The introduction of a U.S. start-up visa could generate as many as 1.6 million new jobs in the next 10 years, according to a report released by the Kauffman Foundation today.
Based on company and employment survival rates from Census data, the report calculates the number of companies and jobs that would be created under the bipartisan Start-up Visa Act 3.0 bill. The updated version of the bill, which was introduced to Congress in mid-February, would grant 75,000 start-up visas to H-1B and F-1 visa holders.
"There's hope that 2013 finally may be the year the United States implements comprehensive immigration reform," Dane Stangler, director of research and policy at the Kauffman Foundation, said in a press statement. "However, that legislation would fall short if it fails to create a new visa for the thousands of potential foreign-born entrepreneurs who are already in the country, particularly those who are likely to start technology and engineering firms. Increasing their numbers would accelerate U.S. economic and job growth and help offset the steadily declining numbers of native entrepreneurs."
The Start-up Visa Act was first introduced by former Senator John Kerry (D-MA) and Richard Lugar (R-IN) in 2010, and again in 2011. On February 14, Senator Mark R. Warner (D-VA), Jerry Moran (R-KS), Chris Coons (D-DE) and Roy Blunt (R-MO) introduced the Start-up Visa Act 3.0., which explicitly included the creation of an "Entrepreneur's Visa." To be qualified for the program, these entrepreneurs would be required to hire at least two full-time employees in the first year and five full-time employees in four years.
Today's Kauffman report used three different calculation methods to project the potential of job creation under the Startup Visa 3.0 Act.
In the first scenario, companies would meet the minimum requirements by the legislative proposal (five full-time, non-family employees after four years), therefore creating about 500,000 new jobs over ten years. In the second scenario, the report applies real job creation record of four-year firms between 2003 and 2010 (9.18 employees on average). This yields a much higher job creation estimate: about 889,000 by 2024.
The third scenario gives the largest potential job creation number – 1.6 million jobs – under the assumption that half of the companies under the Startup Visa program will be technology and engineering firms. The assumption is based on the fact that most F-1 student visa and H-1B visa holders study STEM subjects, and immigrant-founded technology companies employ an average of 21.3 people per firm.
The current immigration rules make it difficult for highly-skilled foreign nationals start a company in the U.S., but almost half of the start-ups have at least one foreign co-founder, according to the recent 2013 Start-up Outlook Report by Silicon Valley Bank.