Birth Tourism: An Economic Win for the U.S., Today and Tomorrow

birth tourism

By Kathleen Brush

NEW YORK -- The boom in so-called "birth tourism" is pouring plenty of fuel on the country's already-fiery immigration reform debate. Birth tourists, primarily Chinese women, travel to and give birth in the U.S. so that their children will be U.S. citizens. After acquiring citizenship for their newborns, the families return to their home countries to raise their "anchor babies." The plan is to send these children back to the U.S. when they are old enough to go to college, after which, if they chose, they'll be able to stick around and make their livings as Americans.

The backlash against this practice has become so intense that members of Congress are now calling for a change in how we interpret the 14th Amendment, overturning a century and a half of precedent that grants citizenship to anyone born on U.S. soil.

Cooler heads need to prevail -- because regardless of whether people are "gaming the system," the result is actually a win for the U.S. economy, both in the short term and the long term.

The birth tourism industry seems to have arisen partly in response to changes in U.S. policy that reduced the number of H-1B visas. These allow non-Americans in specialty occupations to work in the U.S. According to Manpower , the country now faces a severe shortage in occupations in engineering and technology. These Chinese "anchor babies" may offer a partial solution.

The birth tourism industry is tiny. In 2000, the Centers for Disease Control and Prevention reported that 5,009 anchor babies were born. In 2008, the latest year for which data is available, the number was 7,462. This amounts to about 0.2% of births in the U.S.

In 2003, the number of H-1B work visas was reduced from 195,000 per year to 85,000, including 20,000 that are reserved for foreign graduates with master's degrees or doctorates.

In the 2011-2012 school year, there were about 197,000 foreign graduate students in the U.S. Of those, 37% were from China and most were seeking engineering, technology and other science-related degrees. Many of these graduates would prefer to stay in the U.S. after graduation -- and U.S. employers need their innovation-essential skills to fill jobs -- but just 20,000 can be granted work visas.

Importing Economic Energy

A shortage of workers in America with the skills to innovate is not something to view lightly. A quarter of a century ago, the consensus was that the U.S. would lose its status as the world's largest economy by 2007, falling to third place behind Japan and Germany. Japan would be a $4.5 trillion economy, Germany $4 trillion and the U.S. $3.5 trillion.

%VIRTUAL-pullquote- Having more hard-working Americans with needed skills at a time of declining American competitiveness seems like something liberal and conservatives could agree to embrace.%The economists were right about the size Germany and Japan would achieve, but they missed the U.S. figure by $10 trillion. Later analysis indicated that those pessimists had failed to account for America's innovation machine, which draws quite a bit of its power from immigrants. Since 2000, 20 percent of American Nobel Prize winners in science, technology, engineering and math (the "STEM" fields) were immigrants.

Which of America's immigrants are the most innovative? Naturally, it's the STEM graduates. According to the Department of Education, Asian-Americans have the highest ratio of science and engineering graduates to population. It's nearly 3-to-1. Next closest are non-Hispanic white Americans, which have a ratio slightly higher than 1-to-1.

Asian-Americans also punch well above their weight class in higher education generally. The bachelor's-degree-to-population ratio is nearly 2-to-1 among Asian-Americans, and for doctorates, it's nearly 3-to-1.

Education statistics skew toward not just U.S. immigrants, but Asians in general. Looking at the 2009 rankings from the Program for International Student Assessment, the top five educational systems for math scores were: Shanghai-China, Singapore, Hong Kong-China, South Korea and Finland. The U.S. ranked 27th. The top five countries in science were: Shanghai-China, Finland, Hong Kong-China, Singapore and Japan. The U.S. ranked 24th. (The report treats China's "special administrative regions" as distinct from the rest of the country.)

The U.S. also needs more immigrants to support economic growth. The U.S. in 2012 reported its fertility rate was below the replacement rate. The last thing the debt-soaked U.S. needs is a smaller working population as its population of retirees who depend on Social Security and Medicare is growing.

Economic Stimulus Right Now

The rise of Chinese anchor babies appears to also have a more direct benefit to the U.S. economy. According to the Institute for International Education, foreign students contributed nearly $22 billion to the U.S. economy in the 2011-2012 school year and are paying into the health care system.

Further, a report by NBC estimated that the parents of anchor babies are in the country only three to four months but spend about $30,000 here on heath care, accommodations and travel.

It's not just school funding shortages, potential population shortages and STEM graduate shortages that these children are helping to alleviate. Asian-Americans also have the highest average earning capacity of any hyphenated-American group. According to the Pew Center, the average income for an Asian-American household in 2010 was $66,000 vs. $49,800 for the U.S. population. Much of that difference can be attributed to being STEM graduates.

In the U.S., the average STEM major earns $500,000 more (in discounted lifetime earnings) than the average non-STEM major. That probably means they are also disproportionately contributing to our tax revenues -- paying down the U.S. deficit, not contributing to it. Asian-Americans are proportionally under-represented as welfare recipients and, according to the Bureau of Labor, they have the lowest unemployment rate of any hyphenated-American group.

Chinese anchor babies who later return to the U.S. to live offer one big benefit to the country. Chinese parents will raise these children in China before sending them there for an advanced education. Once they have completed their educations, these Chinese-Americans will be great resources for American companies that want to access the abundant opportunities in the 21st century's largest market opportunity. They are bound to also be great ambassadors to promote American-style freedoms back in China.

Having more hard-working Americans with needed skills at a time of declining American competitiveness seems like something liberal and conservatives could agree to embrace.

The framers of the 14th Amendment, ratified in 1868, may not have been able to foresee the rise of anchor babies. They did, however, probably recognize that people who see in America the chance for a better life for their children will always be vital to keeping America on the forefront of innovation.

Since then, innovation has played a large role in making the U.S. economy the world's largest and keeping us in that spot, even though our population is currently one-fourth the size of rapidly surging China's. America could ultimately lose its "largest economy" title simply by being overwhelmed by the raw power of population, but it would be a real pity if it lost its status as the world's greatest innovator due to factors under our own control.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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