Immigration Shouldn't Be Color-Blind
The color we should be looking for, though, is green. Spurning immigrant entrepreneurs makes no economic sense, writes the WSJ:
Consider the barriers we now put on immigrant entrepreneurs.Start-ups are responsible for most net new jobs in the U.S., and immigrants are almost 30% more likely than non-immigrants to start a business. None of this is news to economists, writes Stuart Anderson of the National Foundation for America Policy in a new paper, but a focus on start-ups "is largely non-existent in the current policy debate over jobs and the economy, most of which centers on how to encourage existing firms to hire more employees."
The U.S. created an immigrant investor visa category (EB-5) in 1990, but steep minimum capital requirements put it out of reach for most potential recipients. The average start-up company in the U.S. begins with about $31,000. Yet to become eligible for an EB-5 visa, an individual must invest at least $500,000. It's no wonder that fewer than 3,700 people received EB-5 visas last year--including spouses and children--and most of them went to immigrant investors looking to expand existing U.S. ventures, not create new businesses.
Senators John Kerry of Massachusetts and Richard Lugar of Indiana have introduced legislation that would award a conditional green card to immigrant entrepreneurs who receive at least $250,000 from a U.S. venture capitalist. The immigrant would receive permanent residence status if the enterprise employed at least five workers or reached $1 million in revenue within a year. This would improve the status quo, but the capital requirements would still remain needlessly high. In retail and manufacturing, for example, start-up costs average $98,000 and $175,000, respectively.
Mr. Anderson, a former Immigration and Naturalization Service official, says the U.S. would do better to discard capital requirements and welcome any foreign national who can present a business plan that passes muster with the Small Business Administration. As with the EB-5 visa, the individual would receive a green card only if the business created a certain number of jobs for U.S. workers within a set period of time.
And then there are the consultants. If I wanted to try striking out on my own, I would need less than $5K in computer equipment and software; and about $40K to tide me over in the lean times.
Jim P. at October 13, 2010 5:51 AM
Oh, yes, I really want the SBA in charge of reviewing people's business plans this stuff. Anyone who has ever worked with the SBA can tell you what an absolute joy they are. The SBA is one of those government bureaucracies that serves no useful purpose whatsoever.
Skip to the chase: many countries say you can immigrate as long as you have enough assets to allow you to live comfortably. If you stuff those assets into a bank account, or start a business - it doesn't matter.
It is also entirely normal to review your assets when you renew your residence permit. If you lost it all, whether to bad business planning or to bad card playing in Atlantic City, home you go. Residence in a foreign country is a privilege, not a right.
Government involvement: keep it simple.
bradley13 at October 13, 2010 7:32 AM
I would love to move my software business to the US, but it's almost impossible for someone like me to get in. I hope this legislation gets passed.
Lobster at October 13, 2010 7:53 AM
I seem to recall a lot of animosity that flared during the LA riots against the neighborhood Korean grocery stores. Weren't many of them burned?
So how is new immigrant owned business that will probably end up hiring more immigrants going to be different?
Don't get me wrong. The intention of steering immigration in ways that will help our economy is good. My expectation is that this will be good for politicians, because they are looking for the tax revenue. I don't think it will do anything for the average unemployed citizen, and I don't underestimate his reaction when it turns out as I predict it will.
MarkD at October 13, 2010 9:12 AM
So how is new immigrant owned business that will probably end up hiring more immigrants going to be different?
Because the LA riots are the exception, not the rule. Also, the sort of businesses contemplated here - ones that garner venture capital - aren't Korean owned corner stores in South LA.
Some very smart VCs and entrepreneurs I know have been making this point for a long time. I think it's a great idea.
Christopher at October 13, 2010 9:21 PM
The standards of how much money is needed sort of needs to be high as any lower you increase the limit the hight the chances of abuse.
As always I will give an example from Korea. In Korea you used to be able to get a visa to stay and open a business if you had 50000 dollars (50 million won). Know all you had to really do is get the money, put into a bank in Korea and then show immigration. This was good as a few nice restaurants and bars open up for the expat crowd. But as usual the abuse comes in. Know the government said you had to have the money in a account in Korea but the did not stipulate that it had to stay in Korea (of course a person has to spend the money to run and open the business). So what happened is a whole bunch of Nigerians and Pakistanis would do is borrow the money needed, show the immigration department yep I have the money, get the visa and then return to money to the lender. Then proceed to work in Korea and good chunk would be criminal enterprises. The consequences is the limit now for the visa was upped to 100,000 dollars. I personally thought they should just of restricted or limit the amount of people who could apply from certain countries.
John Paulson at October 13, 2010 10:33 PM
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