Robert Litan in Forbes: Import Job Creators14 Sep 2010
Robert Litan is a pillar of the Washington establishment. A senior economics fellow at the Brookings Institution, Litan also is affiliated with the pro-entrepreneurship Kauffman Foundation. He often is quoted in the press, and is a regular contributor to national debates on economic policy. When he talks, people tend to take notice.
In a recent article in Forbes, Litan – with characteristic pithiness – takes aim at the “xenophobes” who complain that immigrants are taking American jobs. Litan’s rejoinder: make sure immigrants are creating jobs, by providing a “job creator’s visa.” (See Import Job Creators, by Robert E. Litan, Forbes, 13.Sep.2010.) Specifically, Litan proposes that “[i]mmigrant entrepreneurs get a one-year visa enabling them to launch a business and to search for employees. Once they hire at least one nonfamily member – who must be an American citizen – they could stay for five years. If they hire more than ten U.S. workers, they get their green card.” According to Litan, his scheme:
“…would exploit two phenomena in the job market. First, nearly all new jobs are created by relatively new companies. A recent study from my colleagues at the Kauffman Foundation (see “Every Man (and Woman) an Entrepreneur”) found that young companies (those less than one year old) create 3 million American jobs a year, while older firms destroy a million. Second, immigrants are far more likely – 30 percent more inclined, by some estimates – to form new companies than are native-born citizens. Ebay, Google, and PayPal were all cofounded by immigrants; AT&T, U.S. Steel, and Procter & Gamble were also created by foreigners searching for opportunity in the U.S. Today, there are 1 million highly skilled immigrants in this country legally, if temporarily, on H1B visas. Another 125,000 foreigners graduate from our universities each year. If only 10 percent of them launched businesses under this program, we’d have 110,000 new jobs right off the bat. Immigrant founders would then have superstrong incentives to expand their businesses in the U.S. so they could stay here.”
Similar ideas have been floating around in Washington lately, including many attempts to tweak the current EB5 investor visa program. As we have noted in articles here and on MurthyDotCom, the EB5 investor visa category is designed for those who invest one million dollars in a new enterprise that employs ten U.S. workers – exclusive of the immigrant and immediate family members – or invests $500,000 in certain rural areas or places with unemployment of at least 150 percent of the national average.
Litan argues that the current investment thresholds are far too high – too “stingy,” he says – to attract enough investors to make a difference in our economy. Even the “startup visa” proposal from Senators Kerry and Lugar sets too high an investment threshold, Litan says: $250,000. Litan does not say what the optimal investment level should be, but clearly he thinks a quarter-million dollars is excessive: “After all, how many entrepreneurs are well enough connected that they start up with $250,000 in outside capital?”
Fair question – but one can imagine how difficult it would be to enact a job-creator visa program with a relatively low investment threshold. A bill like that would invite criticism from the Left and Right, for rather different reasons; both sides surely would fret about the unfairness of allowing foreigners to “buy their way” into the country. Liberals would say this is unfair to poor immigrants, discriminating against the masses of Mexicans and Central Americans who would be pushed aside by wealthier people. Some conservatives would doubtless see a national security problem and the potential for fraud, questioning whether we were selling our national security for the promise of a few jobs.
Nonetheless, Litan’s argument is compelling – and well worth exploring when Congress gets back down to business on immigration issues.