out the best way to utilize the spending. 

Mr. RAVINDRA. I would like to add, yes, there is certainly a 

shortage of women in the engineering field and also a shortage of 

high school students going into engineering. So definitely we need 

to increase the awareness among high school students and also 

train the high school guidance counselors to introduce STEM-related fields to let them know that the kids have a future in them. 

So it definitely needs to be introduced at the high school level to 

encourage girls to go into engineering. 

Ms. CLARKE. Mr. Costella. 

Mr. COSTELLA. One of the owners of our company is a woman. 

Our director of communications and our director of technical communications are women. Our director of business process is a 

woman. And one of the things that we find extremely important is 

making sure that when we engage with schools, both letting parents and students and folks into our factory, visiting schools for career fairs, is to show that our sector is not just putting parts together. There is a whole slew of jobs that are interesting. And 

showing the folks who are in leadership in our company who are 

women, having them go out and be the spokespeople, too. It has 

a tremendous impact in inspiring young girls that these are careers 

that they can have. And so again, I go back to I think the answer 

lies with the employers taking responsibility and taking this seriously enough. If we do not engage, I do not see how you build a 

pool of interest that is sustainable. 

Mr. TYLER. Yeah. And I would add I think that your question 

is very astute and I would add to not just women in STEM fields 

but women in entrepreneurship, women who grow companies. 

There should be more of them and we need to have more of them. 

But there is also evidence that the number of women who have 

started growing companies is growing. And I think at the 

Kauffman Foundation, we are trying to engage in one particular 

set of programs how do we do that better? How do we as a foundation facilitate the entry of women into STEM fields, entry of women 

into entrepreneurial fields and their ability not just to enter, but 

to succeed in those fields? So supporting groups like Astea, which 

provides women mentors to women entrepreneurs, trying to identify those women who can be role models, who are role models, and 

to do more to support them in their efforts to demonstrate that this 

is an excellent path for women. 

Ms. CLARKE. Thank you. 

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I yield back. 

Chairman HANNA. Something maybe a little more contentious, 

we have limits from certain countries on the total numbers of people who can immigrate to the U.S. Knowing what we know about 

STEM and how important STEM is to the future of this country, 

and we have a lot of anecdotal evidence that suggests that when 

people come here, if they cannot get a visa within a certain period 

of time they actually go back and become our competition, do you 

think we should set visas based on skill sets as opposed to just raw 

numbers? 

Mr. REED. Obviously, I am going to sound like a broken record. 

That is exactly right. We are looking for the right person, and we 

do not care what country they come from, what accent they have. 

We want the person with the skill set that we want. So absolutely. 

We see a need to change the perspective basing it on the border 

versus basing it on the talent. And I think you are exactly right 

there. 

Mr. TYLER. And it seems arbitrary that Malawi or Lichtenstein 

would have access to the same 7 percent of EB series visas that 

countries like India and China and European Union countries 

have. The number is arbitrary. The application of the system in 

that regard is arbitrary. And it sure seems like there are a lot better ways to do it that would be particularly tied to opportunities, 

to needs, to skill sets, to education levels that folks in the countries 

may have. 

Chairman HANNA. So there is a fundamental logic for this country to pursue immigration policy that perhaps acknowledges the 

fact that there are certain people we need more of, and those for 

this moment in history are people who are educated in STEM. 

Can any of you give me some real life evidence of somebody you 

knew, maybe a company you know of, that came here and could not 

get a visa in time, so they took their knowledge and their skills and 

built a business overseas that is perhaps our competitor today? 

Mr. RAVINDRA. I can speak about that. 

Not necessarily because they did not get a visa or they were not 

able to stay here, but what we need to do is we need to attract the 

best and the most talented people to come to the United States, 

stay on, and then continue on to start businesses and that will be 

to our benefit. So I do know that many of my classmates who came 

here and did start businesses but did go back to my home country, 

India, and continue to expand and establish bases outside the country, it is just global economy. So whatever they thought for their 

business that it would be beneficial for them to be in India instead 

of being in the United States, they pursued that. So not because 

they were not able to obtain the visa or anything. 

But lately things are changing because, like I said, when I first 

came here to this country 20–30 years ago I got my green card 

within nine months, so that is a big difference. Today, for a student 

to get a green card it takes eight years for somebody from my country. So there is definitely—the person is going to think about it and 

then say, hey, you know, if there are opportunities elsewhere in 

other countries as good, why would I want to stay here? So that 

person would think very seriously about staying in this country 

and go outside. 

SBREP-219 with DISTILLER

22 

Chairman HANNA. To follow up with that, and I am going to 

read you something—I will ask the question quickly. 

So we are the competitive place to be. People want to start businesses here. We have great educational systems here. And to your 

point, if it takes nine years, people are going to think twice about 

whether or not they should even bother. But this is from David 

Brooks, a columnist from the New York Times, ‘‘In the 21st century, the U.S. will no longer be the big dog. Human capital will be 

more broadly dispersed. There will be an array of affluent nations 

fully engaged in a global economy. Their competitiveness will be 

more about organizing relationships and amassing force to thrive. 

America will need to have to be the crossroads nation where global 

talent congregates and collaborates.’’ 

So if we do not get ahead of this dynamic that you describe, we 

will not be that country at that global crossroads. Would anyone 

like to comment on that? 

Mr. RAVINDRA. That is correct. As a matter of fact, many other 

countries, like the European countries, are jumping ahead and then 

giving research to very talented people in STEM, inviting them 

over to their countries with open arms compared to the United 

States. So they recognize that. So the European countries have already started recognizing the need for it. 

Mr. TYLER. And I would add not just European countries but 

also your neighbor to the north, Canada, is aggressively pursuing 

U.S. castaways, if you will. They have new visas that they make 

available. They have expedited processes that they make available. 

Australia, New Zealand are being aggressive. Japan. I mean, any 

number of countries. I mean, Japan, which had formerly been 

mostly closed to immigrants, is now recognizing value in attracting—— 

Chairman HANNA. So, Mr. Tyler, would you say then, we are 

losing our ability to attract these people; a lot of it is because of 

our own bureaucracy and of course the whole other issues around 

immigration. How long do you think this dynamic can go on before 

we are looked at as a place that is too formidable to try? 

Mr. TYLER. Predicting the future is always risky. I would suggest that with the degree of attention that other countries are paying to this issue and the aggressiveness with which they are pursuing talent and not just the countries we have mentioned but also 

China and India who we are educating a lot of their talent and a 

lot of their workforce and a lot of their entrepreneurs. Not only do 

we have to change how we are doing business as a nation because 

it makes it more attractive, but we have to do it more aggressively 

because other countries are not just being more welcoming for U.S. 

educated students but they are making inroads in having a more 

friendly business climate where there are more opportunities for 

advancement, and even wealth creation, to degrees. And those opportunities become, you know, on one hand an opportunity for the 

U.S. economy given the global marketplace, but on the other hand, 

if we do not pay attention, we do not pay attention quickly, it becomes a threat to the U.S. economy. 

Mr. REED. I will give you a specific one and that is Kunal Bahl 

who created a company called Snapdeal. I am looking at the article 

where it talks about it. He now has 400 employees. He is in posiSBREP-219 with DISTILLER

23 

tion to take on Groupon, and he specifically said his H–1B visa expired in 2007 and he returned home to India now to create a company called Snapdeal. The headline on the article is great. It says, 

‘‘At a time where the U.S. could use all the tech jobs it can get, 

Kunal Bahl is creating hundreds of them in India.’’ 

Chairman HANNA. Amazing. 

Mr. COSTELLA. And I would just add, at least from the manufacturer’s perspective, we are kind of there. There is a shortage of 

people today in skilled STEM careers, as many as 600,000 across 

the country according to some estimates. It is a problem and I appreciate that we want to look forward and be ahead of the curve. 

I think we are at the curve and not figuring this out will be detrimental to our future. I really believe that. 

Chairman HANNA. Innovation technology can facilitate new domestic jobs in industries or make it easier to transfer jobs overseas. 

Besides improving STEM education, what else do you think we can 

do to keep jobs here with knowing that all the uncertainty by government in terms of regulation and taxes and everything else? I 

know it is a big question but Mr. Reed, you are smiling. 

Mr. REED. The size of that question is pretty daunting. Obviously, from the small business perspective—— 

Chairman HANNA. You ask questions. 

Mr. REED. Yeah, I know. You get the opportunity. 

From the small business perspective we have several issues from 

the technology part that we need to look at. We do have a lot of 

uncertainty right now with regards to regulation around other 

issues. Privacy is one that you heard mentioned earlier. But as we 

have to build these companies here in the United States, making 

sure that we can get the right person quickly and be able to pivot— 

one of the biggest—the biggest things that we have learned in the 

last five to six years over the mobile apps economy is it is not just 

about having the smartest person; it is having the smartest person 

who can change direction because the market changes. 

