The best-known aphorism in economics holds that there is no such thing as a free lunch. There is, however, one glaring exception: immigrant entrepreneurs. This group of people seeks to come to the United States to start companies, create jobs, and add wealth to the economy. Yet America, once a magnet for aspiring entrepreneurs from all over the world, is increasingly turning them away.
Recently, the Kauffman Foundation received an email from a European entrepreneur—let’s call him Jay—who participated in our Global Scholars program this year. This program, completely funded by foreign governments, brings in potential entrepreneurs from other countries to study and experience American entrepreneurship, develop networks, intern with entrepreneurial companies and take their skills back to their home countries. Importantly, we find that a good number of these individuals seek to remain in the United States to either start their own companies or join other startups. Even when they decide to return home, the entrepreneurial networks that have arisen out of the program are a boon to American companies.
But Jay, an engineer who landed a job with a U.S. startup during the program, is being denied re-entry to the country. In his case, the denial stems from a third party error related to the type of visa he acquired. Once the mistake was discovered and rectified, however, American immigration officials still refused to allow Jay back in. As he put it: “I am trying to bring in money from Europe to the States. Why not let me enter the country?!”
This is not an isolated example. Last year, we received a call from a technology startup whose Finnish co-founder was stuck in Europe because the United States refused to grant him a visa. And in surveys of Indian and Chinese entrepreneurs, entrepreneur-turned-academic Vivek Wadhwa has found that an increasing number of them are leaving the United States to start their companies. In some cases this reflects more promising opportunities in their home markets, but in others it reflects silly immigration policies.
True, the plural of anecdote is not data, but it is difficult to ignore the continuous amassing of such anecdotes and, in any case, some researchers have found more systematic evidence. Immigration attorney Malcolm Goeschl has investigated the adjudication process for H-1B visas conducted by U.S. Citizenship and Immigration Services (USCIS). He found that, while the law on the books is generally conducive to allowing American entrepreneurs to hire immigrant co-founders and employees, implementation of that law is far less friendly. In recent years, Goeschl observed, USCIS “has made it increasingly difficult for startups and small companies to hire highly qualified foreign nationals through H-1B sponsorship.” The Administrative Appeals Office usually does not reverse these decisions, and immigration lawyers say denials for small companies have risen.