This blog will discuss the Trump Administration Department of Homeland Security’s decision to rescind President Obama’s January 2017 “International Entrepreneur Rule,” which begs the question: Is this administration really interested in merit-based immigration policy?
What is the International Entrepreneur Rule (IER)?
The IER was proposed by the Obama Administration’s DHS with the goal of stimulating job creation domestically and contributing to global economic competitiveness of the United States.
The IER is a regulatory measure that allows the DHS to grant parole to immigrant entrepreneurs who can demonstrate that their business will provide a “significant public good.” Eligibility for the IER is decided on a case by case basis and includes many requirements. First, the company must have been founded in the past five years. Second, the entrepreneur must hold at least a 10% stake of the company and have a central managerial or development role. Third, the company must have minimum funding of at least $250,000 from private US investors or $100,000 from public governmental grants at the local, state, or federal level.
For further specifics see the USCIS page on the IER.
What is the current standing of the IER?
The IER proposed by the Obama DHS was originally meant to come into effect in July 2017. However, 6 days before its policy induction, the rule was delayed for another eight months until March 2018. A legal challenge made by the National Venture Capitalist Association ended this delay early, but not before the Trump DHS had already started drafting a rule removing the IER because it “is not the appropriate vehicle for attracting and retaining international entrepreneurs and does not adequately protect US investors and US workers employed by or seeking employment with the startup.” The removal rule was proposed on the 25th of March, 2018.
In a series of open letters, publications, and studies on the benefits of such a provision—business owners, immigrant entrepreneurs in the US, and venture capitalists have argued in favor of the IER. The sentiment over all forms of political action is unified: “foreign-born entrepreneurs are critical to maintaining a strong and growing US entrepreneurial ecosystem.” In spite of bipartisan efforts, the DHS has moved forward with their removal. Are they justified?
Ultimately, do we need an immigration process for Entrepreneurs?
According to a range of organizations including The National Foundation for American Policy, Boundless Immigration, Technet, The Kauffman Foundation, The New American Economy Research Fund, and the National Venture Capital Association, the US needs the IER for its originally stated reasons: job creation domestically, and a competitive edge globally.
Regarding job creation, the IER is a promising regulatory tool. The New American Economy Research Fund demonstrates this clearly by mapping three different expectations of IER job stimulation over the next decade. If entrepreneurs created the minimum number of jobs necessary to stay in the country, their startups would produce 135,240 new jobs. If company performance is projected on historical success of US startups, the IER would create 199,570 new jobs. And if over 50% of IER companies were STEM field firms, the IER would potentially create over 300,000 new American jobs—more than all of the taxi drivers and chauffeurs in the US in 2014. Further, other estimates have found that less strict regulatory measure have the potential to create 500,000-1.6 million jobs over ten years. While these are only estimates, they demonstrate that immigration under the IER would lead to lower unemployment for Americans and therefore would be a productive part of a proposed “merit-based” immigration system.
The US also needs the IER to compete globally. Foreign entrepreneurship is a commodity the country cannot afford to lose. Recent legislation in France, China, Canada, and the UK has created visas specifically geared towards foreign entrepreneurs. As an increasing number of countries compete for entrepreneurship, the US has fallen behind as an innovator. Its share of global venture capital was 81% in 2006 and has dropped as low as 53% in 2017. Immigrants have founded or cofounded over half of the private companies in the US valued at over 1 billion, and these immigrant-led ‘unicorns’ represent a collective value of 168 billion, half the value of Mexico’s stock market. Without an equivalent visa process for new entrepreneurs, business creation of this kind will happen outside of the US.
Last year, more tech jobs were created in Toronto than in Silicon Valley, Washington DC, and Seattle combined. The IER, or a similar immigration policy aimed at foreign entrepreneurs, is a necessity for the United States going forward. Entrepreneurs benefit both Americans searching for employment and the country’s global economic standing.