The Gang of Eight’s proposal will include several provisions intended to attract more foreign talent to the United States. (Jewel Samad/AFP/Getty Images)

Senate immigration bill features new start-up visa, lifts cap on highly skilled workers

In its opening bid for comprehensive immigration reform, the Senate’s “Gang of Eight” has included a series of provisions meant to attract more highly educated and entrepreneurial foreigners to the United States.

The group’s proposal, formally filed Wednesday, features a new class of start-up visa for foreign entrepreneurs and would increase significantly the number of H1-B visas (those offered to highly skilled individuals) available to immigrants with advanced degrees, particularly in science and mathematics.

The provisions are intended to accelerate economic growth by welcoming more entrepreneurs and helping U.S. firms find the talent they need to expand.

“These are complicated issues, and the fact that they came up with a package that deals with immigration in a comprehensive fashion, and the fact that it includes a start-up visa provision and substantial modifications to the H-1B program — that’s encouraging,” Steve Case, head of investment firm Revolution and a member of President Obama’s Council on Jobs and Competitiveness, said in an interview. “But there will be plenty of debate ahead, and the devil is in the details. These next few weeks are important.”

The bipartisan group’s proposal would offer up to 10,000 new temporary visas to foreign-born entrepreneurs who create at least five jobs and raise at least $500,000 from angel investors, venture capitalists or other investment groups. In addition, the company must bring in $750,000 in annual revenue.

Studies show that 40 percent of American Fortune 500 firms were started by immigrants, as are roughly half of the most successful start-ups in California’s Silicon Valley. But in recent years, the rate of business formation by foreigners has started to slip, threatening to slow an already-sluggish economic recovery.

The Kauffman Foundation, an entre­pre­neur­ship research group, has estimated a new class of visas for entrepreneurs would create roughly 1.6 million jobs in the United States.

“This is an opportunity to create jobs for Americans by making certain talented immigrant entrepreneurs continue to choose the United States as the best place to start a business,” Sen. Jerry Moran (R-Kan.) said in a statement. However, he argued that the number of proposed start-up visas is “arbitrarily low” while the investment and revenue requirements are “unreasonably high.”

In February, Moran previously helped introduce legislation that would offer 75,000 new visas to entrepreneurs, with an investment minimum set at only $100,000.

The start-up visa idea is catching hold in other parts of the world, as nations such as the United Kingdom, Chile and, earlier this month, Canada have launched visa programs targeting foreign entrepreneurs.

Efforts to establish a similar visa here have foundered despite enjoying bipartisan support in Congress. In many cases, the proposals have been blocked by those hoping to use that component as leverage toward broader immigration reform — a strategy employed by the Obama administration.

“People can count heads and count votes, and reality has struck that the most likely solution is to make high-skilled immigration reform part of a comprehensive bill,” John Feinblatt, chief policy adviser for New York Mayor Michael R. Bloomberg (I), said in an earlier interview. With the mayor, Feinblatt has helped lead a campaign to eliminate some of the country’s visa restrictions for nonnative entrepreneurs.

Others have pushed for fewer visa restrictions for immigrants with advanced degrees, arguing that American universities are not churning out enough native-born graduates in science, technology, engineering and mathematics, known collectively as STEM, to keep pace with growing demand from U.S. employers. Many entrepreneurs and technology executives have suggested eliminating or at least raising the annual cap of 65,000 H-1B visas.

Their argument was bolstered this month, when five days after opening for this year’s applications, U.S. Citizenship and Immigration Services officials announced they had already received more than 65,000 H-1B requests. This year’s crop of recipients will be determined by a lottery.

However, critics warn that the so-called skills gap is overstated, arguing that allowing more skilled workers into the country would drive down wages and take jobs away from Americans.

The Senate group’s bill addresses both sides’ concerns. On one hand, the measure would raise the annual cap on H-1B visas to 110,000 and increase the additional allotment for STEM graduates to 25,000 from 20,000. Over time, the overall cap could nearly triple to 180,000 — shy of a previous pitch under the Immigration Innovation Act to lift the cap to as high as 300,000.

The limit would fluctuate based on a new formula that places equal weight on recent demand for H-1B visas and changes in U.S. unemployment levels.

However, the senators recognize the concerns over wages, as they have proposed requiring employers to pay significantly higher wages to H-1B workers. Their bill also would tack on additional fees for large employers (50 or more employees) whose H-1B employees make up more than 30 percent of their workforce.

Next year, the bill would ban firms from applying for more foreign workers if more than 75 percent of their staff have H-1B visas. The limit would drop to 50 percent by 2016.

Meanwhile, to help American job-seekers compete, the measure requires the Labor Department to establish a Web site for posting positions typically filled by H-1B visa holders. Before hiring a foreign worker, business owners would have to post an opening on the site for at least 30 days.

Employers would also be required to check the citizenship status of all employees and job candidates using the e-verify system, an online program run by the federal government that combs through worker-eligibility documents. The mandate would be phased in over five years, though the time frame would be shorter for big businesses (two years for those with more than 5,000 workers and three years for those with more than 500).

The Senate proposal is expected to serve as the starting point for a lengthy political battle over the proper way to overhaul the nation’s immigration system, with particular emphasis on securing the border with Mexico and providing a pathway to citizenship for the country’s 11 million unauthorized immigrants. House lawmakers are finalizing their own proposal, which is expected in the coming weeks.

Case said he believes policymakers have a window of about 90 days to get a bill passed and signed by the president — otherwise, he said, “there’s a considerable risk it won’t get done.”

“If it doesn’t get done by July, it slips into the fall, and if it slips into the fall, we may miss our opportunity, because people start thinking about the next election,” he added. “We need to move quickly to capitalize on this moment and this momentum.”

Follow On Small Business and J.D. Harrison on Twitter.