[Editor’s note: This story originally was published by Real Clear Policy.]
By Theresa Cardinal Brown & Dane Stangler
Real Clear Policy
President Biden’s proposal for comprehensive immigration reform ran into resistance in Congress from almost the moment it was unveiled. Some question the plan’s content, while others are skeptical about the timing or how it can pass in such a polarized environment. The president should work with Congress on targeted immigration steps that can promote economic recovery.
There’s no question about the need for upgrading the nation’s immigration system. But at a moment when the economic pain from the pandemic crisis is still acute for millions of Americans, overhauling our immigration system might seem somewhat disconnected from the urgent priority of economic recovery.
Yet there are meaningful actions to take on immigration that would help catalyze recovery and create jobs for all Americans. Importantly, these actions could gain bipartisan support and strengthen the basis for broader reform down the road. These actions relate to attracting and encouraging immigrant entrepreneurs.
The outsized economic role of immigrant entrepreneurs in the United States has been well-documented. There are high-profile examples of foreign-born Americans who started some of our most successful companies: Elon Musk (Tesla, SpaceX); Sergey Brin (Google); Pierre Omidyar (eBay). Over half of this country’s “unicorns” (startups valued at over $1 billion) have at least one immigrant founder.
Empirically, the economic contribution of immigrant entrepreneurs is unavoidably impressive. Overall, the foreign-born are far more likely to start companies than native-born Americans —estimates vary from twice as likely to 30% more likely. As a result, immigrants start about 25% of new American firms, even though they account for just about 14% of the workforce.
These immigrant-founded companies also tend to have a disproportionately large impact on employment creation compared to businesses started by native-born entrepreneurs. They create American jobs across all sectors and in all parts of the country. In the high-tech sector, immigrant-owned firms have been found to have higher rates of R&D and innovation. This further adds to overall prosperity.
Doing more to attract and support immigrant entrepreneurs would also help address another longstanding challenge: a long-term decline in the rate of new business creation. Prior to the COVID-19 pandemic, entrepreneurship was on a steady downward trend. As noted in a recent Congressional Research Service report, slow growth in population and labor force has been a major driver of that trend.
New business applications spiked in the second half of 2020, but there are good reasons for viewing that as a temporary blip rather than permanent resurgence. The demographic dynamics cited by CRS and many researchers have not shifted; the pre-pandemic decline in entrepreneurship is set to resume at some point. Establishing pathways for people from other countries to start businesses here is one obvious tactic to counter demographic trends.
We think there are at least three ways to do that — and that could attract bipartisan support. Importantly, these actions could be designed and executed in a way that ensures all parts of the country benefit from immigrant entrepreneurs.
First, create an entrepreneurship pathway for those graduating from American universities. Presently, foreign-born students can stay and work for a period of time after graduation through a program called Optional Practical Training. Those on OPT, however, cannot start a company. The Global Entrepreneur-in-Residence program is one innovative approach that uses the H-1B cap exemption for universities to attract immigrant entrepreneurs. New policy can build on this clever approach and widen the door for foreign-born graduates of U.S. schools who want to remain and start a business.
Second, permit H-1B visa holders to take an entrepreneurship “detour.” Those here working on an H-1B are approved for three years, with renewal for another three years. They must be an employee of an unrelated employer, meaning they cannot sponsor themselves as entrepreneurs. Many are highly talented STEM workers and undoubtedly possess entrepreneurial propensity. Allowing them to start a business after the first three years would maximize their economic value.
Third, create a startup visa. This would establish an explicit pathway for immigrant entrepreneurs to enter the country. For several years, a startup visa has been included in the bipartisan Startup Act. Dozens of other countries have created specific visas for foreign-born entrepreneurs. A startup visa would solidify the United States’ position as the premier global location for entrepreneurs — and bring high levels of innovation and job creation.
Some organizations are urging the Biden administration to reinstate the International Entrepreneur Rule. Crafted by the Obama administration, but frozen by President Trump, this rule is similar to a startup visa. It would grant immigrant entrepreneurs a “parole” period to start and grow companies. We support the spirit of the suggestion to reinstate; enshrining it in law would provide certainty for would-be entrepreneurs.
This is a key point. Immigration policy has been a political tetherball for the last decade, with executive actions being issued, challenged, rescinded, challenged again, and so on. Few potential entrepreneurs consider moving to the United States, or remaining here, in such a situation. There are certainly areas where executive action is necessary — easing the H-1B sponsorship process for small and young companies, for example, would be a good step. Yet while executive action can achieve progress for immigrant entrepreneurship, that doesn’t mean it should be done that way in every facet.
White House advisors have described the president’s proposal as a “starting point,” indicating scope for negotiation with Congress. Bipartisan support has already been demonstrated for the steps suggested here. There are other policy actions that might be taken, too. Legislative agreement will ensure that public policy toward immigrant entrepreneurs is durable, creating certainty for job-creators. Such agreement will also help pave the way for broader immigration reform discussions later.
Theresa Cardinal Brown is Director of Immigration and Cross-Border Policy, and Dane Stangler is Director of Strategic Initiatives, at the Bipartisan Policy Center.
[Editor’s note: This story originally was published by Real Clear Policy.]
