Startup Act 2.0: Could it be an immigration breakthrough?

Startup Act 2.0 sponsors aim to build a new case for immigration reform. Their point: America has a deficit of employees with skills relevant to an economy built on innovation – and new immigrants can help.

Forget the border fence or allusions to the American dream – if you want reforms of the nation's immigration policy, talk about jobs.

Talk, in other words, about the Startup 2.0 Act.

If a gridlocked Congress is to make headway on modernizing US immigration policy, it may be by fighting for reforms because of their economic imperatives rather than getting bogged down in highly charged cultural or moral debates.

"For too long we’ve been arguing immigration policy from the extremes, border security on one side and amnesty on the other side, in a debate about emotions," says John Feinblatt, chief policy adviser to New York City Mayor Michael Bloomberg. "What it needs to be is a debate about economics." 

Mayor Bloomberg is a leading member of the Partnership for a New American Economy, which recently published a study of American immigration policy's shortcomings in attracting and keeping top global talent. 

And in a debate about economics, the Startup 2.0 Act's bipartisan contingent of supporters in both houses of Congress believes it has got the data to lay low all doubters. Immigration, the group contends, is a jobs issue.

But they're running up against a record of failed attempts at immigration reform since at least 2005 – and no sign that leadership is willing to take up this fight in an election year.

What would the legislation, introduced by its House sponsors on Wednesday and by its Senate proponents late last month, do?

The bill would offer 50,000 new visas so that US-educated foreign students achieving a master’s degree or PhD in so-called STEM fields – science, technology, engineering, or mathematics – can receive green cards. It likewise offers 75,000 visas for entrepreneurs who have legally immigrated to the US to stay in the US for up to three years. Both options also include a path for the visa recipients to become permanent residents or American citizens. 

It also eliminates per-country caps on employment-based visas in order to allow skilled workers from nations with lots of applicants, such as India and China, to be able to immigrate more easily.

Those changes would shake up a system of immigration that critics deride as built for the 1960s, with too few opportunities given to talented foreigners who have studied at American universities or who want to start businesses in the United States.

"Immigration and jobs are tied together," said Rep. Loretta Sanchez (D) of California, a leading co-sponsor of the bill, during a press conference Tuesday. "And it's about time this country figured that out."

What does America at large need to figure out?

That the nation is getting grayer. The labor force is expanding at a meager 1 percent per year while the median age continues to rise, meaning that in the absence of more immigration the US will have to wring more and more productivity out of a steady number of people in order to grow its economic output. That's a tall order, economists say.

Adding to the strain, America has a deficit of employees with skills relevant to an economy built on innovation. That's an economy fed by the talents of workers in STEM fields. But by 2018, the US faces a deficit of 230,000 STEM workers, according to an analysis by the Partnership for a New America Economy and the Partnership for New York City.

Immigrants with STEM skills – and, often, graduate degrees from America's colleges and universities – "put an awful lot of brain power into new markets," says Charley Polachi of Polachi Access Executive Search, a Massachusetts-based firm that conducts executive searches for a variety of high-tech companies.

"A lot of the best innovation is done by newly minted students," Mr. Polachi adds, "that haven't had a lot of bad experiences working for corporate America so they go out and do things that they otherwise get told they couldn't do."

So America needs workers, and it needs STEM workers particularly, the argument goes. But the next piece is what really drives the immigration question home: what those workers do once they've reached the United States.

Research shows that immigrants provide important fuel to America's economic engine. The line of thinking goes like this. Between 1980 and 2005, startups (businesses less than five years old) created an average of 3 million jobs per year and accounted for nearly all net job creation during that time. Immigrants, research suggests, are disproportionately likely to be in the entrepreneurial mix. 

Of the current Fortune 500, more than 40 percent were founded by a first- or second-generation American. While immigrants are 12 percent of the US population, they account for a quarter of the nation's Nobel Prizes and patent applications, according to the Partnership for a New American Economy survey. Nearly half of the top 50 venture capital-backed companies in the US last year had at least one immigrant among their founders.

And the outcome? A study by Partnership for a New American Economy and the American Enterprise Institute found that every immigrant with a graduate degree from a US university working in a STEM field creates 2.62 subsequent American jobs.

The risk to not adjusting America's immigration policies? The US, with its high-powered higher education system and massive economy, is the world's most powerful magnet for global talent. Immigration to America accounted for 27 percent of all global immigration flows, the most by far of any nation, according to the Organization for Economic Cooperation and Development (OECD). But Feinblatt worries that without immigration reforms, the US is going to slip in attracting top global talent, particularly as its hospitality to entrepreneurs drops as it has from first in the world to 13th in recent years, according to the World Bank.

"The real difference you see between what is going on in the US and what other countries are doing is that other countries are recognizing that immigration, just like infrastructure or taxation or research and development is part of their economic policy," he says. "We are not integrating it into our economic policy."

In the US, Feinblatt notes, about 7 percent of immigrants (or 15 percent, including their families) are admitted for economic reasons. In South Korea, Switzerland, and Spain, that figure is 80 percent. According to an OECD report on innovation and entrepreneurship published Tuesday, France has shown a "spectacular" increase in new businesses far outpacing the US over the past five years thanks to a simplified procedure for startup firms.

Since the current Congress was seated in 2011, moreover, seven nations have added special visa provisions to lure entrepreneurs, Sen. Jerry Moran (R) of Kansas, one of the bill's Senate patrons, said on the Senate floor Tuesday.

"We have a problem accessing talent. We know that. We have a problem retaining that talent. And this legislation is going to help us retain, attract, and motivate those to want to start a business here in the United States, to hire American employees," said Rep. Michael Grimm (R) of New York, a co-sponsor of the bill, during a press conference Tuesday.

Of course, this legislation does nothing for the millions of illegal immigrants currently in the United States. Nor does it attempt to address the thorny issue of border security.

For Democrats, that's objectionable because it takes a bargaining chip – visas for high-skilled immigrants – off the table in their discussions with Republicans over comprehensive immigration reform. For Republicans, it adds fodder to those wary that immigrants compete with Americans for work.

Jamming the bill through Congress in an election year is an additional hurdle. The bill has some influential sponsors among its six Senate backers, including rising star Marco Rubio (R) of Florida, Republican whip Roy Blunt of Missouri, and Sen. Mark Warner (D) of Virginia. In the House, the measure's roughly half-dozen cosponsors skew strongly toward the junior end of the seniority scale. The bill hasn't received the blessing of leadership in either chamber, although the legislation is still only a few weeks old.

“We are encouraged by the amount of support both the Senate and House bills have gotten in a short amount of time," Senator Moran said in an e-mailed statement.