To Build the American Dream 2.0, Start With Reforming U.S. Immigration Laws
Current U.S. immigration laws not only hurt our economy, but also harm the United States' global competitive advantage in innovation.
Immigrants have founded about half of all top performing, venture-funded businesses in the U.S. and occupy 76% of top management positions in the most successful startups. These include companies like Google and Intel and ones with smaller household names, like the romantic social network Zoosk or the online marketplace for crafts, Etsy. Entrepeneurs pick the U.S. for its dynamic entrepreneurial culture whose open, performance-driven business infrastructure and access to capital empower them to grow an idea into reality – it’s the American Dream 2.0.
Entrepreneurs are not the only ones who benefit. In 2005, immigrant-founded publicly traded companies were worth over $500 billion and employed over 220,000 people in the U.S. Even small, venture-backed tech companies create an average of 150 jobs, many of which pay Americans higher than their competitors, according to data in reports by the National Foundation for American Policy and the National Venture Capital Association. Let’s not forget the indirect impact of immigrant-founded companies like PayPal, which makes e-commerce more secure, or Chegg Inc., which makes course material more affordable to thousands of college students already burdened by debt.
Given these obvious advantages, it’s a mystery why U.S. visa policies make it difficult for the foreign-born to set up shop. No more than 140,000 employment-based green cards are distributed per year, and only a subset of skilled workers and investors who have “specialized knowledge in a field of human endeavor” are eligible to apply for the H1-B visa. The U.S. government restricts recipients from becoming entrepreneurs; their status only allows them to work at a company, not start one. Some entrepreneurs work in the U.S. through the EB-5 visa, also known as the investor visa, which requires applicants to invest from $500,000 to $1 million to an American enterprise. This pay-to-play scheme misses the mark because it measures the size of an applicant’s pocketbook, not his/her skills in science, technology, and engineering – the areas that drive and grow the U.S. economy.
Not everyone supports visa reform. Several immigration “restrictionists” support strict visa requirements because they believe foreign-born immigrants take jobs away from Americans. Arizona’s proposed immigration law in 2010 galvanized many around this notion, including GOP senator Jim DeMint who explained, “Many other states are also under a lot of pressure because of high unemployment to not let illegal immigrants come and take jobs.” The prominent Coalition for the Future American Workers ran a TV spot that claimed “with millions jobless, our government is still bringing in a million-and-a-half foreign workers a year to take American jobs.” Their frustration at unemployment is completely understandable. However, their facts are wrong.
The argument over entrepreneurship deals with legal immigration of foreign-born, highly-skilled workers, not the estimated 8 million illegal immigrant workers. Whichever the class, research across the board shows that immigrants do not adversely impact the economy. Low-skilled immigrants expand the economy, “create more jobs than they occupy,” and help American-born workers secure jobs with higher salaries.
The Obama administration wants to “stop expelling responsible young people … who want to start news businesses” but his most recent plan of an Entrepreneur in Residence program unveiled this week in Silicon Valley is not going to do much to protect our country or economy. The announcement by the United States Citizenship and Immigration Services describes a public-private partnership that will “develop USCIS policies and practices surrounding immigrant investors, entrepreneurs, and workers with specialized skills, knowledge, or abilities; [and] get insight in areas critical to economic growth.” It’s good (and logical) to tap into entrepreneurs’ expertise, but this brainstorming activity is not going to lead to tangible results despite what the first grade level Power Point diagram on the USCIS website indicates.
Source: Kauffman Foundation
The government needs to take this issue much more seriously because we are losing our competitive edge. Countries like China and India are investing more in their R&D capacity, sending fewer students to study in the U.S., and are reaping the benefits of reverse brain drain.
The government needs to enact reform at all levels of the entrepreneur eco-system. First, qualified foreign students need a clear and seamless way to apply for their H1-B visa upon graduation. Second, entrepreneurs who create jobs for other Americans should we rewarded. The Start Up Visa bill proposed by Senators Kerry and Lugar make this precise proposition: Any foreign-born entrepreneur can obtain a green card if their business creates five new jobs in two years and secures at least $100,000 in venture capital or angel funding. Third, the U.S. should scrap the $500,000 minimum investment under the EB-5 visa if the Start Up Visa Bill does not pass and better recognize the entrepreneur from the unskilled investor. In reality, most startups do not need that much in their initial stage. Fourth, the government should expedite processing for visas. Applicants for the employment-based green card can wait up to 70 years – it’s no wonder they prefer to go to Canada, the U.K., or back to their own country.
The question of foreign-born entrepreneurs is not just economic, it’s about our national security. The bottom-line is this: Unless visa policies are reformed, we will give up the goodwill and contributions of some of the brightest minds in the world. Their smarts and ambition are portable – ultimately, we will be handing them over to another willing recipient. Losing them only hurts us.
Photo Credit: jurveston