Should we give visas to immigrants who create startups?

March 3, 2013

For those who fear that immigrants will take away jobs from native-born workers, Sen. Jerry Moran (R-Kan.) has a new proposed solution: Give visas to immigrants who create jobs.

Two weeks ago, Moran introduced a bill in the Senate that would give a new kind of visa to a fixed pool of 75,000 foreign-born individuals who launch startups that create jobs in the United States, with a path to permanent residency if their businesses continue to hire more workers.


A Samsung Electronics Co. Ltd. smartphone is seen illuminated during use near the River Danube. (Akos Stiller/BLOOMBERG)

The proposal, part of a bill known as Startup Act 3.0, would only extend such visas to those who are already here on a student visa or a H1-B visa for specialized skilled workers. Within the first year of receiving the visa, these immigrant entrepreneurs would have to register at least one new business that hires "at least two full-time, non-family member employees, and invests or raises capital investments of at least $100,000," according to Moran's summary of the bill. If those requirements are met, the immigrant would be granted three more years in the United States. During that time, the immigrant entrepreneur would have to hire at least five more full-time workers. If he or she is successful in doing so, the visa-holder could apply for permanent residency in the US—i.e., a Green Card.

Supporters of the program like Reuters' Felix Salmon call it a "no brainer" that would allow the United States to attract and retain innovators who will be key to the country's future economic growth. "It makes no sense to turn away people who are bringing needed skills to the country," said David Leopold, general counsel for the American Immigration Lawyers Association. President Obama backed the idea during a Las Vegas speech in late January that kicked off his current immigration reform push.

Currently, there are many legal and bureaucratic obstacles facing foreign-born individuals who want to come to the United States to create a new businesses, particularly if they're smaller companies. The current bar for prospective immigrant entrepreneurs is very high: An EB-5 immigrant investor visa is only available to those who personally invest at least $1 million in a new business that employs at least 10 full-time employees in two years.

Moran's proposal would still require prospective entrepreneurs to either be employed first by an existing U.S. company that would bring them in on an H1-B visa or go to a college or university in the United States. But it would make it far easier for such temporary visa-holders to stay in the United States by starting a business. Salmon points out that it would also address the criticism that the H1-B traps foreign-born workers in jobs with little opportunity or economic mobility. In a new analysis, the Kauffman Foundation estimates that the bill's new immigrant entrepreneur visa would create between 500,000 and 1.6 million new jobs over the next 10 years. The Kauffman study assumes that all 75,000 visas are given out, and that the new businesses would create jobs and flourish at a rate that's comparable to the average startup, as measured by the U.S. Census Business Dynamics Statistics.

But critics of existing work visa programs believe that such job-creation estimates are overblown and worry that prospective immigrants would end up gaming Moran's proposed  program. "It's less of an incentive to start business than find a way to get a green card," said Ross Eisenbray, vice-president of the Economic Policy Institute. He believes that the assumption that all 75,000 visas will always be filled is "unreasonable," with concerns that enforcement of the program's requirements will be lax and that the definition of "full-time employees" hired by these immigrants' companies will be vague and watered down.

That said, Eisenbray acknowledged that, at least in theory, the basic idea of creating more opportunities for immigrant entrepreneurs in the United States is a good one. "It should be done as a sort of pilot program, and we'll see how it goes," he said.

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