To spur job growth, change immigration policy, tax policy, and incentives for investment.
Slowing economic growth in China and throughout Asia, a recession in the Eurozone, and recent weakness in U.S. non-defense capital goods orders and consumer confidence indicate that further actions are necessary to promote job creation in the United States. Job gains over the last three months have averaged only 94,000 after rising by 232,000 in the first quarter. Unemployment fell back to 8.1 percent in August, but only because thousands gave up actively seeking employment and dropped out of the labor force. Unless the pace of job growth accelerates to at least 175,000 per month, the U.S. unemployment rate will remain above 8.0 percent -- an unacceptable level that will cause long-term social and structural harm to the United States. My ideas to spur job growth include immigration policy changes, altering incentives for investment, and changes in tax policy.
Expand foreign talent, investor, and entrepreneur recruitment
The problem: Currently, the U.S. caps employment-based (EB) visas at 140,000, significantly below smaller countries that enjoy boosts to aggregate demand from foreign talent and investors. For example, Canada, which has a population one-tenth the size of that of the U.S., accepted 186,913 "economic immigrants" in 2010. As Steve Case has related in this series, these immigrants unquestionably contribute to economic growth, job creation, and increased demand for housing. Quotas restricting various countries to no more than seven percent of all visas issued create significant backlogs of highly educated individuals, investors, and entrepreneurs, and disproportionately restrict our supply of high-value immigrants from China and India. STEM graduate students typically are forced to leave the U.S. upon graduation. Additionally, the framework for EB-2 visas, meant for those with an advanced degree or "exceptional ability," remains vague. Despite a cap of 10,000, the maximum number of EB-5 visas (for immigrant entrepreneurs) ever issued in a year was approximately 4,000.
The solution: Significantly increase the cap for EB visas to at least 300,000; adjust national admission quotas to account for population size and the quality of the immigration pool. Enable automatic residence for STEM graduates. Create a new entrepreneur visa mechanism with a probation period. Reduce the bar for EB-5 investors by cutting minimum investment requirements from current levels, and engage in widespread global marketing of the EB-5 program.
Address the housing market overhang with a new visa mechanism
The problem: Approximately 20 percent of homeowners owe more on their home than it's worth. Households have depleted their savings and taken on additional debt in an attempt to remain in their homes, while many have decided to stop making mortgage payments. Rising shadow foreclosure inventory (delinquent homes that are not yet on the market), the prospect of falling prices, and tight loan requirements continue to exacerbate the housing overhang.
The solution: In order to absorb inventory, put a floor under housing prices or possibly boost them. Capitalize on pent-up foreign demand, by creating a new visa mechanism for the first two million non-U.S. residents to purchase a home in the U.S. in the price range of $200-500K, depending upon regional housing prices. Set the residency requirements at three months for the program to have maximum impact.