President Obama recently warned that the current high unemployment could be “a new normal” in the United States. If his administration doesn’t change course on policies, he may be right. Myriad policy options—from deregulating and cutting taxes to slashing the size of the federal government—remain untried. Add to that mix fostering entrepreneurship by letting foreign entrepreneurs come to the U.S.
America is already the most entrepreneurial nation in the world. Immigrants reinforce that tradition because they are generally the most enterprising of their respective nations. According to the Kauffman Foundation, the nation’s leading research institute on entrepreneurship, 540 out of every 100,000 immigrants start a new business every month. By comparison, the native born rate of business creation is 280. Among descendants of Hispanics, the largest immigrant group, the rate is 480.
Migrating to a land with a different language, culture and economy far from family and friends is difficult. People who undertake the journey are mostly committed to achieving a better life. For example, the three Mexican states of Guanajuato, Michoacan and Zacatecas contribute about one-third of all Mexican immigrants to the U.S. They are far from the border and known for their entrepreneurial culture and bustling middle classes. It is Mexicans from states like those, rather than the much poorer Tabasco or Chiapas, who come to America to start businesses.
Other immigrant groups also fit that mold. Metin Ozen, a skilled immigrant from Turkey who moved to Silicon Valley, employs Americans at Ozen Engineering. Sergey Brin, co-founder of Google, arrived in the U.S. from the Soviet Union when he was 6 years old. Intel, eBay, Yahoo! and Sun Microsystems all include immigrants among their founders. Those firms have created economic opportunity for millions of Americans.
Ideally a visa would exist for entrepreneurs who promise to create any business in the U.S. The current entrepreneur visas focus on the wealthy, but the system needs to be expanded. However, any entrepreneur visa would only be a partial solution. Brin, of Google, came to the U.S. as a child refugee from Russia. An entrepreneur visa would have excluded him because as a minor, there was no way to pinpoint him as the next Internet tycoon.
A growing economy means that small, medium and large American firms need to grow and be started. Smaller firms that require skilled labor often have trouble attracting skilled Americans, so they rely on H-1Bs. Increasing the number of H-1B visas, lowering their cost and eliminating restrictions will aid smaller firms and startups.
Those companies compete for customers and highly skilled workers. H-1B visas, the technical lifeline of Silicon Valley for more than a decade, apportions 85,000 work visas (including 20,000 for foreign graduates of American universities) to work for American firms. Those numbers are paltry compared to the real needs of U.S. firms.
H-1Bs also help new smaller firms. Expanding enterprises rely on them to fill needed slots. The non-partisan National Foundation for American Policy found that each H-1B visa requested increases employment by five workers. Foreign skilled workers need support and management. They typically do not substitute, but complement American labor. A firm willing to employ H-1B foreign workers employs Americans alongside them.
Bad policies from both parties have gotten the U.S. into the economic mess it is in. But big messes require big solutions. Both parties have spent big and regulated this country into the ground over the past decade. Cutting taxes and deregulating the economy are paramount. Expanding legal immigration for law-abiding foreigners is an integral part of any reform. Allowing for increased legal immigration and work permits, especially among the highly skilled, is a better stimulus than any government spending bill.
Alex Nowrasteh is a policy analyst at the Competitive Enterprise Institute.
Alex Nowrasteh is the immigration policy analyst at the Cato Institute's Center for Global Liberty and Prosperity.