It’s time to bring the immigration question squarely into the debate over jobs. A change to immigration policy could help create jobs and rev up economic growth. It’s a change that wouldn’t be hard to bring about. I’m talking about the establishment of a Startup Founders Visa program.

The program would make it easier for those with great ideas and the desire to start a company to live and work in the U.S. The idea is simple, yet powerful. By letting in company founders, the U.S. would bring in risk-takers who want to create jobs and potentially build the next Google (GOOG), Cisco Systems (CSCO), or Microsoft (MSFT).

At the same time, a founder visa program could stem the tide of talented, tech-savvy foreigners who are leaving the U.S. to seek fortunes in their home countries, primarily China and India. Even foes of flexible immigration policies who rail against both skilled and unskilled immigrants may have a hard time finding fault with granting visas to startup founders.

REQUIRED: EARLY INVESTOR BACKING

This type of program has been championed by a long list of technology notables and entrepreneurship gurus, including venture capitalists Brad Feld, a managing director at Mobius Venture Capital, Paul Graham, a partner at early-stage venture firm Y Combinator, and technology startup experts Eric Ries and Dave McClure. This idea was originally conceived last year by Robert Litan, the Kaufmann Foundation’s vice-president of research.

Here’s how it would work. Suppose a talented engineer who is not a U.S. citizen has a great idea for a new type of search engine and wants to start a company. This entrepreneur wants to start that company in the U.S., where venture capital markets are the most mature, intellectual property laws are strong, and the talent level is high. It turns out that the would-be founder’s search engine idea is actually very good. So a qualified U.S. investor decides to put real money—say, $250,000 to $500,000—into the startup. That investor could nominate the potential founder for a Founders Visa while also making a formal commitment to fund his or her company.

The idea and the founder’s résumé would then need to pass muster with a government or industry-appointed board of venture capitalists, financiers, or technology experts. After passing, the founder would be granted a permanent resident visa.

To open up visa slots, Ries, Feld and others propose altering an existing visa known as the EB-5, now for immigrant investors. Created by the Immigration Act of 1990, the EB-5 lets foreign nationals who invest at least $1 million in the U.S., and thereby create 10 jobs, obtain a green card visa. In areas where unemployment is high, foreign nationals need only invest $500,000 to obtain residency. By adding a Founders Visa provision such as that I have outlined to the EB-5 visa, we could avoid having to create a new class of visas and any political hassles this might entail.

NEWT GINGRICH LIKES THE IDEA

Richard Herman, a Cleveland-based immigration attorney and co-author of the upcoming bookImmigrant, Inc.—Why Immigrant Entrepreneurs Are Driving the New Economy (and how they will save the American worker), says that allowing thousands of founders to get special immigration status could spur sufficient economic activity and innovation to realize billions of dollars in real economic gains for this country within a short time span. We’re talking years, not decades.

How palatable would such a program be politically? U.S. Representative Jared Polis (D-Colo.), himself a former entrepreneur, is developing legislation to make it easier for foreign founders of investor-backed startups to secure visas to remain in the U.S. On the other end of the political spectrum, even Newt Gingrich, the Republican former Speaker of the House, has bloggedabout the need to make the country “more accessible to skilled immigrants.” He wrote this after witnessing “the dynamic entrepreneurial and high-tech business culture in Tokyo, Beijing, and Seoul”—countries with which we are competing for top talent. Representatives of both ends of the political spectrum can agree on this issue.

As things stand, we’re losing the battle to retain the immigrants who fueled the recent tech boom. We’re experiencing the first brain drain in American history.Other countries in Europe and South America are realizing the potential of attracting skilled immigrants and are putting together programs to snap them up. The startups needed to boost our economy are being created in Shanghai and Bangalore. That’s great for those countries, but we need job creation in Silicon Valley in California and Research Triangle Park in North Carolina. That means warmly welcoming to America as many founders as we can.

Wadhwa is senior research associate at the Labor & Worklife Program at Harvard Law School and executive in residence at Duke University. He is an entrepreneur who founded two technology companies. His research can be found at www.globalizationresearch.com. Follow him on Twitter“@vwadhwa”.

[Source: Businessweek]

The program, known as H-1B, has been a mainstay of Silicon Valley and Wall Street, where many companies have come to depend on securing visas for computer programmers from India or engineers from China. Last year, even as the recession began to bite, employers snapped up the 65,000 visas available in just one day. This year, however, as of Sept. 25 — nearly six months after the U.S. government began accepting applications — only 46,700 petitions had been filed.

