In the race to attract the best and brightest innovators from around the world, the U.S. has just decided to compete in this race while wearing a lead vest. The White House, and more specifically, the Department of Homeland Security, has decided to delay the decision regarding the International Entrepreneur Rule (IER), and the intention is to eliminate the rule entirely.
The IER was announced in 2014 as a way for foreign entrepreneurs to enter the U.S. and build a business. As long as the entrepreneurs met certain criteria pertaining to job creation and investment, they could obtain a valid visa to remain in the country.
The value of foreign entrepreneurs is often understated. In fact, immigrants are 2.2 times more likely to become an entrepreneur than their native-born counterparts. Overall, 27% of entrepreneurs in the U.S. were foreign born in 2012, a trend that has been steadily increasing for decades. Not only are foreign entrepreneurs a critical component of our economic growth, they are becoming increasingly central to that growth over time.
This trend is especially true in high-tech fields, such as semiconductors, information technology, digital communication, and optics. Immigrant founders hold between 77% and 87% of all patents in those fields. Consider this, 40% of Fortune 500 companies were founded by first or second generation immigrants. In the aggregate, immigrant-run businesses employ a full 10% of the labor force.
For these reasons, and many others, we are disappointed and disheartened to hear of the White House’s decision to delay and ultimately eliminate the IER. This decision will effectively apply the brakes on an already slow moving economic engine. This measure to block immigrant entrepreneurs comes at a time when our country should be breaking down barriers, not building them.
We will have more analysis to come, which will dig deeper into the economic consequences that will come from this decision.