Eight years ago there was no such thing as the iPhone. There 

was no mobile apps economy. So in a matter of years we have created something that will hit about $100 billion by 2016. So when 

you look at barriers to entry and barriers to success, a lot of it has 

to do with where there is either a government or other impediments that get in the way of a good, fast pivot. 

Mr. TYLER. And part of what could be done to alleviate that is 

just in looking at the amount of regulation that current exists. And 

too often regulation gets adopted and it stays on the books without 

any real effort over time to evaluate is it still right? Does it still 

make sense? Should we do away with this regulation? What is the 

effect? Just because a regulation was adopted 15 years ago not only 

does not mean that it still makes sense today but it may actually 

be causing harm today when it may have been the right thing 15 

years ago. So there needs to be a more concerted effort to review 

regulations, and I would suggest at all levels of government, not 

just the federal level, but state levels as well. And to evaluate the 

regulation—what is the effect of this regulation not only based on 

the original intent and purpose of the regulation but what harm is 

it causing now? What harm is it likely to cause in the future? And 

are the benefits, you know, which comes in more important—the 

SBREP-219 with DISTILLER

24 

benefits to be gained or the harm that is caused? And a lot of that 

harm that is caused is increasing the expense associated with 

starting and growing businesses. 

Mr. COSTELLA. And as a small business that is part of the 

aerospace and defense supply chain, for example, one of the things 

that we have worked very hard in our engagement on the Hill is 

to try and educate folks that while the regulation may be well intended, it oftentimes impacts of customers. And a lot of people do 

not realize a lot of small businesses, their customers are the big 

OEMs, like a GE or a Boeing or a Lockheed-Martin or a Northrop 

Grumman. And so while there may be regulations that impact 

those guys at the top, there is rarely very much analysis about how 

it impacts the second and third and fourth tier suppliers down the 

chain like us. And we employ people with those good, high paying 

jobs that if through the stroke of a pen a program is just wiped out 

or some sort of regulation is put in place that adds a tremendous 

amount of cost, that does not affect the big guys; that comes right 

down the chain to us. And at some point it becomes not sustainable 

and it gets kind of scary. So I would say the cognizance of the entire supply chain and how decisions here, which I truly believe are 

well intended in many respects, how do they actually impact the 

guys on the front lines? 

Chairman HANNA. Thank you. 

Mr. RAVINDRA. Being in the construction industry I just want 

to add that obviously, the investment in infrastructure is a good 

way to improve business climate in the country. And from what I 

know, any place in other countries, especially like for example, 

India, speaking from my personal experience, building a good, nice 

airport in my hometown, paved the way for major improvements 

and major investment by private sector all around and all the way 

to the town, filled with technology companies that took advantage 

of the investment. 

Chairman HANNA. Thank you. 

Ms. Clarke. 

Ms. CLARKE. Thank you, Mr. Chairman. Excuse me. 

I would like to refer back to a question actually raised by Congressman Hanna, and that is given that there is legislation that 

would lift the statutory cap on overrepresented countries, do you 

find that would be a sufficient answer to the employee shortages 

that we face? Or would you be in favor of a removal of caps all together? 

Mr. TYLER. I think—— 

Ms. CLARKE. Did you kind of get where I was going with that 

question? 

Mr. TYLER. If I understand the question, you are asking if eliminating the per country cap in the AB series visa, is that going to 

solve the need for talent? I would suggest that it is a component 

of solving the need but it is not going to be sufficient to solve the 

need because the EB series visas, they are still—if you eliminate 

the per country cap, there is still the numeric caps that exist as 

well and those numbers are relatively small for each of the series. 

And even looking only at the EB series is not likely to solve the 

workforce needs. 

SBREP-219 with DISTILLER

25 

Mr. REED. I agree. If you look at the raw numbers, the fact that 

we hit the cap in a matter of days, it is interesting to note that 

in 2009, which we have to argue is the worst economic condition 

that this country has faced since the Great Depression, we still 

used up all the H–1B visas. So at a certain level we have to understand that the cap itself needs to be expanded and eliminating the 

per country is going to be important to doing it. 

Ms. CLARKE. So then you are saying lift the cap or remove the 

cap? Or—— 

Mr. REED. Ultimately, I am very pragmatic about this. I want 

solutions that help my members, and so removing the cap would 

be great but I am also very cognizant of the needs of Congress to 

meet compromise levels. So at best, let us get it raised first and 

then we can revisit the question of removing it all together. 

Ms. CLARKE. So I heard the number 600,000 currently in the 

shortage of people with the expertise. If we are raising the cap, I 

mean, where is the sweet spot there? 

Mr. REED. Well, I think we have looked at numbers more in the 

120,000 range versus where we are right now, and I know that 

Kauffman can speak to the specific numbers on that. But overall, 

you are right. Even a lift of the cap will not eliminate our shortage, 

but that is why we want the money to go to STEM so at the same 

moment that we are raising the cap, we are also getting Americans 

who are capable of filling those slots prepared immediately through 

community college efforts, through afterschool programs, through 

every level of the education system so that at the same time we 

are lifting the cap, we are also bringing Americans into those jobs. 

Mr. RAVINDRA. I just want to add I would be for removing the 

cap because for the primary reason, as an employer, when I am 

looking for employees, I am looking for certain skill sets and I am 

also comparing the foreign students and graduates with the local 

workforce available, and I want to hire the best. So the market will 

dictate. If you remove the cap and if the market is flooded with too 

many foreign graduates and if the companies have an abundant 

supply and then they are going to hire the best and the remaining 

will ultimately go home anyway. So I do not think removing the 

cap is going to hurt us. 

Ms. CLARKE. Very well. 

One final question, Mr. Chairman. Can you provide us with an 

idea of the diversity of the potential foreign candidates with STEM 

degrees that you are finding in the aggregate candidate pool? I 

mean, where from around the world are we talking about? Is it just 

every nation? We certainly know of India and China. I heard the 

E.U. also mentioned but they are our main competitor right now. 

I just do not see people rushing out of the European Union unless 

I guess financially there is an incentive. But what are we talking 

about here? 

Mr. REED. Actually, we have been able to get some good talent 

out of Ireland. Their economic situation, they have a great education system in Ireland. They have produced some really skilled 

software engineers over there. And you are right. We are willing 

to pay more. And that is not a bad thing necessarily if we get the 

right talent. So I think it is good that we face off against our competitors like Ireland, like the E.U., and say come to America. If you 

SBREP-219 with DISTILLER

26 

are better, smarter, or faster, we would love to have you here to 

help create jobs. So it is all the way around the world but we 

should never take our eye off the places that are directly competing 

with us. 

Ms. CLARKE. I yield back, Mr. Chairman. 

Chairman HANNA. Ms. Chu, do you have a question? 

Ms. CHU. Yes. I wanted to ask specifically about the Senate bill 

that is before us on comprehensive immigration reform. 

Mr. Reed, you pointed out that simply increasing the H–1B cap 

will be not enough to solve the STEM worker shortages that we are 

facing, and you stated that not everyone can fill this gap and that 

for vulnerable technology startups that the right fit is very critical. 

The Senate immigration bill would add an additional 120,000 

merit-based visas for high- and low-skill immigrant workers annually. And I am just wondering what you think about this. It would 

give extra points to immigrants with masters degrees and Ph.D.s, 

and those with experience working in high demand fields would 

also provide—it has a potential for providing small businesses and 

startups with the skilled employees that they need. Outside of increasing H–1B or employment-based visa categories, would this improve the chance of finding the right fit candidates? 

Mr. REED. Congresswoman, I believe that there are quite a few 

benefits that we are seeing in the Senate bill. I have to say that 

we find the I–Squared legislation as proposed to definitely have 

some advantages over the Gang of Eight—I guess we can call it the 

Gang of Eight Senate version in that it is a little more pragmatic 

about some of the difficulties in making sure that we can get the 

right employee. There are elements of the Gang of Eight bill on the 

H–1B side that would put some pretty high burdens for a small 

startup company in terms of meeting their requirement that we 

have looked into every possible way to find an American, that we 

leave ourselves open to investigation by the Department of Labor 

for multi-years. 

So when you look at the Senate bill, to go directly to your question, does it solve all the problems? Of course not. We know that. 

We discussed that ad nauseam. We think that the I–Squared language probably does a better job of dealing with the small business 

needs that are being considered elsewhere, and so we would encourage you to look at the I–Squared language around that portion. 

Overall, I think it is important that the other area that needs to 

be looked at is that right now the legislation in the Senate only apportions about 15 percent of its money to a secondary education. 

A lot of it goes right now to college, community colleges, which is 

great, but I think one of the things we need to consider is the fact 

to get that competent college student, like you talked about, getting 

them in the community college, they need the talent that Mr. Costella described—reading, writing, arithmetic. So we need to actually put some more of that money looking at the high school level, 

too. 

So as you look through that Senate bill, look at the I–Squared 

on the H–1B requirements and look at where the money is going 

and ask serious questions about is there a way for us to put more 

into secondary education so that Mr. Costella’s needs are met as 

SBREP-219 with DISTILLER

27 

well and that they have the math skill so that they can go through 

the journeyman program. 

