Entrepreneurs in America: Who creates jobs?

http://www.economist.com/news/business/21577106-immigrants-do-who-creates-jobs?fsrc=scn/tw_ec/who_creates_jobs_

by ActVen • 13 years ago

26 47 13 years ago

economist.com

minussohn• 13 years ago

Sorry, all people living in the US are immigrants.

thirsteh3• 13 years ago

Then all people living on Earth are immigrants from East Africa.

peddamat2• 13 years ago

Great minds :)

I wanted to go a bit further back without referencing the Big Bang.

protomyth3• 13 years ago

There is a bit of a challenge to that one floating around (somewhere in Asia is a new theory).

As to its relevance, well the UN has other ideas. http://www.un.org/apps/news/story.asp?NewsID=23794

MisterBastahrd• 13 years ago

I think you need to look up the definition of "immigrant." You clearly do not understand what it means.

modarts2• 13 years ago

Emmigrants of East Africa.

peddamat2• 13 years ago

Stepping back enough, we're all immigrants from the oceans.

staunch• 13 years ago

Maybe even some other planet.

pjscott• 13 years ago

Nonsense! I was born here, and I'm hardly the only one.

13b9f227ecf04• 13 years ago

What percentage of immigrants start innovative businesses? I think it's negligible. Immigrants overwhelmingly enter the labor market and drive down wages.

http://cis.org/immigration-and-the-american-worker-review-ac...

ActVen• 13 years ago

"The Center for Immigration Studies (CIS) is a conservative, non-profit research organization that advocates immigration reduction in the United States." http://en.wikipedia.org/wiki/Center_for_Immigration_Studies

Sources of research are always important. Like most things, it is not a simple issue that you can put on a bumper sticker.

mrb4• 13 years ago

The percentage of immigrants who start businesses is higher than the percentage of americans who start businesses.

Here is a data point: 40 Percent of Fortune 500 Companies Founded by Immigrants or Their Children: http://www.forbes.com/sites/stuartanderson/2011/06/19/40-per... And because immigrants represent a minority of the people in america (12.6% as of 2007 [1]; and when adding their children this is likely still less than 40%), we can deduct they create more businesses per capita than americans.

[1] http://books.google.com/books?id=aaimTNHDzZYC&pg=PA32...

13b9f227ecf04• 13 years ago

Business creation is not a particularly useful metric. Note that I qualified with "innovative." That there are more restaurants and more people have their lawn professionally landscaped rather than cutting it themselves doesn't really create an argument for immigration.

The Fortune 500 stat smells pretty slippery and cherry picked. I mean, one co-founder had one parent born overseas and the company is counted as immigrant founded? This is meaningful? The vast majority of major companies were probably also founded by people who grew up in major urban centers. Immigrants are disproportionately likely to live in major cities. What happens when you control for that? I cast aspersions.

The link I provided is actually fairly rigorous in describing the effect of immigration as it is currently practiced in the USA: It drives down the wages of low earners and increases profits to the economic elite. It's probably a wash for the bulk of the middle class when measured in purely financial terms, but that ignores various psychic and ecological impacts. Did you know that current immigration rates projected out result in a USA population of over 600 million by the end of the century? Is it not obviously insane and ecologically criminal to allow that level of over population?

protomyth3• 13 years ago

Regardless of truth of the article, it looks like immigration reform is going to continue to be delayed. The whole "$100,000 in welfare then blow people up" message is going to take a lot of positive to overcome. It is possible to lobby past the event, but there doesn't seem to be a group willing to do that.

sskates• 13 years ago

The Economist article cited two groups that are lobbying to fix this- Innovate for America and FWD.us.

protomyth3• 13 years ago

They don't seem to have the muscle to overcome the crisis. Neither has done the advertising to locals to push through a bill. They are not putting the money into the local markets to really count as a push.

john_w_t_b• 13 years ago

The government should auction the H1B visas to the highest bidder. This would encourage high value immigration. They could set a price floor of $100k to discourage low wage employers. They should also set a minimum salary for H1B holders of $100k.

There is already a visa for investors creating jobs so that is covered.

mrb4• 13 years ago

"There is already a visa for investors creating jobs so that is covered."

This visa (E-2 treaty investor visa) has deficiencies. Firstly, although there is no official minimum investment amount, in practice, as a founder you need to invest at least $50 to $100 thousand to have non-negligible chances of obtaining this visa. This excludes virtually all founders in this community who receive YC funding! Secondly, it requires the investor to own 50%+ of the company, hence it excludes most startups where the equity is roughly evenly distributed between 3 cofounders or more. Thirdly, only citizens of treaty countries can apply to this visa. This excludes about 110 countries in the world (only 80 countries on the list [1]).

