Bipartisan legislation could one day make it easier for foreign entrepreneurs to get American visas, but according to a paper from the Kauffman Foundation the act doesn’t go far enough.
The Startup Visa Act of 2011, which is currently held up in Congressional committee, would extend visas to incoming foreign entrepreneurs as long as they meet a few business-related conditions. First, they would have to invest at least $100,000 into their own businesses. They would also have to show their commercial activities would generate $1 million in investment and five jobs. The act is estimated to create 125,000 new visas if passed.
According the Kauffman Foundation, though, the financial barriers are still set too high for would-be student entrepreneurs to reach.
“The $100,000 minimum investment requirement surpasses amounts contemplated by many students, especially undergraduate students,” the report said.
Instead, the paper said that, if the act should pass, students applying for the Startup Act visas should receive certification from their universities reflecting the possible success of their venture. The foundation’s paper, written on its behalf by Anthony Luppino, John Norton and Malika Simmons of the University of Missouri-Kansas City, still recommends an investment requirement, but says the benchmark should be lower.
“If we make financial investment determinative while dismissing intellectual investment, it denies America’s heritage as a nation whose success lies in meritocracy,” the report said.
The Kauffman Foundation’s paper comes at a time when other economic organizations are saying strict visa laws are hurting the American economy.
Immigration laws have changed since 9/11. Prior to the terror attacks that day, students from certain countries didn’t have to interview for visas, but fear of terrorism brought changes in the law. As a result, most immigration matters are now overseen by the Department of Homeland Security. The change in offices resulted in a change of immigration priorities from job creation to safety. Today, student immigrants come to America on F-1 visas which prevent them from working even if they are self-employed. Some students have even been deported in recent years for violating this law.
The Kauffman research paper suggests courts should relax rules for students who create new jobs.
“What the court failed to acknowledge is that entrepreneurial investors do not compete with American labor, and in many cases actually create jobs for Americans,” the paper said.
A recent study from St. Louis University Economist Jack Strauss brought the immigrant entrepreneur issue right to Missouri’s back door, saying a lack of immigrants is hurting St. Louis.
Strauss found that foreign-born residents of metro St. Louis, on average, earn 25 percent more, are 44 percent more likely to have a college degree and are 60 percent more likely to start a business than their native-born counterparts.
“The region’s relative scarcity of immigrants largely explains our poor economic growth and the St. Louis metro’s fall from the 10th largest MSA in 1970 in the U.S. to 18th in population and 20th in economic output in 2010,” Strauss said. “Other metros in the top 20 averaged 40% faster economic growth over the past decade. This report statistically demonstrates that a lack of immigration explains a considerable portion of the region’s slow income growth.”
The Importance of the Immigrant Entrepreneur
The Kauffman Foundation’s paper shows immigrants have a long tradition of creating jobs in America. According to the paper ,46 percent of top venture-funded companies have at least one immigrant founder, 74 percent have at least one immigrant in a high-level position and immigrant-founded companies create an average of 150 jobs. Foreign-born entrepreneurs also create businesses in America at twice the rate native-born businesspeople do.
An article by George Anders on the Forbes website agrees that immigrants make strong entrepreneurs, citing determination as the reason why:
“Immigrants don’t dawdle in their pursuit of better opportunities,” Anders says. “They start at any available entry point in the job market, and then rapidly advance toward very ambitious personal goals. They keep pushing ahead, even if it means hauling plywood on a construction site or making small talk with whatever big shots they might be driving around in a borrowed limo.”
Entrepreneurship amongst immigrants is increasing. According to a study on immigrant entrepreneurship, immigrants now make up 18 percent of small business owners in America, up 6 percent from 20 years ago.
Yahoo, Google and Ebay were all created by teams of student entrepreneurs with one immigrant or first-generation American.