Ms. CHU. Okay. Mr. Tyler. 

Mr. TYLER. If I would, I would add that it is important that immigration reform, particularly as it relates to the high skilled levels, and particularly in the area of small business, that we remember that high skilled immigrants have a greater propensity to start 

and grow companies. So it is not just a workforce issue; it is also 

an entrepreneurship issue and starting and growing companies, 

which actually then creates more demand for workforce. Creates 

jobs, creates opportunities, and creates product services, et cetera. 

So it important that there be opportunities for folks, as I mentioned earlier, for foreign nationals to come to the U.S. to start and 

grow their companies here. And also for foreign nationals who are 

here on temporary visas or other restricted visas to be able to have 

a pathway to starting and growing their business. 

Ms. CHU. Mr. Tyler, there is—in talking about the Senate immigration bill, it does have a provision that would improve the portability of visas, and in your testimony you mentioned that small 

businesses would particularly benefit from procedural changes to 

the law that allow for this portability. Could you expand on this 

point and explain why it would be important to you? How it would 

benefit small businesses? 

Mr. TYLER. Portability is important for a few different reasons. 

The absence of portability ties the immigrant to a particular company. It ties them to their sponsor. And that creates opportunities 

for below market wages, below market working conditions because 

of that specific tie to the employer, because if the person who is 

sponsored by the employer leaves that employment, they have to 

either leave the country or find somebody else to sponsor them. So 

having degrees of portability is important because it becomes a 

pressure against abuse of the system which is important. Portability also needs to encompass the possibilities of starting and 

growing companies as opposed to finding another employer sponsor. 

Starting a company and having that company effectively hire you 

becomes part of portability as well. 

Mr. RAVINDRA. If I may add, I was speaking to a friend of mine 

who owns a small business—not exactly a small business but a 

company of 200 plus employees. I asked him about how many H– 

1B visas he has hired and sponsored, how many employees, and he 

said none because the complexity of the process scares small businesses. And they really do not want to deal with going through the 

H–1B process to hire people and they will not just do that. And so 

simplification of the process is really critical for small businesses 

to hire H–1B visa graduates. 

Mr. COSTELLA. I would second that just as a smaller business. 

When we look at that it is burdensome to figure it out and understand all the details. So we will adopt our own measures of finding 

the right people, but simplifying that would help us access more 

talent, which makes us more competitive and helps us grow and 

create more jobs. 

Ms. CHU. Thank you. I yield back. 

Chairman HANNA. We talked a little bit about the Senate bill. 

Part of it, to protect opportunities and wages for domestic workers, 

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the Senate bill includes provisions that would require employers to 

pay H–1B visa employees higher wages. Would anybody like to 

speak to that? 

Mr. RAVINDRA. I can speak a little bit about it. 

When we sponsor an employee for the H–1B visa in talking to 

our counsel, they advised us that we need to pay the prevailing 

wage, which is whatever the average rate of pay is for that employee and not pay any less than that for the chances of that employee to get their visa. So we cannot really go and hire foreign 

graduates assuming that we can pay less and then make money 

out of that. So we do not do that. And also, our counsel told us that 

the rate of pay has got to be on par with anybody that we would 

hire. 

Chairman HANNA. So basically you would say then the Senate 

provision is irrelevant; that it is unnecessary? 

Mr. REED. I would say that right now I know that being on the 

software side it is a little different than my colleagues here at the 

table but we are not finding that people are saying no to hiring the 

right talent because it is slightly more; in fact, we are actually 

looking at wage competition in the other direction which is trying 

to keep our best employees in our company by doing anything we 

can, including salary increases. As we all know, those are going up. 

So it is not really relevant to us right now in the software sector. 

Chairman HANNA. What you are really saying is the market 

has taken care of that. 

Mr. REED. Absolutely. 

Chairman HANNA. Okay. 

Mr. TYLER. Mr. Chairman, if I might add on the compensation 

side of things, small businesses have a tendency to compensate 

their folks in a lot of different ways. It is not just salary. 

Chairman HANNA. Oh, is it? 

Mr. TYLER. Exactly. So it is salary but there are bonuses that 

come into play, and a lot of times, particularly with very small 

businesses or even growing small businesses there is equity that 

can be part of the compensation. As I understand it, the prevailing 

wage calculation, the immigrant calculation of market wages is salary based. It does not account for bonuses. It does not account for 

equity. Now, equity is hard to value, and particularly in a small 

company and a closely held company, but at the same time there 

is value there and that can be an important aspect of the compensation. 

Mr. REED. That is actually, and I apologize for not even thinking about bringing that up, that is actually probably one of the 

most critical areas for us. If Congresswoman Meng had a great 

idea and she and I wanted to start a high-tech firm and we had 

the change rattling around in our pocket, the way that she would 

be compensated for her brilliant idea and all of her successful output would be stock. Would be some other compensation—equity in 

the firm. And when you take that away from us it makes it a small 

business—it gives us—chops us off at the knee a little bit when we 

are going up against a much larger company that can do it all 

through salary. So absolutely. Thank you for bringing that point 

up. 

SBREP-219 with DISTILLER

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Chairman HANNA. Let me reverse the notion a little bit, the 

question. 

On our current laws, and we all know immigration is on the 

table now. A lot of people are hopeful that by September we will 

all have something settled. But in the absence of that or if we wind 

up with more of what we have, how long would it take to build up 

our own indigenous workforce to fill the types of jobs that you gentlemen see coming down the pike knowing what Mr. Reed said earlier, and that less than 10 percent of the schools are focusing on 

information technology education types of individuals, how reckless 

is it for us to stay on this path, and what are the long-term consequences if we do not change our policies? 

Mr. REED. I know Rob Atkinson at ITIF has done quite a bit of 

looking at the innovation economy in looking at how many jobs we 

will be down if we continue on this course. And I have seen numbers as high as 900,000 or more for in the innovation economy sector. I know that Kauffman Foundation has also done some work on 

this. But we are talking millions, and at least at least from the 

software side, at least a million. 

Mr. COSTELLA. I would say that in terms of the timeframe to 

turn it around it is not going to happen fast. There are so many 

facets that we have learned in our work. I mean, we were able to, 

because of our very strong partnerships with the workforce system 

in the state of Nevada, the governor, the higher ed system as a 

whole, the K–12 system, we were able to put together a program 

to meet an immediate need for machine operators in fairly short 

order, but that does not answer our need for journeymen level machinists. By the time there is a shortage of some of these really 

skilled people, which we will notice in the next five to seven years, 

it takes me five years to train a journeyman level machinist. If we 

wait till the shortage hits it is too late. You cannot find those folks. 

You cannot train them. And so there is no immediate solution, and 

I cannot emphasize enough, as I think I have been doing, the role 

of employers to be proactive. I guess I am singing to ourselves. We 

have got to engage and be proactive in this conversation. There are 

things that can be done at the federal level from a policy perspective to simplify and to get this right. But we have to be the boots 

on the ground, to be clear about what we need. We have to engage 

with the community, with students, with parents, with teachers, to 

make sure that these careers are viable options. And without those 

pieces all coming together I just do not know where the solution 

is going to come from. 

Mr. RAVINDRA. I just want to add we really need to look at 

long-term benefits of investing in STEM and investing in encouraging high school students to get into STEM. So whatever we do, 

we need to be looking at long-term investments, long-term—the 

benefits are going to be 10, 15 years from whatever we do today 

is when we benefit. So it is really easy to turn around and look for 

short-term gains in any field, even the companies look for quarterly 

returns, and then if they stop looking at the long-term investment 

and long-term growth aspect of the business they lose out. 

Mr. TYLER. Mr. Chairman, I would offer a couple of points. One, 

the importance of education and educating our native-born population cannot be understated. It is not just a workforce issue, it is 

SBREP-219 with DISTILLER

30 

not just an employment issue. It, in fact, affects the future of our 

democracy. Educated citizenry is essential to the functioning of our 

nation. If we continue to neglect that we are continuing to neglect 

our nation in those sorts of ways in addition to the workforce 

issues. 

A second point is that even if we had a completely educated native-born workforce, there would still be needs to bring in foreign 

nationals, not necessarily to supplement the expertise and the skill 

sets, but if nothing else but to provide new ideas and new insights 

because in the global economy, American businesses are reaching 

out into some of the least strange places of the world, like European Union, but they are also reaching out to what might be 

strange places in the world, to understand cultures around the 

world, to understand frankly just how a product is used, much less 

the interaction with the potential customers, customs with suppliers, having access to that information, we are not going to be 

able to grow it at home. We are going to need to access it from 

abroad. 

Chairman HANNA. Thank you. Thank you all. 

Are there any further questions? 

We have a couple of minutes, and a lot of times in these hearings 

the right questions do not come out and there are things that people would like to say and they do not necessarily have an opportunity to say. So we have got a few minutes if anyone would like 

to add to the conversation. 

