The US Taxpayer acts as a wealthy investor which relies on smaller co-investors (Universities) to act as its agents in selecting STEM Talent.
The domestic STEM question is not “whether US-born graduate students can compete?” – but whether, given attractive alternatives, US students will choose to compete in sufficient numbers for these opportunities against hundreds of international student applicants willing to work for years below the US prevailing Science & Engineering wage. The expanded presence of foreign scholars responding to relatively depressed economic conditions in their home markets pushes the number of total applicants well beyond the number of US opportunities, encouraging domestic students to pursue alternatives to STEM advanced degrees (e.g., business). Additionally, large numbers of foreign students from countries like China often receive help paying tuition costs, since their home country values the heavily US taxpayer subsidized university education system.
Background: How did we get here?
In 1986, US National Science Foundation under Erich Bloch reviews a Reagan Era economic study that raises concerns new US Ph.D. graduate salaries soon will exceed $100K
Through National Academy of Sciences Government And Industry Research Roundtable, the NSF unites to expand the US Science and Engineering (S&E) labor supply targeting international students specifically from China, India, Taiwan and Korea
China S&E graduates in the US quickly increase from almost none to >25% of all graduate students. Foreign students and governments see immense benefits from being able to access the heavily US tax-payer subsidized university education system.
A flood of foreign S&E graduate students “enables US university research institutions to continue to meet their imbedded growth obligations, feeding a cryptic graduate student labor economy inside universities. Thereby, creating an expanded supply of lower-cost graduate student labor at the base of the university system pyramid.” US S&E graduate program enrollment is transformed, becoming 55% to over 80% International students. (China accounted for 360K of the roughly $1 Million total foreign students in the 2017-18 school year)
Access to the US labor market opens under 1990 Immigration Act, famous for H1B visa features
As the US steps away from funding post-cold war blue sky research, the H1B program expands, feeding lower-cost laborers to the growing US S&E sector. This serves to open up what had been asymmetric citizen access to the US labor market and mitigates rising wage pressure
Rapidly growing US commercial tech hubs continue lobbying DC for expanded supplies of visas.
Commercial companies entice S&E new hires with extravagant company perks in lieu of salary hikes in an attempt to lessen intensifying wage competition. Defense struggles to attract talent.
http://users.nber.org/~sewp/references/archive/weinsteinhowandwhygovernment.pdf ; http://users.nber.org/~sewp/references/archive/weinsteinIssuesofLegislation.pdf ; http://heather.cs.ucdavis.edu/Mich.pdf