Fasten Your Seat Belts, Folks

The U.S. economy is in free fall and it is now plain that even in the rosiest scenario we are staring at a two-year long recession, with the worst yet to come. Equally easily, we could tip into a severe depression, from which it may well take us a decade to dig out.

During the last 15 years, Indian Americans rode the crest of the buoyant global economy. The Indian American population tripled from around 800,000 in 1990 to over 2.5 million today. Indians are the most affluent group in the U.S. with a median household income of $91,195, nearly twice the income of $46,881 of all foreign-born households and substantially higher than even Whites.

But the U.S. financial crisis is wrenching the Indian American community hard. To begin with, there are the massive layoffs in the financial sector, which is heavily populated with Indian immigrants. Information technology, another sector with a heavy Indian presence, is also in recession, resulting in the retrenchment of many Indian American techies, thousands of who are on temporary H1B visas.

Employment opportunities are sparse in this economy for laid off immigrant workers, who are returning to India by the planes load. Besides, Congress is adopting increasingly protectionist policies against skilled workers. Recent TARP (Troubled Assets Relief Program) legislation, for example, imposes prohibitions on the hiring of foreign workers by banks and other financial institutions receiving government bail out funds.

In previous years, Indians students, by far the largest foreign student group in the United States, were snapped up by U.S. companies upon graduation. But the 94,563 Indian students in U.S. colleges are encountering a drought this year. Students at even top business schools, such as University of Pennsylvania’s Wharton School and the Harvard Business School, are confronting the prospect of unemployment for the first time in decades as the financial sector melts down.

Even that last bastion of hope for NRIs — returning to India to leverage opportunities in India’s booming economy, to which many Indian Americans turned in the past couple of years — has run out of steam. Although the Indian economy has proven far more resilient than that of most countries, high end employment and the technology sector, where returning NRIs were in greatest demand, have taken the hardest hit. Top salaries have been slashed by as much as 75% as Indian companies retrench and scramble to reduce costs. This year’s graduating class at the rarefied Indian Institute of Management, Ahmedabad, saw domestic salaries drop by almost 30% and the top foreign salary dove 75%.

There can be no sugar coating the truth any longer. The economic prognosis for the next couple of years is exceedingly grim. Fasten your seat belts for a very bumpy ride.