Mr. COSTELLA. I would just say, reiterate from my opening remarks, that when we talk about STEM skills, a lot of people automatically think NASA engineer or something, and those are STEM 

jobs. But from the perspective of small- and medium-size businesses, it is the basics. It is reading, writing, math, problem solving. If we can get across that bar then we companies are happy to 

train and develop people. It is very, very normal for a company like 

ours to make substantial investments in developing and cultivating 

talent from the start all the way up through the senior levels of 

the company. So I just hope we do not think STEM is the separate 

kind of entity out there that is different than the basics. It is the 

basics and then all the way up. 

Chairman HANNA. Sure. So knowing that people change jobs 

seven or eight times in their lifetime, knowing that what once was 

true, that you could have a set of skills today, but you need a longterm set of skills that you keep up with throughout your life to stay 

competitive and that if we are going to build a thriving middle 

class in this country, and rebuild this country in a way that provides a positive future for all of us, and reduces our high unemployment and this enormous debt that we are facing, we need to 

focus on STEM. 

With that, I would like to thank you all for your time today. It 

has been very valuable. And again, I know you go through long distances and a lot of work to get here. 

I ask unanimous consent that members have five legislative days 

to submit statements and supporting material for the record. Without objection, so ordered. 

This hearing is now adjourned. Thank you. 

[Whereupon, at 11:49 a.m., the Subcommittee was adjourned.] 

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31 

1See Dane Stangler and Robert Litan, WHERE WILL THE JOBS COME FROM? (Ewing Marion 

Kauffman Foundation, November 2009). 2Peter Schuck and John Tyler, Making the Case for Changing U.S. Policy Regarding Highly 

Skilled Immigrants, 38 FORDHAM URBAN L. J., 327, 359–41 (2010) (citations omitted). 3See National Science Board, Science and Engineering Indicators 2010, NSB 10–01, chapter 

3, p. 29 (National Science Foundation, 2010); Peter Schuck and John Tyler, Making the Case 

for Changing U.S. Policy Regarding Highly Skilled Immigrants, 38 FORDHAM URBAN L. J., 327, 

339–41 (2010) (citations omitted). Dowell Myers, THINKING AHEAD ABOUT OUR IMMIGRANT FUTURE: NEW TRENDS AND MUTUAL BENEFITS IN OUR AGING SOCIETY, (Immigration Policy Center, 

American Immigration Law Foundation, January 2008); Jacob Funk Kierkegaard, The Accelerating Decline in America’s High-Skilled Workforce: Implications for Immigration Policy, POLContinued 

A P P E N D I X 

Testimony for Hearing on STEM Workforce and 

Immigration Reform 

Before the Contracting and Workforce Subcommittee 

Of the Small Business Committee 

Of the United States House of Representatives 

John Tyler - April 25, 2013 

Introduction and Context 

Good morning. My name is John Tyler and for the past 14 years 

I have been the General Counsel and Corporate Secretary for the 

Ewing Marion Kauffman Foundation in Kansas City, Missouri. The 

Kauffman Foundation is among the largest private foundations in 

America and our focus is on fostering economic independence by 

promoting entrepreneurial success and educational achievement. 

As you know, small businesses and in particular young businesses have been a significant driver of job growth in our nation. 

Kauffman research shows that most net new job creation has historically come from businesses that are less than five years old.1

Small and young businesses also are a substantial contributor to 

our nation’s economy and a major source of innovative products, 

services, and processes that have not only contributed to our economy but also to our ways of life. As such, it is imperative that U.S. 

policy support opportunities for small businesses and especially 

that entrepreneurial subset whose businesses are positioned for the 

transformative growth that keeps our nation’s economy vibrant. I 

refer to these collectively as ‘‘small business’’ in this testimony. 

Among current policies that do not provide enough support for 

those opportunities is a U.S. immigration system that does not give 

enough consideration or support to economic priorities and opportunities that immigrants provide. The STEM workforce is particularly at risk of being neglected. 

Demand for STEM jobs has been growing,2 but STEM businesses 

are being squeezed from one end by the large number of STEMskilled people leaving the field because of retirement 3 and from the 

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ICY ANALYSES IN INTERNATIONAL ECONOMICS 84, p. 1 (Peterson Institute for International Economics, December 2007). 4Peter Schuck and John Tyler, Making the Case for Changing U.S. Policy Regarding Highly 

Skilled Immigrants, 38 FORDHAM URBAN L. J., 327, 340–41 (2010) (citations omitted). 5See Malcolm Goeschl, An Attack on Entrepreneurialism: A Review of USCIS Adjudication of 

H1–B Petitions for Startups and Small Companies in 2009, 87 No. 7 INTERPRETER RELEASES

369 (February 15, 2010). 

other by the decreasing number of native-born talent with the requisite level of knowledge and expertise who are entering the field.4

Although these problems affect our economy and innovative capacity more broadly, they present distinct challenges for small business. 

Small Business Vulnerability Under the Current System 

As this Committee knows and understands, small businesses frequently operate on limited budgets and personal sacrifices of people 

driven by passion for their business’ purpose, particularly during 

their early stages. Their very survival—much less growth—can depend on the ability to attract and retain the right talent with the 

right skillsets and experience at the right time. 

Thus, small businesses in STEM fields are particularly vulnerable to the talent squeeze and workforce issues. The current immigration system too often leaves small businesses at the mercy of an 

expensive process with too many businesses competing for too few 

visas that take too long to process. Large established businesses 

are better able to dedicate regular financial and personnel resources to manage through the expense and bureaucracy of meeting their workforce needs. For example, one explicit way in which 

the system favors large business is that, because of their resources 

and regularity of engagement, they are more likely to be recognized 

as ‘‘trusted employers’’ for purposes of expedited processing. Even 

so, the current system does not meet the workforce needs of big 

business either. 

Policy Change Recommendations 

Changes in U.S. policy regarding immigration could alleviate the 

vulnerability of small business to certain workforce issues. As a result, firms may be more likely to survive past the early years and 

become growth firms. More firms and more growth will mean more 

jobs, more innovation, better standards of living, and advances in 

human welfare just as we have experienced in prior decades. 

A 2010 article by Malcolm Goeschl highlights some of the challenges that small companies and startups face when trying to hire 

prospective non-native employees. Among these challenges are 

what Goeschl asserts was an apparent USCIS presumption that no 

company with 25 or fewer employees, annual gross income of less 

than $10 million, and/or less than 10 years old could have legitimate visa needs.5 Such a presumption—whether actual or in practice—hurts small business. 

In addition, there are three key types of changes that will help 

small business and their contributions to the American economy: 

changing the total of available economically oriented visas, adding 

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6See Madeline Zavodny, IMMIGRATION AND AMERICAN JOBS, American Enterprise Institute 

and The Partnership for a New Economy (December 2011) (immigrants with advanced degrees 

from U.S. universities in STEM fields creates average of 2.62 jobs); National Foundation for 

American Policy, H1–B VISAS AND JOB CREATION (March 2008) (‘‘for every H1–B position requested, U.S. technology companies increase their employment by 5 workers’’ on average with 

the average increasing to 7.5 workers for technology companies with fewer than 5000 employees). 7 A recent Kauffman Foundation study showed that immigrants are almost twice as likely as 

native born people to start businesses. See Robert W. Fairlie, KAUFFMAN INDEX OF ENTREPRENEURIAL ACTIVITY 1996–2012, p. 10 (Ewing Marion Kauffman Foundation, April 2013). See also 

Continued 

at least one new visa type, and changing processes by which applicable visas are awarded. 

Increase Number of Visas Available 

With regard to quantity, there are any number of general increases that, by helping all business will also help small business. 

Among these are the following: (1) increase the annual number of 

H1–B visas so that supply better matches demand and (2) remove 

or at least increase the national caps on employment-based series 

visas. Data shows that increasing the number of H1–B visas has 

a further effect on job creation as studies show that an average of 

between 2–5 additional jobs are created in connection with each 

H1–B hired.6

More specific to small business and recognizing their unique circumstances, it may be appropriate to target a certain number of 

percentage of economy-oriented STEM visas for small business, 

based possibly on number of employees, overall revenues, and/or investment capital resources. This step would position small businesses to choose between competing with each other in this realm 

rather than with big business but without hurting big business. 

New Class for STEM Graduates of U.S. Universities 

Along with more visas, another change that would help small 

business by helping all business would be allowing foreign students 

who receive graduate or even bachelors degrees in STEM disciplines from U.S. colleges and universities to have a predictable, 

certain path to permanent residency, either by automatically providing green cards upon graduation or at least providing a temporary visa that automatically leads to permanent status upon satisfaction of certain conditions. 

These visas could have at least four outcomes beneficial to the 

U.S. economy. First, they would permit U.S. employers to more 

readily access this talent to help meet their employment needs. 

