Uncapping Progress
Increased immigration catalyzes technological innovation and entrepreneurship. Biochemist Katalin Karikó, a Hungarian immigrant to the US, invented the underpinnings of mRNA vaccine technology; studying her work prompted Derrick Rossi, a Canadian-born immigrant, to found ModeRNA Therapeutics (meanwhile, Charles Pfizer, founder of the pharmaceutical company, and Albert Bourla, its current CEO, immigrated from Germany and Greece, respectively). Beyond these and other prominent examples, systematic evidence reveals that immigrants are vastly overrepresented in business creation and technological invention.1 Increasing the number of innovative and entrepreneurial immigrants would accelerate technological progress across many domains but would be particularly impactful in industries like semiconductor device manufacturing, where more than 80% of patents from top US universities include a foreign-born inventor.2
The intractable challenge of federal immigration reform
The United States remains attractive to high skilled and entrepreneurial immigrants on many dimensions, with the notable exception of migration rules.3 Indeed, the widespread success of the United States in attracting innovative and entrepreneurial immigrants is despite its vast and exceptionally complex procedures for allowing individuals to work in the country. Sensible arguments have been made to expand, eliminate, or modify the H1-B visa cap, for example, or to create an entrepreneurship visa. Practically speaking, however, prospects are bleak for federal legislation that boosts high skilled immigration. Several attempts to raise the H1-B cap or make other changes have failed (e.g., the American Innovation Competitiveness Act in 2006, the Secure Borders, Economic Opportunity and Immigration Reform Act of 2007). The most recent attempt to pass comprehensive immigration reform in 2013 was derailed by the electoral defeat of Eric Cantor, a Republican in House Leadership, to a little-known primary challenger running on an anti-immigration platform.4 Prospects for such legislation passing has dimmed further as Republicans have become more hardened in their opposition to immigration and many liberal Democrats have become less likely to embrace an immigration reform package that boosts funding for policing the border. Even piecemeal efforts at immigration reform are beleaguered by political polarization and the Senate’s supermajority threshold. In 2022, the House of Representatives narrowly approved the COMPETES Act with significant immigration provisions such as a start-up visa and uncapped visas for STEM doctorate holders. But this vote offers only false hope to immigration reformers. Immigration provisions are absent from USICA, the corresponding Senate bill, and Senator John Cornyn, a lead Republican sponsor, has criticized the House’s immigration provisions.5
How state and local governments can “uncap” innovation
Rancorous politics has left immigration law in stasis, modulo administrative tweaks subject to reversal by successive Presidencies.6 This does not mean, however, that all hope to promote high-skilled immigration is lost. Federalism offers a path forward. Though regulating immigration is the federal government’s domain, a sleepy provision in a twenty-year old statute empowers state and local governments to expand high-skilled immigration and thereby unleash technological innovation.
The Immigration Act of 1990 established a numerical cap on H1-B visas issued to high-skilled workers each year. The American Competitiveness Act of 2000 temporarily increased the H1-B cap for FY2001-2003 (to as high as 195,000 in FYs 2002 and 2003), but the cap reverted to 65,000 people thereafter. Since 2004, a further 20,000 visas have been issued annually to aliens graduating from US universities with master’s degrees. Because the number of applicants seeking an H-1B visa far exceeds the cap, visas are allocated by lottery and exhausted early in the year.7
However, the American Competitiveness Act of 2000 also included provisions exempting certain types of employers from the H-1B cap.8 Cap-exempt employers include universities, hospitals or research organizations affiliated with a university, and non-profit or government research agencies. Exempt employers can issue an unlimited number of H1-B visas to qualified individuals who fill positions that serve the essential role of the organization (so long as employers pay the prevailing wage determined by the Bureau of Labor Statistics). They can also sponsor qualified individuals at any time during the year. Importantly, a person sponsored by a cap-exempt employer can also receive sponsorship to work for another company, such as their own start-up venture; this second visa does not count towards the national H1-B visa cap either. In this way, cap-exempt employers can provide individuals with demonstrated potential for innovation, such as the founders of start-up ventures, with legal authorization to reside, work, and grow their business in the United States. This has further ripple effects on innovation because the H1-B holder can, in turn, sponsor a dependent spouse or children – and immigrant spouse visa holders are also disproportionately entrepreneurial and innovative.9
The “Global Entrepreneurs in Residence” Model
Because public universities are cap-exempt employers, they can sponsor high-skilled innovators, entrepreneurs, or other workers to reside and work in the United States if the sponsored individuals work at least part time to advance their mission. There is precedent for leveraging H1-B cap-exempt status in this way to facilitate entrepreneurship and innovation. In 2014, the Massachusetts legislature authorized the University of Massachusetts Boston to issue visas to entrepreneurs through its Tech Collaborative by forming the “Global Entrepreneurs in Residence Program” (GEIR). The statutory goal is to enable those “with the potential to create a high growth company” who studied at Massachusetts colleges or universities to stay in the country to grow their start-up ventures – in effect, creating the “start-up visa” long sought by progress activists.10 Two entrepreneurs participated in the 2014 pilot program, which scaled-up to 10 entrepreneurs in 2015 and about 15 annually thereafter. Though the legislature initially appropriated $1 million annually towards this initiative, in 2015 the funding was cut 90% by Republican Charlie Baker, the new governor, to $100,000 per annum (Baker had initially proposed eliminating the program). A Jeff Bussagang, a venture capitalist and architect of GEIR programs, called it “a paltry amount of money, but it legitimized the program.”11 The program has also received funding from private donors including the Silicon Valley Bank, which invests in start-ups.12
The GEIR program markets itself as “an ideal solution to the uncertainty and limitations of the visa system.”13 Resolving this uncertainty shifts to productive use the time and energy that is expended to navigate complex immigration rules.14 Participants in the GEIR program work 8 hours per week teaching university students about innovation and entrepreneurship; their remaining time is to grow their ventures. At least 110 visas, including follow-up visas, have been issued to the 80 or so graduates of the program. Companies founded by program graduates employ more than 1,500 people and have received more than $1 billion of investment; they include, for example, PillPack, an online pharmacy acquired by Amazon in 2018.15 Other public universities could replicate this model by forming their own GEIR programs.
