Give Me Your Tired, Your Poor, Your Huddled Entrepreneurs …
Why the U.S. needs a new visa for foreigners who want to start businesses here.
Near the end of his election campaign, Senate Majority Leader Harry Reid promised to hold a vote on the DREAM Act, a laudable bill that would extend citizenship and offer education and other benefits to some young illegal immigrants. Reid might be wise also to push the Startup Visa Act, legislation introduced earlier this year by Sens. John Kerry and Richard Lugar that creates renewable, two-year EB-5 visas for entrepreneurs with at least $100,000 in venture capital or super angel backing (as part of at least $250,000 in equity financing).
While the capital requirements are unnecessarily high, a startup visa law can't come soon enough. On Tuesday, Congressman Lamar Smith of Texas, the incoming chairman of the House judiciary committee, rallied for immigration enforcement. "We need to know who is entering our country and why," he said before a House judiciary committee panel. Under his leadership, he explained, the committee would "enact policies that would better secure our border and discourage illegal immigration, human smuggling, and drug trafficking."
What is so strange about the Republican drumbeating on enforcement is that the political and economic landscape so clearly would benefit from an injection of new jobs, and one way to do that is to support immigration, and especially immigrant entrepreneurs. Last month, in a working paper published by the National Bureau of Economic Research, the authors argued that when firms can't find cheap (read: immigrant) labor and are forced to relocate offshore, there are fewer jobs for both unskilled and skilled workers. Economist Tyler Cowen offers a more thorough analysis of the paper here. A recent report by the National Foundation for American Policy estimates that 10,000 foreign-born entrepreneur visas could create 100,000 new jobs.
For years, academics have noted the connection between immigration, entrepreneurship, and job creation. Vivek Wadhwa, senior research associate at Harvard Law School's Labor and Worklife Program, published four journal articles from 2007 to 2009 as part of a series on America's "New Immigrant Entrepreneurs" that drove home the point that immigrants start companies at high rates and stimulate job growth. Great Britain has endorsed this position, too. Despite a pending immigration cap, British Prime Minister David Cameron just established a new "entrepreneur visa" for foreign founders with investment commitments from leading investors.
The startup visa law is necessary in part because current law doesn't yield many immigrant entrepreneurs. Businesses want more visas for skilled and unskilled workers. Under current immigration law, a skilled, non-native worker can obtain an H1B visa. That person also can stay here on the obscure E-1 or E-2 visas, if both the employee and employer find a treaty trader or investor and are from a country that has an E-1 or E-2 treaty with the United States. But these visas are temporary. There is still no visa for engineers and technologists who get U.S. degrees and want to start the next Google. "We don't have a true startup visa on the green-card side of the immigration equation," says Stephen Yale-Loehr, who teaches immigration and asylum law at Cornell University Law School.
The United States has a visa for entrepreneurs, but it is targeted toward foreign investors who want to invest in U.S. companies rather than start their own. And about half of those visas, called EB-5s, went unused last year, indicating a policy misstep. In recent years, cities and states have started finding creative ways to use EB-5 to attract investors and stimulate job growth. Philadelphia, Seattle, and other municipalities have worked with private developers who can hire immigrants on EB-5 visas if developers create a certain number of jobs. Earlier this year, California Gov. Arnold Schwarzenegger went overseas on a trade development mission to promote EB-5 visas. And Vermont's governor went on a mission overseas that reaped $50 million in new capital for the state (he returned last month). Other governors have followed suit. But the fact that public servants, administrators, and policy makers have to twist their arms to figure out ways to create jobs through the EB-5 visa is perplexing.
The Startup Visa bill isn't likely to mesh well with the extremely anti-immigrant agenda of many Republicans. But pushing the act might help Democrats gain more traction with immigrants, and certain business leaders who are serious about wanting to create jobs.
Jill Priluck is a writer living in New York City.
Photograph of Statue of Liberty by Medioimages/Photodisc/Thinkstock.