Second, these visas would presumably permit broad portability, 

which will help protect against below market wages and working 

conditions and permit professional advancement and enhanced contributions through promotions and job moves. Moreover, there 

would not be the same incentives to restrict portability in order to 

protect the initial employer’s investment of funds to obtain a visa 

through current channels. Third, they would permit these visa 

holders to become small business owners and entrepreneurs themselves by starting and growing their own businesses, as studies 

show that high skilled immigrants are more likely to do.7 Finally, 

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Anthony Luppino, John Norton and Malika Simmons, REFORMING IMMIGRATION LAW TO ALLOW

MORE FOREIGN STUDENT ENTREPRENEURS TO LAUNCH JOB-CREATING VENTURES IN THE UNITED

STATES, Ewing Marion Kauffman Foundation (August 2012). 8Dane Stangler and Jared Konczal, GIVE ME YOUR ENTREPRENEURS, YOUR INNOVATORS: ESTI- MATING THE EMPLOYMENT IMPACT OF A STARTUP VISA, p. 4 (Ewing Marion Kauffman Foundation 

February 2013); Dane Stangler, THE ECONOMIC FUTURE JUST HAPPENED, p. 10 (Ewing Marion 

Kauffman Foundation, June 9, 2009) (setting survival to five years at 48–49%). 9See The Partnership for a New American Economy and The Partnership for New York City, 

NOT COMING TO AMERICA: WHY THE U.S. IS FALLING BEHIND IN THE GLOBAL RACE FOR TALENT

(May 2012); Vivek Wadhwa, et al., THE GRASS IS INDEED GREENER IN INDIA AND CHINA FOR

RETURNEE ENTREPRENEURS (Ewing Marion Kauffman Foundation, April 2011); Chris Gafner 

and Steven Yale-Loehr, Attracting the Best and the Brightest: A Critique of the Current U.S. Immigration System, 38 FORDHAM URBAN L. J. 191 (2010); Peter Schuck and John Tyler, Making 

the Case for Changing U.S. Policy Regarding Highly Skilled Immigrants, 38 FORDHAM URBAN

L. J., 327, 336–39 (2010) (citations omitted). 

these visas would better position our nation to directly harvest the 

fruit of seeds sown by permitting access to the knowledge, experiences, networks, and other benefits of a high quality education at 

a U.S. college or university. 

Procedural Changes 

Although increasing quantities and adding a class(es) could help 

significantly, the benefits risk being minimized or even eliminated 

without changes in how visa applications are processed. The process is too cumbersome and time consuming for all business but is 

especially so for small business, which often is not engaged in the 

system with enough regularity and consistency to do so efficiently. 

A more specific procedural change would better account for the 

inherently changing nature of new firms, most of which are small 

businesses, by allowing for portability if the originating firm goes 

out of business. According to Census Bureau data, only 44% of 

firms founded since 2003 survive after five years.8 A person who 

is legally present on an H1–B or whose EB series visa is pending 

should not be penalized if the business that originally sponsored 

them closes. If the person has found similarly gainful employment 

or has started a valid business, the Service should be required to 

afford them presumptive legitimate status—not for their benefit 

necessarily but for the contributions they make to their new employer or business. 

Conclusion 

Other nations are increasingly eager to welcome high skilled and 

entrepreneurial immigrants, particularly those trained at American 

institutions of higher education.9 The United States’ current approach to immigration makes it a lot easier for those nations to 

succeed in this regard. While it is true that stronger economies 

elsewhere can have tangential, indirect contributions for the U.S. 

economy and businesses, it should not be at the expense of opportunities for direct benefits for U.S. jobs, economic growth, innovation, 

and advances in human welfare. The changes proposed here better 

protect those opportunities, particularly for small business. 

These proposed changes also position the United States to more 

actively benefit from the growing global ‘‘brain circulation’’ by 

which knowledge and innovation is increasingly shared among nations. Without these types of changes, U.S. participation is more 

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likely to be one-sided—meaning that knowledge and innovation 

leaves but does not most fully benefit us by circulating back. 

Thank you for the invitation to submit this testimony and to be 

a part of the Committee’s work on reforming U.S. policy regarding 

high skilled immigration. I look forward to your questions. 

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A C E C 

AMERICAN COUNCIL OF ENGINEERING COMPANIES

100 YERAS OF EXXCELLENCE

TESTIMONY OF MR. NAGAPPA RAVINDRA, P.E. 

PRESIDENT OF

RAVI ENGINEERING & LAND SURVEYING, P.C. 

BEFORE THE HOUSE COMMITTEE ON SMALL BUSINESS

SUBCOMMITTEE ON CONTRACTING AND WORKFORCE

APRIL 25, 2013 

Chairman Hanna, Ranking Member Meng, and members of the 

committee, I appreciate the opportunity to testify in today’s hearing 

on how the STEM workforce shortage is affecting small firms. 

My name is Nagappa Ravindra and I am the President of Ravi 

Engineering & Land Surveying. We are a small engineering consulting firm based in Rochester, New York. I am here today to testify about how H–1B visas are essential to small engineering firms 

that need to hire engineers with specific skill sets in order to serve 

our client’s needs. I also want to tell you my store, and how my 

firm would not exist without work visas for engineers. 

I am a member of the American Council of Engineering Companies (ACEC), the voice of America’s engineering industry. ACEC 

members—numbering more than 5,000 firms representing hundreds of thousands of engineers and other specialists throughout 

the country—are engaged in a wide range of engineering works 

that propel the nation’s economy, and enhance and safeguard 

America’s quality of life. Over 70 percent of ACEC’s members are 

small firms. 

My firm Ravi Engineering & Land Surveying, P.C. has been in 

business since 1995. I came to this country in 1980 after graduating from the Indian Institute of Technology, Madras, India, with 

a Bachelor of Science degree in Civil Engineering. I got my Master’s degree in structural engineering from Syracuse University and 

started my career as a structural engineer in a consulting firm in 

Syracuse, New York. I was able to get a green card within 9 

months with the help of my employer and became a citizen at a 

later time. After training for 8 years, I moved to Rochester, New 

York to accept a higher position in another consulting firm and 

worked another five years before starting my own business in 1995. 

I started a consulting engineering firm providing structural engineering services and went on to add employees and offer other 

services such as bridge design and inspection, land surveying, construction inspection, environmental and geotechnical engineering. 

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Currently, we average 90 employees and have three offices in New 

York and one in Pittsburgh, Pennsylvania. 

As a member of ACEC, we advocate for a quality based selection 

process and we compete for work based on the strengths and talents of our employees. To win projects, we need to demonstrate exceptional qualifications and experience. So, in order to grow and 

succeed, we need experienced as well as entry level engineers who 

are exceptional and talented individuals. Our growth is limited because of a lack of qualified people in our industry. Currently, we 

have vacant positions we cannot fill due to a lack of experienced 

engineers. 

Because there are not enough engineers with the skill sets we 

need, we currently employ one engineer on an H–1B visa, and a 

student on an OPT visa. We had hoped to transfer the student to 

an H–1B visa, but as you know, the current cap of 65,000 was met 

in just five days and our labor certification could not be completed 

in time. 

Engineers and the engineering industry are major economic drivers and play an essential role in helping the U.S. compete in the 

global economy. Engineers are in high demand, but the output of 

new engineers from the nation’s universities is not keeping up with 

the needs of the industry and the nation. 

Bachelor’s degrees in engineering have declined by nearly 20 percent since 1985. The workforce is also getting older: nearly 30 percent of all engineering and science degree holders in the labor force 

are 50 or over and are headed toward retirement. 

There is also greater competition for the diminishing pool of engineering graduates, particularly from the information technology industry seeking the skill sets that engineering graduates provide. 

Only half of engineering degree holders work in the engineering 

field. According to Duke University, between 30 and 40 percent of 

graduates from the University’s Masters of Engineering Management program take jobs outside of the engineering profession. 

Moreover, the proportion of foreign students earning engineering 

degrees at American universities is quite high. According to the 

American Association of Engineering Societies, for the 2008–2009 

academic year, foreign nationals comprised 43.9 percent of the 

Master’s and 54.6 percent of the Ph.D.s awarded in engineering by 

U.S. universities. 

With so many engineers graduating from American universities 

and working in other fields, it does not make any sense to send 

trained foreign engineers home to work for our competitors in the 

global marketplace. If I had not been given the opportunity to stay 

and work in the United States, 90 American workers would not 

have the job opportunities provided by my firm. My story is not 

unique. Speaking from my personal experience, nearly half of my 

graduating class of 220 students from Indian Institute of Technology, Madras, India came to the United States in 1980 to pursue 

higher education. Out of that pool of 110 engineers who came to 

this country, today, nearly 30% have their own businesses employing a large number of Americans, about 20% are CEO’s, CTO’s, 

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General Managers and senior officers in Fortune 500 companies, 

20% are professors, deans and educators in premier institutions 

and the remaining have become venture capitalists and successful 

investors. 

I strongly believe that the United States needs to invest in talented and young engineers similar to investing in our roads, 

bridges and infrastructure as a long term strategy for growth and 

prosperity. I urge Congress to strengthen and expand the H–1B 

visa program so that firms like mine will be able to hire the necessary engineering talent to serve our clients’ needs and continue 

to grow and thrive. Thank you for the opportunity to participate in 

today’s hearing, and I would be happy to respond to any questions 

from committee members. 

