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Innovative New Ideas For Job Creation – OpEd


By Diana Furchtgott-Roth

It was 97 degrees in Kansas City on Wednesday. But the heat didn’t stop Ewing Marion Kauffman Foundation scholars Robert Litan and Timothy Kane from churning out new ideas for job creation.

The setting was a roundtable discussion with financial services industry representatives. Kauffman’s latest idea is to import job creators from abroad to create start-ups and hire workers, and attract tourists to give more business to our stores, beaches, restaurants, and wilderness areas.

Start-ups lead to innovation, which leads to economic growth. Think Facebook, with its friends and captivation of an entire generation. Or think of Apple, a start-up just a generation ago. Last quarter all 9.3 million iPads produced were sold. People are buying them for personal use, companies are buying them for employees. And this is in an economy with a 1.9 percent growth rate and 9 percent plus unemployment.

If we had another two dozen new Apples or Facebooks every year making similarly attractive products, our economic growth and our employment would really take off. That’s because data show that new companies, those in their first few years of existence, hire a lot of workers on net. That means some companies start and fail, but others make up for it, and more.

Many people don’t understand how immigrants could solve our jobs problem. “Why give out more visas when we have a high unemployment rate?” is a typical question.

But Kauffman data show that immigrants found new companies in America at greater rates than do native-born Americans. So if we allowed more immigrants to enter, and gave green cards to those who created jobs, employment would rise.

Consider Sergei Brin’s Google, Andrew Grove’s Intel; Jerry Yang’s Yahoo; Pierre Omidyar’s eBay; and Elon Musk’s PayPal, Tesla Motors, and SpaceX, to name but a few. Past founders include Alexander Graham Bell, Levi Strauss, Adolph Coors, and Henry Heinz.

Kane explained to me that once companies are around five years old, they appear to reach a hiring equilibrium. They keep the workers they have already hired, but on average their employee expansion rate slows down and they generate no new jobs. So the best way to expand employment in an economy is to figure out how to get more new, innovative firms.

A bill sponsored by two senators, Massachusetts Democrat John Kerry and Indiana Republican Richard Lugar, would do just that. The Kerry-Lugar Startup Visa Act would set up a new class of visa called the EB-6, aimed especially at entrepreneurs.

Those who could bring in capital from abroad, or who have already generated U.S. sales, would be eligible for the visa. If they hired a certain number of non-family members, the EB-6 would transition into a green card, and they could stay forever and become citizens.

The Kerry-Lugar bill proposes about 5,000 EB-6 visas a year. The Kauffman Foundation suggests making the number unlimited, to allow as many founders as possible to have the opportunity to come to America to start companies. Those immigrants who did not hire workers would not receive green cards and would have to return to their countries.

In essence, the Kauffman plan would allow America to take a number of potential entrepreneurs on a provisionary basis, and keep the successful ones.

This visa would be especially attractive to some of the million immigrants in America who now have temporary H1-B visas, work permits obtained by employers that require workers eventually to return to their home countries. If H1-B visa holders could start companies and hire other workers, they could convert the H1-B visa to the EB-6, and then progress to the green card.

Once an H1-B visa holder was converted into an EB-6, one market for the new entrepreneur would be his former firm. Rather than selling his services to an employer, he would sell his firm’s services to his former employer-and to other employers also.

Another group that could benefit from EB-6 visas would be the 60,000 foreign students who graduate with American degrees in the technical fields of science, technology, engineering, and math.

The possibility of such visas would encourage more foreign students to come here to study. Now, many don’t come, because they believe that they will just have to return home when their studies are completed. Instead, they study in Canada, Britain, and Australia.

And there’s another way that visas could help our job picture, Litan said. We could be giving out more tourist visas, and promoting our country as the global vacation spot.

Walk into a hotel in Zurich, Switzerland, and you can find a brochure in Mandarin Chinese promoting the surrounding area. Walk into the Willard Hotel in Washington D.C. and you see nothing in Mandarin, and little in any other languages. It’s no wonder that Chinese tourists go to Switzerland or Singapore.

Instead, our embassies and consulates around the globe seek to discourage visitors. They interrogate them as to their intentions and make sure they don’t want to stay here. Plus, they charge substantial sums for a visa application, in the range of $200 to $300. If the visa application is rejected, the embassy keeps the fee.

We have a natural desire for security. But we need to work out some way that tourism and security can be reconciled. All states offer attractive tourist destinations, and with the weak dollar, America is good value.

America is facing an economic crisis on a scale that our government at times seems incapable of grasping. Our mounting debts are not the result one mistake made at one time, but a series of mistakes made repeatedly over decades. At least the Kauffman Foundation is thinking of ways to turn America around and head us in the right direction, one job at a time.

Diana Furchtgott-Roth is a Senior Fellow and Director of Hudson Institute’s Center for Employment Policy. She is the former chief economist at the U.S. Department of Labor. This article was published by and reprinted with permission

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One thought on “Innovative New Ideas For Job Creation – OpEd

  • July 25, 2011 at 12:59 am

    Personally I do think the immigration policy should be changed to let people who have both “money and knowledge” to immigrate in order to uplift economy and relieve national debt vigorously.

    International students who have about one million US dollar assets in their own families of their home countries or the ones who have stayed in US for more than 10 years with US advanced degrees in Science, Health & Medicine are groups to have both “money and knowledge”. If US immigration policy allow those international students to immigrate after running a comprehensive background check to make sure that they are FREE of criminal record, then they will bring inflow of money to US to set up companies if they can’t find a job. Setting up companies will hire at least 1-3 persons and generate tax income to the country. Moreover, immigration visa fees, cash inflow to buy houses, cars, computers and all kinds of household appliances bring a considerable sum of money to the country.

    Also, those new immigrants will invite both friends and relatives to visit US, tourist visa fees, airline tickets reservation, hotels’ reservation, restaurants’ reservation and profits of retail sales in shopping centers will be increased. Those profits’ increase will indirectly create job opportunities such as to hire more salesmen. More immigrants will create more demand in houses and education of the immigrants’ young generation, therefore, more construction and education jobs will be created.

    Also, those international students are more familiar with US surroundings than other people in other countries in the world and they have US drivers’ licenses or social security cards for running background check—therefore, it is impossible to invite someone to have criminal record to immigrate. National security will be enhanced.


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