Immigrant Innovators: Premium Fuel For An Economic Recovery?

Monday, May 2, 2011 - 01:00

As is typical during periods of financial distress, the economic downturn of the last several years was characterized by curbs on immigrant labor. Worldwide, governments resorted to numerous mechanisms to limit foreign workers of all skill levels.In the United States, Congress imposed new fees and additional obligations on many of the employers who seek to hire foreign nationals in the H-1B professional and L-1 intracompany transferee temporary visa categories. At U.S. Citizenship and Immigration Services ("USCIS"), the government backtracked from longstanding internal policies to take new and stringent positions on usage of the H-1B and L-1 visas. Aiming at the perceived problem of both outsourcing and contract laborers, the agency limited the ability of employers to place H-1B and L-1 workers at third-party worksites, thus constricting companies in a growing sector of the international economy - consulting services. USCIS also took the position that foreign nationals who have an ownership interest in the company that petitions for their immigration status could not qualify for the H-1B category because the company would purportedly not be able to exercise sufficient control over the foreign worker. This rather extraordinary viewpoint meant that many of the most sought-after foreign nationals - innovators, investors and entrepreneurs - were foreclosed from a major avenue of being able to set up (or join an existing) shop in the United States.

Now, as the economic recovery begins to gain momentum, the stringent visa policies that were once viewed as essential to protect the U.S. labor market are beginning to feel like strangleholds to innovation and growth. Around the country, employers seeking to hire the best minds, regardless of citizenship, are finding that their immigration petitions are being delayed or denied because of restrictionist policies. A recent Newsweek article drew much-needed attention to the plight of talented foreign workers caught up in the immigration maze and unable to begin or continue their jobs with U.S. employers because of the immigration bureaucracy. The result? Critical projects are stalled, employers lose out on top talent, and foreign nationals begin to look to other countries or return home to leverage their skills in a more hospitable environment.

Eager to preserve the United States' reputation for innovation and entrepreneurship, forward-thinking leaders in business and government are beginning to fight back. New York City Mayor Michael Bloomberg - who has gone so far as to describe restrictionist policies as "national suicide" - has spearheaded the Partnership for a New American Economy, a coalition of business and government leaders who support favorable immigration reform and who are committed to educating legislators about the need for it. President Obama has made immigration reform a part of his "winning the future" agenda, and recently held a meeting at the White House with business and civic leaders. Members of the House Republican leadership - where pro-immigration voices have been few and far between in recent years - have begun to lend support for skilled migration. House Majority Leader Eric Cantor (R-VA), in a speech to the Hoover Institution of Stanford University, characterized high-skilled foreign labor as a source of job preservation and growth. Rep. Darrell Issa (R-CA) has criticized the H-1B program - not as a drain on the U.S. labor market but because it does not meet employers' needs for the most highly-skilled workforce.

Senators John Kerry (D-MA), Richard Lugar (R-IN) and Mark Udall (D-CO) have gone further, introducing the Start-Up Visa Act, a bill that would provide a range of immigration opportunities for foreign nationals who have qualifying entrepreneurial ventures. The bill would offer a path to a green card for foreign entrepreneurs in three different scenarios: (1) foreign nationals who have qualified U.S. investors willing to sponsor a venture with a minimum investment of $100,000 and who will create five new jobs and show additional capital or revenue after two years in business; (2) foreign nationals in H-1B status who have advanced degrees in science, technology, math, computer science or another relevant academic discipline, provided that they meet certain asset requirements and can demonstrate a requisite level of U.S. investment; and (3) foreign nationals with a controlling interest in an overseas company that has significant U.S. sales and will create at least three new jobs. The bill would serve to significantly expand opportunities for immigrant entrepreneurs, who now have limited options in other temporary nonimmigrant categories and who may not be able to demonstrate the very high capital requirements normally required for immigrant investors under current law.

These are hopeful signs. But the U.S. is already behind in the race for skilled labor. In the United Kingdom, recent curbs on immigration went hand-in-hand with more expansive policies for foreign entrepreneurs. In the last year, Canada reopened a long-suspended program for foreign investors. Germany, faced with skilled labor shortages in certain occupations, is considering mechanisms to ease immigration for foreign professionals. And India and China - longtime suppliers of high-skilled labor to the United States - are actually welcoming their U.S.-educated citizens home. U.S. leaders will need to work fast to reverse the restrictionism of recent years and to compete with world economies that are already easing the way for foreign skilled workers.

Michael D. Patrick is a Partner at Fragomen, Del Rey, Bernsen & Loewy, LLP, resident in its New York office. He may be contacted via email at mpatrick@fragomen.com. Nancy Morowitz, Counsel at the firm, assisted in the preparation of this column. To learn more about Fragomen, please visit http://www.fragomen.com.