Government Research Agencies
In addition to universities and nonprofits, “government research agencies” are also cap-exempt employers. Virtually all states have qualifying research agencies (e.g., the Massachusetts Center for Health Information and Analysis, Cancer Prevention and Research Institute of Texas) and some larger local governments do as well. The cap-exempt status allows enterprising state and local governments to move beyond the GEIR model and create new (or leverage existing) cap-exempt government research agencies to employ high-skilled immigrant workers. Doing so would improve state capacity by helping agencies recruit talented employees to serve for six years or longer (an initial three-years, plus renewal, and longer if the employee is in-line for a green card). More ambitiously, state and local governments could create new research agencies to perform applied research that benefits governmental objectives, such as managing construction-cost in public projects, optimizing government health insurance programs, boosting cybersecurity, and improving information technology systems.
Concluding summation
Although increasing immigration through Congressional action is hampered by partisan polarization around immigration and super-majoritarian legislative thresholds, the landscape within individual states may be conducive to such proposals, particularly if arguments in favor track local conditions. In places led by progressives (e.g., Vermont), a proposal to boost high-skilled immigration might be championed to promote racial and ethnic diversity. In cities and towns experiencing population loss and disinvestment, an economic development framing may be more effective; advocates might tout the effect of increased STEM migration on local wages.16 In some cases, keeping out of the spotlight may provide the smoothest path to passage; to this end, the subnational nature of these proposals gives them a natural advantage.
Buried within existing immigration law is the opportunity for state and local governments to boost high-skilled immigration by leveraging the ability of their universities and research agencies to issue cap-exempt H-1B visas to inventors, innovators, and entrepreneurs. In this vein, there are several paths forward for state and local governments to increase technological innovation:
- The Global Entrepreneurship in Residence Model. Other states, and state university systems, should adopt the University of Massachusetts GEIR model sponsoring qualified immigrant entrepreneurs who provide part-time instruction and mentorship to students of entrepreneurship or subjects relevant to the entrepreneur’s start-up venture. A state statute authorizing the program would help legitimate it but is not strictly necessary.
- The Government Research Agencies Model. State and local governments should create new or leverage existing cap-exempt government research agencies to sponsor high-skilled immigrant workers performing applied research that benefits governmental objectives.
The Private-Public Venture Model. Local governments should collaborate with the private sector on joint ventures to encourage research in an industry, marrying the formers’ ability to create H1-B cap-exempt research agencies with the latter’s ability to raise capital. For example, business groups and a city government could form a new biotechnology research agency funded by investors who get first dibs on any resulting biotechnology startups.
Footnotes
1. For examples: Hunt, J. and Gauthier-Loiselle, M., 2010. How much does immigration boost innovation?. American Economic Journal: Macroeconomics, 2(2), pp.31-56; Kerr, W.R. and Lincoln, W.F., 2010. The supply side of innovation: H-1B visa reforms and US ethnic invention. Journal of Labor Economics, 28(3), pp.473-508.
2. New American Economy. 2012. “Patent Pending: How Immigrants Are Reinventing The American Economy.”
3. See generally: Tuccio, M., 2019. Measuring and assessing talent attractiveness in OECD countries. “[B]efore taking into account its accessibility in terms of migration policy, the United States [is] one of the most attractive countries for all three talented migrant profiles” (44). “[T]he United States shows great results across all dimensions, but yet performs poorly in the ‘future prospects’ dimension (mostly due to lower easiness of [immigration] status change” (45).
4. Kamarck, E. 2021. “Can Biden pass immigration reform? History says it will be tough.” Brookings Institution
5. 2022. “Cornyn Calls for Conference Committee on China Competitiveness Bill.”
6. Examples of such administrative acts include (1) A proposal at the end of the Trump Administration to replace the lottery allocation with salary-preferences (discontinued by the Biden Administration) (2) The Obama Administration’s “International Entrepreneur Parole” program ended by the Trump Administration (but revived by the Biden administration). (3) The Biden Administration’s reducing paperwork requirements for H-1B applicants.
7. The 2022 cap was reached on February 28th.
8. 8 U.S.C. 1184(g)(5)
9. Bier, D. 2020. “The Facts About H‑4 Visas for Spouses of H‑1B Workers.” Cato Institute
10. Chapter 287 of the Acts of 2014 Section 104 (a).
11. O’Brien, K. 2016. “How an immigration workaround for entrepreneurs is faring a year after it was almost killed.” Boston Business Journal.
12. Venture Development Center. “Entrepreneur Visa Partnership.”
13. Brah, W. 2019. “How Does the Massachusetts Global Entrepreneur in Residence Program Work?” Venture Development Center (University of Massachusetts, Boston).
14. Nitin Pachisia, an immigrant entrepreneur, explained “… I ended up spending a lot of time learning immigration law myself, which is among the worst uses of an entrepreneur’s time. I could be spending that time building my business” (quoted in Mohan, P. 2019).
15. Statistics about the program from Venture Development Center. “Entrepreneur Visa Partnership.” PillPack information from O’Brien, K. 2016.
16. Peri, G., Shih, K. and Sparber, C., 2015. STEM workers, H-1B visas, and productivity in US cities. Journal of Labor Economics, 33(S1), pp.S225-S255.
Michael Zoorob 