If the United States is trying to build a system that stifles entrepreneurship and discourages start-up activity among foreign workers, it's doing an excellent job
Sen. Marco Rubio's proposal to allow undocumented immigrant youth to stay in the country legally has elicited interest among some immigration reform advocates. That's primarily because it has breathed life into a moribund effort.
Under Rubio's as-yet unwritten plan, men and women who came to the United States as children and are pursuing higher education would be able to live in the country legally. Unlike the original DREAM Act, which has failed repeatedly to pass the U.S. Congress, the legislation wouldn't provide a pathway to citizenship for this group. It would only create that venue for men and women joining the military.
Some cheerleaders for the original DREAM Act look at the Rubio plan as a way to potentially break the logjam on immigration reform. GOP presidential candidate Mitt Romney, who opposes the original DREAM Act, has not dismissed the proposal outright. Plus, as Rubio points out, the men and women who qualify for his version of the DREAM Act could eventually become citizens through existing venues.
Look at these existing venues, however, and it becomes evident that the current system would exclude a huge number of DREAM Act recipients from citizenship. And--ironically, given our economic climate--the men and women who could face the steepest challenges are aspiring entrepreneurs. Under current laws, it is extremely difficult to become a permanent resident in the United States if you want to create a business.
WHY ARE WE STOPPING START UPS?
There are two major venues for immigrants who want to start enterprises from scratch to become green card holders. One is the so-called "investor visa" or EB5. The other is a visa for people of exceptional ability, or the EB2. Both set a very high bar for cash investment or demonstrated qualifications, excluding thousands of men and women who could build impressive businesses here, given the chance.
Like its moniker suggests, the investor visa is reserved for foreign nationals making substantial investments in the United States. Those who invest a minimum of $1,000,000 in a venture that creates a minimum of ten jobs can qualify for a green card. While that sum is cut in half if the enterprise is established in a high unemployment or rural area, the high figure means a small fraction of immigrant entrepreneurs are able to qualify.
That leaves a visa earmarked for people of "exceptional ability." For that category, if you don't have an employer petitioning on your behalf--and, with few exceptions, entrepreneurs can't petition for themselves--you need to show that your presence in the United States would benefit the national interest. That's a tough hurdle to overcome. A Mexican entrepreneur who has established a successful restaurant chain across Texas, for example, would have difficulty meeting that requirement because his business is confined to just one state.
For a forthcoming report I authored for the Council on Foreign Relations on Latino immigrant entrepreneurs, I spoke with some of the most successful foreign-born Hispanic business owners in the United States. Strikingly, nearly all of them had become citizens through marriage. That is a well-worn path among the highly-skilled: over half of immigrants who at one point studied on a student visa at a U.S. university become citizens because of their spouse. This is not to say these men and women don't legitimately want a lifelong commitment to the people they have married. Still, the fact that so many obtain a green card by exchanging wedding vows is an indication of how difficult it is to become a green card holder through an employer or establishing businesses. That's the case when these immigrants' companies are employing hundreds of people and earning well over a million dollars a year in revenue.
RENTING THE AMERICAN DREAM
DREAM Act entrepreneurs who do not get hitched to a U.S. citizen or have hundreds of thousands of dollars in capital to invest would most likely find themselves residing in the netherworld of living in the U.S. without the guarantee of permanent residency. To be sure, the vast majority of businesses started by this group would (like most small businesses in America) not have paid employees.
But companies that start small can grow into something big. Mexican-native Maria de Lourdes Sobrino, for example, began selling gelatin desserts from a Los Angeles storefront in 1982. Today Lulu's Desserts has $8 million in annual revenue and its products can be found in 1500 Walmarts across the country. That kind of growth never would have happened if Lourdes Sobrino had been on a "non-immigrant" visa of the type Senator Rubio has proposed. It would have been too risky to invest personal savings and hire employees.
Rubio's proposal would, in essence, create a class of renters rather than owners. That carries implications for our social cohesiveness. When it comes to entrepreneurs, the price we pay can be measured in empirical terms. It will cost us jobs and economic growth at the time we need it most.