🛠️ Fixing the Broken US Immigration System 🇺🇸
Should startups run the government?
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Immigration is a hot topic nowadays, and for good reason. In just the last week there has been a whirlwind of news:
It goes without saying that even in just the last few weeks, immigrants to the US have been thrown for a loop, with constant changes in policy and enforcement.
In this post, we explore what’s broken in the US immigration system, suggested policies to fix it, and the startups that are finding ways to fix this problem from the outside.
Doing Well by Doing Good startups play a couple of key roles in the narrative of immigration and in this post we’ll address two of these key roles
Doing Well by Doing Good startups are some of the most creative and innovative startups out there, tying capital incentives directly to doing good for society. These require out-of-the-box thinking, diverse teams, and oftentimes legislation to support their missions. The broken US immigration system puts these companies, their founders and employees, equally, if not more more, at risk than other companies
Immigrants are also some of the most vulnerable populations within the US. So by definition, any for-profit company helping solve this challenging problem fits the Doing Well by Doing Good criteria.
First, let’s dig into some numbers about immigration
Data Shows...Immigrants Get the Job Done
It has been proven time and time again that immigrants, across all socioeconomic backgrounds, are a larger driver of economic growth than US citizens alone. Immigrants are mobile, contribute to filling job shortages, work in highly critical national security fields, and the list goes on. Most critical is that immigrants contribute to job growth via entrepreneurship — in fact 40% of Fortune 500 companies were founded by 1st or 2nd generation immigrants.
In a recent article on Immigration Policy Levers for US Innovation and Startups published in April by the HBS Professor William R. Kerr and Wellesley Economist Sari Pekkala Kerr, they explored the current challenges in our current Visa-based system and a few solutions to the problem. The abstract starts with perhaps the most telling statement
Immigrants account for about a quarter of US invention and entrepreneurship despite a policy environment that is not well suited for these purposes
In other words, immigrants drive economic growth through innovation and entrepreneurship by overcoming these barriers, but this broken policy environment is HINDERING the full potential of immigration.
What’s Broken?
In the paper, Kerr identifies 4 key problems with the current system
H1B visa limits are too low to meet demand and EB residency is distributed with a 7% cap for each country, not accounting for population adjustment for larger countries (e.g. China and India)
Current H1B lottery systems provide equal weight is given to basic skills vs. specialized skills. Kerr explains this with an example of the H1B lottery system in software.
Indeed, the lottery system likely even tilts the application pool further towards more mundane uses: it is easier for a company to submit multiple applications for a routine software developer role, knowing that the overall odds per applicant are in the range of 40%, than it is for a company to submit multiple applications for a scarce skillset like artificial intelligence research. (In a comparable way, it is likely that the lottery favors large companies submitting many H-1B applications over smaller companies who have more discrete needs.)
US universities do not face any cap on student visas while US companies do, leaving many students unsure of their status after graduation. The OPT program provides 1-3 years to students, but the uncertainty of receiving permanent residency always exists.
Green cards are heavily skewed towards family reunification (68% of green cards in 2016) rather than employment-based green cards (only 12% in 2016), leading to large backlogs of green card applications for employed immigrants.
There are no special visas or incentives for immigrants to start businesses. Immigrants who do start companies have to choose from an imperfect set of visas.
Despite the data showing that US immigration creates jobs at a higher rate than it takes jobs, inefficient government policies remain, often because political expediency wins out over what’s economically most effective and equitable.
BUT there is a way forward…
How Can Policy Fix it?
Kerr suggested a few solutions to each of these problems. While these are just suggestions, some of them have been proposed for quite some time…with little progress.
Increase the number of H1B visas available annually to spur growth and increase the expected value of innovative companies
To address the H1B lottery inefficiencies, Kerr suggests a few options to fix this
Remove the lottery system and instead rank candidates by the wage and compensation their employers are offering
Same as above, with an additional minimum wage requirement (e.g. $100,000)
Remove the lottery system, and auction visas to companies (the primary driver of sponsorships for H1B applications)
Transitioning from student visas to work visas results in significant drop off. Kerr suggests a few options to fix this:
Provide 3-5 years of work visa automatically after school (as is already provided in some countries)
“Staple” a green card to any advanced STEM degree
Kerr suggests a reallocation of green cards to shift to higher percentage of “employment-based” green cards
As the key topic of the essay, Kerr suggested a few options to address the “Entrepreneurship Visa” which have currently been put to the floor and discussed quite extensively
In 2019, the "Startup Act", …introduced on a bipartisan basis within the Senate…sought to authorize the Secretary of Homeland Security to issue up to 75,000 "conditional immigrant" visas to entrepreneurs who register a new business, employ at least two full-time employees, and invest or raise at least $100,000 in the business within the first year. For the following three years, entrepreneurs would be required to employ an average of at least five full-time employees in order to remove the conditional basis of their visa.