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4/25/2013 

Mr. Chairman and Members of the Subcommittee: 

My name is Ryan Costella. I serve as the Director of Strategic 

Initiatives at Click Bond, Inc. We are a family owned company and 

just celebrated our 25th anniversary this past year. We employ 250 

people at our headquarters in Carson City, NV, and an additional 

60 people at our facility in Watertown, CT. 

Thank you for the invitation to testify today at the hearing: Help 

Wanted: The Small Business STEM Workforce Shortage and Immigration Reform. I look forward to our conversation on the importance of STEM skills and their relevance to economic stability and 

the viability of small businesses. 

Click Bond is the global leader in the design and manufacture of 

adhesive-bonded fasteners. Our products have revolutionized how 

the aerospace, marine, and transit vehicle sectors build their products around the world. Industries that were once dominated by riveted fasteners in their assembly solutions have evolved substantially, now embracing the use of structural adhesives to create the 

attachment points, which prevents the drilling of holes. 

Our customers realize significant savings on cost of labor and 

materials, increased efficiency and profitability, and enhanced 

health and safety and reduction of risk. They trust our record of 

commitment to quality design, performance, and on-time delivery of 

parts. They know they can depend on our unique ability and 

knowledge of materials not only to innovate new solutions for their 

future challenges but also to provide robust customer service and 

training anytime, anywhere in the world. 

We are proud of our presence as a U.S. manufacturer, leading 

our industry in innovation, environmental stewardship, and workforce development. We are heavily involved in our community and 

are committed to building partnerships with educational, workforce, economic development, and civic leaders to create a sustainable talent pipeline that serves the workforce needs of the manufacturing industry for decades to come. 

Click Bond is a family itself and remains committed to fostering 

a family-friendly culture that provides our employees with competitive pay and benefits as well as multiple career advancement opportunities through subsidized education and training. As a result, 

we are developing a talented next generation workforce that enhances our competitiveness and capacity to continue meeting customer needs globally. 

The future is bright, and there is no shortage of opportunity for 

us to continue innovating, growing, and expanding our business 

right here in the United States. To do that sustainably, however, 

we must aggressively confront an issue that most businesses are 

facing, which has now commonly become known as the Skills Gap. 

Despite high unemployment levels, businesses are struggling 

today to find skilled employees to fill their jobs. Compounding the 

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problem, millions of Baby Boomers are preparing to leave the workforce, and we haven’t even begun to account for growth. 

Will it be possible to fill this gap? If we are struggling to find 

skilled people today, where will we find them in the future, as the 

problem magnifies? How do we fix this problem? 

While there are no easy answers, I can report that Click Bond 

and other companies like us are taking the problem very seriously 

and finding new ways to tackle the issue head on. 

There is a lot of talk about STEM education these days. Many 

people wonder, ‘‘What the heck is STEM?’’ They are then told it 

means, ‘‘Science, Technology, Engineering, and Math.’’ But that’s 

not really an explanation of what we mean by STEM education and 

skills. 

Let me be more specific from an employer’s perspective. Frankly, 

STEM starts with the basics that all people should master in a 

basic education. The ability to read, write, do math, and think critically are all key pillars, complimented by the ability to show up on 

time, communicate effectively, and work in teams. People with 

these skills can be developed and trained to pursue a menagerie of 

career pathways in multiple sectors of our economy. Without those 

foundational skills, the future is bleak. 

Ideally, these skills are mastered by the time a person leave high 

school. Whether we’re talking about an entry level accountant or 

technician on our assembly floor, our top design engineer or a quality inspector, the head of our sales team or the folks who package 

and ship our parts out the door, all aspects of today’s manufacturing workforce require these foundational skill sets on a daily 

basis. 

As you might imagine, these skills aren’t unique just to manufacturing. Many employers, whether in energy, defense, IT, health 

care, transportation, logistics, hospitality, entertainment—the list 

goes on—require these basic skills. 

Unfortunately today, even with record unemployment numbers, 

we are having a tough time finding people who can demonstrate 

these basic skills. 

Some allege that maybe this gap isn’t real at all and that’s it’s 

just an acute problem. Maybe manufacturers are just ‘‘too picky.’’ 

Finding people with the basic skills I outlined—ability to read, 

write, do math, problem-solve, show up on time, communicate effectively, and work in teams—isn’t some outrageous litmus test for 

employment: it’s the minimum threshold to have a chance at a future on any career path. 

Some say we don’t pay enough. That’s not true either. In 2011, 

the average manufacturing worker in the United States earned 

$77,060 annually, including pay and benefits. The average worker 

in all industries earned $60,168. Even more, for every dollar spent 

in manufacturing, another $1.48 is added to the economy, the highest multiplier effect of any economic sector. Our greatest asset is 

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cation programs in partnership with our local high schools, community colleges, and universities. 

Some say our operations are too dirty, and the jobs are too lowlevel. None of this is true either. If anything, people are constantly 

surprised with how clean manufacturing operations are in the 21st 

century. We sit at the forefront of environmental, safety, and quality standards. We can’t compete globally if we aren’t. To maintain 

these top notch requirements, we depend on highly skilled individuals, even for our most entry level jobs. With rapidly evolving technology, we need people who have the foundations to think, challenge the status quo, and solve new problems that we can’t even 

anticipate today. 

In response to these misperceptions and to the larger problem of 

the Skills Gap, many of us historically have pounded our fists on 

the table and pointed fingers, blaming the education system and 

other leaders for the gap we’re sending. Blaming and finger-pointing don’t achieve anything. This problem is serious, and we have 

to work together to find solutions. 

I’m happy to say that we’ve changed our tune in Nevada by looking in the mirror. Let me share with you some of the success we’ve 

seen. 

The manufacturing community has realized that our proactive 

communication is the key to the future. We are engaging with students, parents, teachers, and the community to explain that our industry isn’t dirty smokestacks and low-paying jobs; in fact, we’re 

bringing a message that manufacturing jobs ARE that well-paying 

jobs of the future. Along with marketing and advertising campaigns like Dream It Do It, commissioned by the Manufacturing Institute, we are opening the doors of our factories to teachers, students, and parents, and we’re making substantial progress in showing our community that our operations represent the most exciting 

and sustainable careers of the future! 

We are engaging with leaders in higher education—especially our 

community colleges—to ensure that their investments in training 

facilities and curriculum are worthwhile. We are now scaling a 

fast-track training program that literally takes people from the unemployment lines to full time employment with benefits as machine operators (the entry level position for a career as a machinist) in just 16 weeks. We were proud to hire four graduates from 

the program, and all of them stand out as model employees with 

bright futures ahead of them. Similar programs are in development 

for welding. 

We partner with leaders in our workforce development system to 

ensure that the formula used in allocating Workforce Investment 

Act and other training dollars is demand-driven. Using these funds 

to train people for the jobs that exist today and in the future while 

simultaneously providing them with nationally portable, industry 

driven credentials as proof of their skill set is a win-win equation 

for everyone, employee and employer! 

We partner with economic development officials by highlighting 

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tials granted as proof of a skilled workforce to attract more employers to our state to take advantage of the talent we are cultivating 

here. 

We are making these investments because it’s critical for our 

survival. We are making these investments because manufacturing 

is a tremendously exciting career path. Our quality-critical products enhance the performance and longevity of military aircraft and 

the efficiency and competitiveness of airliners/commercial aircraft. 

Others are developing technology and products that are causing 

breakthroughs in medicine, renewable energy, IT, transportation, 

logistics, and so much more. The reality is: manufacturing makes 

America strong. And we want to keep it that way. 

Our efforts to develop and train people alone, however, aren’t 

enough. 

As the Baby Boomers leave our workforce, we will need to find 

new engineers, quality control experts, machinists, accountants, 

marketing and communications professionals, and so many more in 

order to grow and compete in the 21st century and beyond. 

It will be critical that we have a pool of talent from which to recruit this dynamic manufacturing workforce. 

We are strong believers that competition breeds excellence, so if 

people from other parts of the world are eager to come here legally 

to pursue their passion or a great idea or to be part of existing 

ideas that are flourishing, we want to welcome them. That’s what 

America is all about, and it’s what makes us different! 

As the CEO of the National Association of Manufacturers recently stated, ‘‘Talent and skill have no borders...Manufacturers 

need to be able to hire the right person with the right skill at the 

right time.’’ 

Our company wants access to the world’s best and brightest, period. Thousands of small and medium sized businesses are in the 

same boat. If existing regulations can be adjusted to make it easier 

for hard-working and talented people to come here legally to stay 

and build lives and families, pay taxes, and help make our businesses even more dynamic and viable—not to mention make our 

economy stronger and our future more secure—then we stand in 

support of those ideas. Rather than education the world’s best in 

our universities and then send them home to eventually sit across 

from us at the negotiating table, let’s make it easier for them to 

stay here in our great country and sit on our side of the table. 