Usually, all visas are allocated within a month or two from April, when applications for the following fiscal year are first accepted. But this year, six months later, “you can still walk in with an application and you’re still highly likely to get approved,” said R. Srikrishna, senior vice president for business operations in North America for HCL Technologies Ltd., an Indian outsourcing company.

The sagging economy, which has pushed U.S. unemployment to 9.8%, has crimped expansion in the technology sector, traditionally the biggest user of the H-1B program. Julie Pearl, a corporate immigration lawyer in San Francisco, said that at least a third of her clients have cut their hiring of H-1B visa holders in half from a year ago.

“Most companies just aren’t hiring as many people in general,” Ms. Pearl said.

For Indian outsourcing companies, historically the largest recipients of H-1B visas, the economy as well as political pressures have prompted a cutback in applications. The recession has trimmed technology budgets at their U.S. clients; at the same time, Washington has scrutinized hiring from abroad more closely amid high unemployment at home.

Instead of bringing over Indian engineers, HCL has been hiring American employees who otherwise might have been let go by clients switching the work to HCL, Mr. Srikrishna said. Last year, HCL hired more than 1,000 employees from clients and received just 87 H-1B visas, he said.

Political pressures have come to bear among other applicants as well. Companies that receive federal bailout funds must prove they have tried to recruit American workers at prevailing wages and that foreigners aren’t replacing U.S. citizens. That regulation caused Bank of America Corp., among others, to rescind job offers to dozens of foreigners.

In addition, would-be immigrants from India and China are finding new career opportunities at home as those economies grow relatively quickly while the U.S. economy sags and its political climate appears less welcoming.

Vivek Wadhwa, a visiting scholar at the University of California at Berkeley who has studied H-1B visas, said that trend has been compounded by what he sees as rising anti-immigrant sentiment in the U.S. “The best and the brightest who would normally come here are saying, ‘Why do we need to go to a country where we are not welcome, where our quality of life would be less, and we would be at the bottom of the social ladder?’” Mr. Wadhwa said.

The cost and bureaucracy of applying for H-1B visas is another deterrent. Lawyers’ fees, filing fees and other expenses can easily reach $5,000 per applicant.

And immigration lawyers say some would-be employers are put off by a crackdown on fraud. U.S. Citizenship and Immigration Services, which administers the H-1B program, has been dispatching inspectors on surprise company visits to verify that H-1B employees are performing the jobs on the terms specified. The fraud-detection unit in coming months is expected to inspect up to 20,000 companies with H-1Bs and other temporary worker visas.

“It’s an invasive procedure that is both stressful for the employer and the foreign national employee,” said Milwaukee lawyer Jerome Grzeca, whose employment-visa business is down 40% since last year.

The numbers represent a sharp turnaround for a program that many companies had complained was too stingy with its visas. Year after year, U.S. businesses braced for “visa roulette,” as applications to bring in highly skilled foreign workers far outstripped demand, forcing the government to hold a lottery to award them.

High-tech companies, such as Microsoft Corp., have been lobbying Congress for years to raise the cap. At the same time, some U.S. legislators have been calling for restrictions on the program, which they say displaces American workers.

Sen. Charles Grassley, an Iowa Republican, wrote a letter this month to the new director of citizenship and immigration services, urging tighter controls on H-1B visas. In April, Mr. Grassley and Illinois Democrat Sen. Richard Durbin introduced legislation to require companies to pass more stringent labor-market tests that would ensure they make a bigger effort to hire U.S. workers.

Companies that use H-1B visas argue the market, rather than Congress, should dictate the number of visas issued. The fact that the 65,000-visa cap hasn’t been reached this year shows that the market will temper demand when necessary, said Jenifer Verdery, director of work-force policy at Intel Corp., who represents a coalition of companies that use the visas.

“Contrary to the claims of H-1B critics, if importing cheap labor were the goal of H-1B visa employers, these visas would have been gone on the first day applications were accepted last spring,” Ms. Verdery said. “In slow economic times, such as today, the demand decreases and the market takes over, which is as it should be.”

In 2008, 44% of approved H-1B visa petitions were for foreigners working as systems analysts or programmers. The second-largest category consisted of professionals working in universities. Indians account for about half of all H-1B visa holders.

While the number of visa holders is small compared with the U.S. work force, their contribution is huge, employers say. For example, last year 35% of Microsoft’s patent applications in the U.S. came from new inventions by visa and green card visa holders, according to company general counsel Brad Smith.

Google Inc. also says that the H-1B program allowed it to tap top talent that was crucial to its development. India native Krishna Bharat, for example, joined the firm in 1999 through the H-1B program, and went on to earn several patents while at Google. He was credited by the company as being the key developer of its Google News service. Today, he holds the title of distinguished research scientist.

[Source: WSJ]