The new EB-2 NIW (national interest waiter) stipulates : "(1) that the foreign nationals proposed endeavor has both substantial merit and national importance; (2) that the foreign national is well positioned to advance the proposed endeavor; and (3) that, on balance, it would be beneficial to the United States to waive the requirements of a job offer and thus of a labor certification.”
In January 2017, the Department of Homeland Security (DHS) under the Obama Administration published the International Entrepreneur Rule, a rule permitting the DHS to extend a discretionary grant of parole lasting up to 30 months (2.5 years) to entrepreneurs. Entrepreneurs must (1) possess at least 10 percent ownership interest in startup created within the last five years, (2) have an active and central role in the operations and future growth of the entity, (3) have secured a minimum of $100,000 from government grants or at least $250,000 from a qualified US investor for the business, and (4) demonstrate evidence of substantial potential for rapid business growth or job creation. This was eliminated in May 2018
The policies explained by Kerr are a good place to start, but like any policy they take a long time to see the light of day, and in many cases have failed multiple times in committee.
Thankfully, much like the innovation that these pro-immigration policies themselves promote, startups are finding ways to fix this problem outside of the confines of policy.
DWDG Startups Fixing the System from the Outside
Getting creative when the deck is stacked against you is perhaps the most immigrant trait around. Unsurprisingly these Doing Well by Doing Good startups are facing the challenge head-on.
Boundless Immigration
Boundless Immigration is a Seattle-based Series A company founded in 2017 to help immigrants better navigate the complex US immigration system.
Mission: Empowering families to navigate the immigration system more confidently, rapidly, and affordably.
Product / Service: Boundless provides a software as a service offering for immigrants looking to file for a marriage green cards as well as applications for US citizenship. It simplifies the application process and provides peace of mind for the end users
Doing Well: Boundless currently charges a flat fee for its services including a $950 flat fee for marriage green cards and $395 flat rate for its US citizenship service. These fees can also be paid in monthly installments.
Doing Good: Boundless helps vulnerable immigrant populations more clearly get through the US immigration process and reduces the overall friction faced by the antiquated systems and complicated forms provided by the government. This reduces the number of forms that are turned away due to miscommunication and confusion.
Borderwise
Borderwise is a Philadelphia-based startup focused on streamlining the green card and naturalization process and making it more affordable for US immigrants.
Mission: "There are hundreds of thousands of noncitizens that are eligible for green cards but lack the resources to apply. Borderwise's mission is to eliminate that barrier."
Product / Service: Borderwise provides a software as a service offering for immigrants looking to either apply for a green card or apply directly for naturalization for citizenship. It simplifies the process and reduces the overall cost for the end user.
Doing Well: Borderwise charges a flat fee of $500 for the entire process of application for green card or naturalization.
Doing Good: Borderwise is focused on helping the most vulnerable of the immigrant population, those who are eligible for green cards but lack the resources to rightfully apply.
FastVisa.Us
FastVisa.US is an early-stage startup based in Dallas building a SaaS based workflow for immigration law firms. By streamlining the legal process, they facilitate the process for immigrants.
Mission: Streamline the immigration and visa process, making immigration and visa preparation easier, faster and much more affordable.
Product / Service: They build an all-in-one immigration workflow solution for immigration law firms designed to maximize efficiency, boost new business opportunities and streamline complex immigration processes.
Doing Well: FastVisa is a software-as-a-service offering with multiple monthly or case-based pricing packages for immigration law firms as the key buyer. These prices include one-time setup and data migration fees.
Doing Good: Outside of the one-time setup and migration fees, each incremental dollar made contributes to a better experience for immigrant indirectly through the law firm via a streamlined UI/UX and reduced time for processing.
Each of the companies above are finding their own ways to fix the broken immigration system from the outside in by Doing Well by Doing Good for one of the most vulnerable populations in the US — immigrants. And of course, they are doing this all despite the broken system and finding innovative ways to create efficiencies in a web of government bureaucracy.
As for the startups finding ways to help immigrants outside of the visa, residency, and citizenship issues…that’s a topic for another issue…
If you found this interesting, or have any comments or thoughts on immigration, we would love to hear from you. Feel free to comment, email us, or tweet us @dwdgsf.
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‘Til we meet again
Anand
I love how social capitalism is self-reinforcing. Social missions leverage a powerful human/emotional connection to a problem that in-turn energizes the founders to persevere through the ups and down of rolling out a system. Your article is great since it lists out the ways this process is *working*. Keep these articles coming!