Thank you, and I look forward to your questions. 

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Testimony 

of 

Morgan Reed 

Executive Director 

The Association for Competitive Technology 

before the 

Committee on Small Business 

The Subcommittee on Contracting and Workforce 

on 

Help Wanted: The Small Business STEM Workforce Shortage 

and Immigration Reform 

April 25, 2013 

SBREP-219 with DISTILLER

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Chairman Hanna, Ranking Member Meng, and distinguished 

members of the Committee: My name is Morgan Reed and I thank 

you for holding this important hearing on small business science, 

technology, engineering, and math (STEM) workforce shortage and 

immigration reform. 

I am the executive director of the Association for Competitive 

Technology (ACT). ACT is an advocacy and education organization 

for people who write software programs—referred to as application 

developers. We represent over 5,000 small and mid-size IT firms 

and advocate for public policies that help our members leverage 

their intellectual assets to raise capital, create jobs, and innovate. 

Our organization was founded in 1998 with the commitment to 

foster an environment allowing small technology companies to 

flourish. Our founders believed that the greatest innovation occurs 

in nimble companies like these and our board of directors has always been exclusively comprised of small business owners. The 

emergence of the mobile economy over the last five years has provided tremendous opportunity for our members to market software 

directly to consumers as apps. 

While this new marketplace has thrived, we are now faced with 

a serious challenge—our country is not producing enough software 

developers to allow companies to grow. America’s schools no longer 

provide the math and computer science skills to fuel the innovation 

that has long driven economic growth in this country. 

This concern has become so grave that many companies are willing to pay double the current fees for additional visas and green 

cards so long as the added funds are designated exclusively for 

science, technology, engineering, and math education. The industry 

is willing to incur these extra costs—up to $5 billion—believing 

that schoolchildren educated in STEM subjects are more likely to 

pursue careers in technology. 

The simple fact that companies are willing to pay double the existing fees should speak volumes—when’s the last time anyone has 

uttered the words ‘‘charge me more, please’’? 

The small businesses that are tomorrow’s leading technology 

companies know that finding the right employee today through an 

H–1B, and tomorrow through better STEM education, is critical to 

their ability to reach their full economic potential. 

The Tech Ecosystem and Job Creation 

I spend a significant portion of my time speaking to non-developer audiences who want to know about the state of the mobile 

apps economy. Unlike other industries, I find that I have to update 

my numbers for every speech, not just once or twice a year. Just 

two years ago, total industry revenues were $3.8 billion and expected to rise to $8.3 billion. However, by the end of last we already reached $20 billion and are now projected to reach $100 bilSBREP-219 with DISTILLER

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1 Egle Mikalajunaite, ‘‘The Application Development Market Will Grow to $US100bn in 2015,’’ 

research2guidance (July 6, 2011) available at http://www.research2guidance.com/the-applicationdevelopment-market-will-grow-to-us100bn-in-2015/. 2 ‘‘Testimony of Morgan Reed before the House Committee on Energy and Commerce Subcommittee on Commerce, Manufacturing and Trade.’’ (Oct. 5, 2011) available at http://democrats.energycommerce.house.gov/sites/default/files/image—uploads/Testimony—10.05.11—CMT—Reed.pdf 3 ‘‘New TechNet Sponsored Study: Nearly 500,000 ‘App Economy’ Jobs in the United States,’’ 

TechNet (Feb. 7, 2012) available at http://www.technet.org/new-technet-sponsored-study-nearly500000-app-economy-jobs-in-united-states-february-7-2012/ 4 ‘‘Apps Across America: The Economics and Ecosystem of the Mobile App Market,’’ ACT (July 

18, 2012), available at http://actonline.org/files/Apps-Across-America.pdf. 

lion by 2015.1 This is a meteoric rise for an app economy that 

didn’t even exist five years ago. 

Smartphones derive considerable value from the apps that run 

on them. Consumers are attracted to phones based on the 

functionality these program provide. Telephone companies and 

handset makers have devised entire ad campaigns highlighting the 

apps that run on their platforms. ‘‘There’s an app for that’’ is probably one of the most recognizable ads in the technology space. 

This success has had a dramatic impact on job creation. ACT’s 

study in 2011 estimated that the current mobile apps economy has 

created, saved, or supplemented more than 600,000 jobs nationwide 

across iOS, Android, Windows Phone 7, and Blackberry platforms.2

Another study by TechNet showed nearly 500,000 jobs created by 

the app economy on the major platforms alone.3 We are sure that 

those numbers have grown by 20 percent or more through 2013, 

compared to an overall job growth rate more in the 7–10 percent 

range. 

ACT July 2012 Study of Top 800 Apps: Findings and Analysis 

In 2012, ACT looked at of the current mobile app ecosystem, this 

time examining apps not only by revenue, but also by type and by 

geographic location.4

The results of our research showed two key results relevant to 

this committee: 

1. Seventy eight percent of the top app developers are 

small businesses, with U.S. based companies heaviest in 

California, but significant regional diversity, especially 

in Business and Education applications 

2. U.S. developers make a majority of apps, but international developers make up a growing portion of the 

market. 

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5This estimate is based on the U.S. Bureau of Labor Statistics’ occupational employment and 

job openings data, projected for 2010–2020, available at http://www.bls.gov/emp/.; Integrated 

Postsecondary Education Data System from the U.S. Department of Education’s National Center 

for Education Statistics (NCES) available at https://webcaspar.nsf.gov. 6 ‘‘Occupational Employment and Wages, 15–1132 Software Developers, Applications’’ Bureau 

of Labor and Statistics (May, 2012) available at http://www.bls.gov/oes/current/oes151132.htm. 7 ‘‘Unemployed Persons By Occupation And Sex’’ Bureau of Labor and Statistics (March 2013) 

available at http://www.bls.gov/web/empsit/cpseea30.pdf. 

ACT research continues to find that the majority of the top-selling mobile app developers (78%) are small businesses. Nowhere is 

the dominance of small business seen more than in education apps, 

where over 70% of the app developers surveyed were small businesses. Of those small businesses, 87% have 50 or fewer employees. 

Without question, the new, increasingly mobile consumer is creating opportunities at every level and in every location of this country. 

The Bad News 

America’s dominance in this fast growth market is held together 

by our ability to find new employees who can provide and support 

innovative new solutions. According to the U.S. Bureau of Labor 

Statistics, America is expected to create 120,000 new jobs in computer science annually throughout the decade, but our universities 

only produce 40,000 graduates a year qualified for these positions.5

Self-taught individuals will help to fill that gap but at the end of 

the day, even the self-taught require an understanding of the kind 

of complex mathematics that drive today’s data-crunching algorithms. 

Moreover, the jobs we are sending overseas by failing to educate 

at home aren’t bad ones. Software developers command significantly higher wages—$93,280 at the median according to the Bureau of Labor Statistics;6 all with an unemployment rate among 

computer-related occupations of only 3.2 percent.7

For ACT’s members, this job shortage creates an ideas problem. 

Prospective employees may choose to work at a larger corporation 

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8The College Board’s Database of AP Course Audits, available at https:// 

apcourseaudit.epiconline.org/ledger/search.php. 9 ‘‘The Jobs Machine: Start-ups founded by immigrants are creating jobs all over America’’ The 

Economist (Apr. 13, 2013). 

because of the job security that risky new ventures simply cannot 

match. And while you may think that’s good for the employee, it 

could be bad for our innovation economy. According to an analysis 

of patents by the US Patent and Trademark Office, small businesses account for 51 percent of the most innovative (and most 

often cited) patents. 

The primary reason is the steep decline in schools teaching computer science. Only 1 in 10 high schools offer the class, and computer science accounts for just 0.6 percent of all Advanced Placement tests taken—a 60 percent drop since 2000.8 University students are less likely to major in a technical subject if they have not 

studied it in high school. To fill classrooms, computer science departments admit foreign students who are then ineligible to work 

in the U.S. upon graduation. 

When the Association for Competitive Technology’s small-business members visit their representatives in Washington, they identify this broken pipeline of STEM education as the root cause of the 

high-tech worker shortage. Unable to find qualified computer 

science graduates, one California member company has 40 unfilled 

positions currently and some positions have been open for more 

than two years. At a hearing last year, Flurry, the fastest growing 

mobile analytics company, testified that it had more than 80 openings, many requiring the kinds of math and science that can’t simply be learned over a weekend. Earlier this week, Microsoft testified that they had 6,300 open positions. Imagine what it’s like for 

a small company to convince a great candidate that they should 

turn down the offer from Microsoft, or any other major technology 

company. 

Finally, the Economist reports that for every job created in the 

high tech sector, 4.3 additional positions are created in the local 

economy.9 Therefore the jobs we see unfilled today will lead to hundreds of thousands of lost local employment in a wide variety of 

other fields. 

