The fact that they are conflicting is relevant to whether it is a good idea, but it doesn't seem relevant to whether it would work. You are assuming that they wouldn't be hired. If that assumption is correct, the program wouldn't accomplish anything. However I don't think it is an obvious assumption.
As I think you already noted, there are lots of foreign STEM workers brought in on H1-B's now, despite the fact that there would appear to be US people who are qualified, so I'm guessing that despite the fact that there are lots of un/underemployed STEM people already, there would still be demand for this new pool of workers. The real question about the plan is whether having a known supply available in Detroit would create more demand for such worker in Detroit, as companies opened or expanded operations in the city to take advantage of this guaranteed source of skilled labor. It is entirely possible that it would not work, but I think it is also possible that it would.
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