Over the past two weeks President Trump has taken actions to make good on some of his campaign promises regarding immigration. The President has delayed a rule that would allow foreign entrepreneurs to stay in the U.S. while building their businesses, and is working with Republican Senators to introduce a bill that, by 2027, would cut the number of legal immigrants allowed in the country by half. Immigration was a major part of the President’s campaign platform, and it does not seem as if the administration has lost its focus on the issue.
The “Start-Up Visa” Rule
Prior to leaving office, President Obama, issued the International Entrepreneurs Rule to allow foreign entrepreneurs building “fast-growing business” to apply for parole status to work in the United States. Generally, parole status is issued to individuals working on humanitarian or medical relief efforts, but the rule was meant to expand the status as an alternative to the startup visa. Startup visas were part of an unsuccessful 2013 immigration reform plan. The rule was supposed to go into effect on July 17, but the Department of Homeland Security issued a memo delaying the rule until March 14, 2018. It was reported that approximately 2,940 applications a year would be filed under the new rule.
President Trump has also reportedly been working with GOP Senators Tom Cotton (R-AR) and David Perdue (R-GA) on a piece of legislation that would cut in half the amount of legal immigrants entering the country each year. The legislation is known as the RAISE Act and is currently in the Senate Judiciary Committee. The legislation would shift current immigration policy towards a merit-based approach for issuing green cards. Priority would be given to those with advanced degrees and “extraordinary abilities in a particular field.” The intention is to reorganize the current U.S immigration system by limiting low skilled immigration to the United States and giving priority to immigrants who likely will not depend on social welfare programs. The bill however does not actually introduce any additional visas for skilled workers to achieve this goal. Instead the bill cuts the number of family based visas available to the point that the total number of legal immigrants would be reduced by half.
Shortage of Labor
The major issues with the administration’s policies, from an economic standpoint, relates to the shortage of labor and low labor force participation rate in the United States. The labor shortage is evident as the U.S. government has just approved an additional 15,000 temporary unskilled worker visas. The Department of Homeland security said they expanded these visas to “…help American businesses in danger of suffering irreparable harm because of a shortage of labor.” John Kelly, the Secretary of Homeland Security, found that “there were not enough qualified and willing American workers available to perform temporary non-agricultural work.” American companies are already struggling to fill open positions and limiting the potential workforce will only hurt business further. Legislation like the RAISE Act will limit the pool of applicants for U.S. employers and businesses will fail to meet demand causing them to lose profits. Essentially, the policy will hurt the very people it is attempting to help.
The delay of the “startup visa” alternative is also harmful to American businesses and the economy as a whole. A study done by the National Foundation for American Policy found that immigrants have founded 51% of U.S. billion-dollar startups (44 of 87) and make up over 70% of key management and product development teams for these companies. Postponing the rule creates a great risk of stifling innovation and holding back economic growth in America. Failure to allow these entrepreneurs to stay in America will drive people to invest money and develop meaningful technology in foreign countries; relocate potential jobs for American workers; and prevent these businesses from reinvesting in the American economy. In short a policy like this would create a competitive disadvantage for the American economy and people.
The United States should not adopt policies that will limit the labor force or prevent individuals from developing new technology and reinvesting in the American economy. This could prevent the economy from adding jobs, putting money in American’s pockets, and expanding the overall economy. It is vital that the government take a pro-growth policy approach to the economy and does not act in a counterproductive manner. The market is demanding more workers and cutting immigration in half will prevent growth for U.S. business and the economy as a whole. Reducing legal immigration by half will only perpetuate the problem of the lack of available workers.