If we lose those jobs, where do they go? The beauty of the internet is its global, always-on nature. But this very global nature is 

why our failure to deal with the STEM problem could be catastrophic. Unlike other businesses, these high paying tech jobs can 

simply move elsewhere. Small companies that previously would 

never have considered overseas hiring now look to Israel for high 

skilled math workers, or Norway for User Interface expertise. 

Fixing The Problem 

Step One: the H–1B Band-Aid 

There is no way to fix that skills gap overnight; it will take eight 

to ten years to see any STEM program produce the kind of impact 

we know is needed. So where does the needed math and science 

talent lay today? Right here in America’s colleges and universities. 

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10 CRS Report Foreign Science and Engineering Presence in U.S. Institutions and the Labor 

Force Christine M. Matthews, Oct. 28, 2010. 11 ‘‘For example, in years when visas were denied by the cap, most large firms reported finding 

other (sometimes more costly) ways to hire their preferred job candidates. On the other hand, 

small firms were more likely to fill their positions with different candidates, which they said 

resulted in delays and sometimes economic losses, particularly for firms in rapidly changing 

technology fields.’’ U.S. Government Accountability Office, ‘‘H–1B VISA PROGRAM: Reforms 

Are Needed To Minimize The Risks And Costs Of Current Program,’’ www.gao.gov, January 

2011 12 ‘‘VCs and Startups Call for More H–1B Visas, But Some Say Talent Shortage is Exaggerated,’’ Reuters, (April 10, 2013). 4/10/13 

It is estimated that in colleges and universities, foreign-born doctorate degree holders account for approximately 33% of the fulltime faculty in computer sciences, 26% in engineering, 33% in 

mathematics, and 22% in the physical sciences. At the postdoctoral 

level, the participation of foreign doctorate holders is 56% in engineering, 50% in mathematics, and 42% in physical sciences. Data 

show that since 1990, approximately 50% of the U.S. Nobel laureates in the scientific and technical disciplines were foreign-born.10

With that kind of talent pool here on our shores, finding a way 

to keep them becomes critical. But H–1Bs are very limited, and 

often go to large, deep-pocketed firms that can afford to wait 

months to find out if a visa has been awarded. According to a 2011 

GAO study, in years where the H–1B cap was met quickly and applicants denied, small businesses were the big losers, facing economic loss and product delays.11 To avoid this negative impact on 

small business, a higher, more rational cap to H–1Bs must be in 

place. 

However simply increasing the cap will not be enough. We need 

the right employee to make it to our small business doorstep because we can’t just pick anyone to fill the slot. Today’s technology 

companies have found that the right team can be more valuable 

than just the right skill. According to a recent Reuters article, the 

right fit is everything: 

‘‘Especially in a small start-up, they say, more than expertise 

is required: The right fit is critical. ‘When you’re creating something from scratch you need somebody outstanding,’ said Nathan Blecharczyk, co-founder of the red-hot short-term rental 

company Airbnb. The firm currently has only two engineers 

working on its search capability, he explained—a critical function that could be improved if he could find just the right caliber of engineer. ‘There isn’t enough of the talent that we need 

to basically create this business in the U.S.,’ he said. ‘We do 

need to look globally for that talent.’’’ 12

To help small businesses, we support efforts to recapture unused 

employment-based green cards. We also support an exemption from 

the annual limits for U.S. advanced STEM degree holders. This 

should reduce the backlog, helping a small business make a realistic offer that results in a key team member moving from ‘‘visitor’’ 

to ‘‘resident.’’ 

Clearly small businesses need more H–1B visas in the pipeline. 

Unfortunately, some recent efforts to increase the number of H–1B 

visas come with far too many strings attached. The most recent 

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version of the ‘‘Gang of Eight’’ bill in the Senate includes language 

that could create incredible regulatory hurdles. 

We understand the desire of those in the Senate to ensure the 

correct use of H–1B, but if the level of bureaucracy functionally 

bars small businesses from using H–1B visas, we will harm the 

very innovators we need to support. 

Specifically, the bill includes a recruitment requirements for nondependent employers who are only modest users of the H–1B program. This recruitment language will require companies to maintain extensive records of individualized hiring decisions and subject 

employers to extensive scrutiny and second-guessing by the Department of Labor (DOL), years after the hiring decision, over case-bycase hiring outcomes. 

And while the H–1B program should not be used to displace U.S. 

workers, the language mixes displacement and layoffs. Companies, 

especially small ones, often need to pivot to meet new strategic 

challenges. Their design or plan may not be workable against a 

competitor, or the platforms they depend on may change. These 

regular business requirements do not rise to the level of ‘‘for cause’’ 

terminations, and therefore create incredible burdens on small 

businesses who must be nimble to survive. 

Instead, we believe legislation could help to protect workers better by other means. For example, legislation could restrict these 

provisions to employers whose net hiring of U.S. workers for the 

year is lower than layoffs within the same occupation. 

Step Two: The STEM Investment 

Scott Stanfield, an ACT member and president of Vertigo Software, Inc., addressed the STEM question with the best possible answer I have ever heard. When asked about why he supported using 

H–1B money for STEM, Mr. Stanfield answered: 

I have been in business for a bit more than 15 years, and I 

plan to be in business 15 years from now. I know I will need 

talented, well-educated programmers in the future. I want that 

child who is just now entering grade school to have the training 

needed so that I can hire them as soon as they are ready 

Mr. Stanfield’s long-term perspective is not uncommon for our 

small business members. They all plan to be in business, the technology business, for the foreseeable future. And they know that will 

take serious investment. 

Technology businesses both large and small see value in funding 

STEM education through additional fees on H–1B visas and green 

cards. The I-Squared Act proposes to raise $500 million annually 

over ten years to be allocated for teacher training, post-secondary 

STEM programs, and computer science community college training. 

This funding represents a fraction of the positive economic impact 

for future generations who can fill these jobs currently going overseas, or simply remaining unfilled. 

Looking beyond a Band-Aid fix, however, requires us to focus our 

efforts on primary and secondary education. If we hope to produce 

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enough graduates capable of qualifying for these high wage tech 

jobs, then students must be exposed to computer science education 

at an early age. This will require a renewed commitment to the 

subject in school districts across the country. Currently, only ten 

percent of high schools offer computer science courses. If students 

have never taken a technical subject before college, they are unlikely to pursue it as a major. 

In the Senate I-Squared legislation, tech companies have expressed a willingness to pay double the current fees for additional 

tech visas and green cards if the extra funds are dedicated to 

STEM education in U.S. schools. Generating as much as $5 billion 

to expand education in these subjects, the tech industry hopes that 

more schoolchildren exposed to computer science will choose careers in the tech field. 

The current draft of the Senate’s ‘‘Gang of Eight’’ immigration 

bill allocates money for STEM education funded by H–1B visa fees, 

but most of it is directed to post-secondary education. A far larger 

percentage must be dedicated to educate schoolchildren in primary 

and secondary schools if they are to develop an interest in computer science and acquire the skills necessary to pursue it as a 

major in college. 

The work of a few nonprofits reveals this approach yields success. One example comes from a group called CodeNow that conducted afterschool computer science training for students in Washington, DC. The organization targeted children in underserved 

communities whose schools didn’t offer the subject. After teaching 

the students how to write software, one of the participants won a 

national STEM video game challenge only a year later. More importantly, these high school age children are sticking with it. 

Today, 30 percent of the program graduates have gone on to major 

in computer science at university. 

Another program called the Young People’s Project teaches school 

children math and other STEM skills. It is a math literacy outreach and mentoring program, utilizing high school and college students as ‘‘math literacy workers’’ that focus on innovative teaching 

techniques to make the subject more accessible through hands-on 

activities and workshops. The organization believes that kids who 

master math (and other STEM skills) develop greater academic 

self-esteem, and are more likely to succeed in school and become 

leaders in their community. They have programs in Boston; New 

York City; Jackson, MS; Ann Arb or, MI; Eldorado, IL; and Mansfield, Ohio. 

These non-profit organizations have provided valuable insight for 

the government into how to design effective STEM programs and 

the incredible results that could be achieved with the kind of real, 

long-term investment that the I-Squared Act provides. 

Conclusion 

Mobile app makers and small tech companies are at the leading 

edge of innovation and job creation, but their inability to hire more 

workers is limiting their growth. Recent immigration legislation ofSBREP-219 with DISTILLER

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fers relief in the form of expanded H–1B visa and green card access. 

This meets immediate staffing needs, but doesn’t provide the solution to America’s chronic shortage of software developers and engineers. Our nation cannot maintain its global technology leadership with a foreign labor dependency. We must foster the growth 

of an American software developer workforce to ensure our industry’s long-term stability and competitiveness. 

Lucrative careers in the thriving tech industry should be more 

accessible to American students. If we are willing to invest in 

STEM education, particularly at the secondary level, we can get 

this done. The tech industry is willing to do its part to help fund 

these measures through increased fees for high skilled visas. The 

Senate I-Squared Act provides that opportunity. We hope Congress 

agrees with this approach and allows us to help. 

Æ 

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