[1] http://travel.state.gov/visa/fees/fees_3726.html

rayiner2• 13 years ago

That's actually a brilliant way to handle immigration.

Compute how many slots are available, based on national concerns (mostly, how many people can you easily integrate and naturalize per year). Then, auction off the slots to the highest bidder, and have a short-track naturalization process for the winners.

HarryHirsch• 13 years ago

When you auction off the available slots you can be reasonably sure that the auction will benefit the winners (if self-sponsored) or the sponsors (if this is an H1B-style visa). But it may not be in the best interest of the nation as a whole. I note that most every other high-immigration country (Australia, New Zealand, Canada, Britain) has a point system.

volandovengo3• 13 years ago

Right. Because the only immigrants you want are people willing to pay crazy amounts for a visa.

A solution like this would have kept a good chunk of all the famous immigrant entrepreneurs from ever coming to the US.

enraged_camel2• 13 years ago

As a current H1B holder making below that number, I have one response for you. It starts with the letter "f" and ends with the letter "u."

(I am getting paid at or above the average salary for my profession, by the way. My company hired me because they literally could not find any qualified Americans for the position, either local or willing to move to the area.)

volandovengo3• 13 years ago

If you only want job creators to come to the country - how about just creating a visa to only allow that. On this visa, you can come to the US to consult, open a barber shop, found a startup, etc but you cannot work for anyone else.

modarts2• 13 years ago

That'd be an interesting predicament for the "dey takin our jerbs" crowd.

Swizec• 13 years ago

Consulting visas, now that'd be useful! Right now I'm not even sure if it's legal to work with my american countries if I come for a visit. Sure, it's okay if I stay over here in Europe and work remotely, but the moment I set foot on american soil things get grey at best.

tptacek• 13 years ago

A consulting visa would set up perverse incentives between employers and "consultants"; I don't see what the public policy difference is between someone working W-2 and someone working 1099, except that in the 1099 case the employer has an excuse not to pay FICA or offer health insurance.

A problem with startup visas is that nobody knows what a viable startup is, and countries have a strong incentive not to offer long-term residency to people who can't support themselves. So what we have to go on instead are proposals like "we'll allow you in if you're sponsored by a qualified venture capitalist", which creates it own set of perverse incentives.

loumf2• 13 years ago

All things being equal, public policy usually prefers employer-employee relationships over 1099. Tax collection is more sure, worker's comp and unemployment get paid (and the individual is covered), etc.

Probably the best way to deal with "startup visa" is to instead have a small-business visa. Small-business already has an understood (to the government) meaning, and there's already a lot of examples of slightly different rules for them.

isalmon• 13 years ago

One thing that a lot of people don't realize is how hard it is to start a company being on H-1b visa. It's almost impossible. I actually agree that "Immigrants overwhelmingly enter the labor market and drive down wages". I had to work for 4 years, taking less-than-market salary before I got lucky and got my Green Card. Next day I started a company and now I create jobs.

We need visas for entrepreneurs, we don't need more H-1b's

orangethirty• 13 years ago

Before visas for entrepreneurs, how about we dal with the issues the locals have? Like health insurance and laws that favor tax breaks for bootstrappers and incubators. Nothing against foreigners, but more people dont fix anything if laws are not aligned for the benefit and interests of those involved.

makmanalp• 13 years ago

This comes in time with the whole debacle of the H-1B lottery being triggered this year due to too many people applying within 5 days of the quota period, overflowing the 85k yearly quota by almost twice.

I've written about this before, and I like to impress upon you yet again that the majority of H-1Bs are taken by outsourcing / consulting companies that you might not have heard of, like WiPro, InfoSys, Satyam, Tata, Deloitte, Patni, which contribute the least to innovation, in my humble opinion.

Second in line is Microsoft, Google, et al. and the smallest group by far are startups and small businesses, which innovate the most and create the most jobs for the US.

Why not make work visas easier to get for small companies but limit visas per company? That'll make sure companies pick correctly and only people they need. Or maybe make it much more expensive. There is currently an additional (around 2k/appl iirc) cost for having too many H-1Bs, but it's not enough. The visa system heavily favours larger companies, because it was created and lobbied by them.

More details: https://news.ycombinator.com/item?id=5515519

....

Besides, if you're worried about foreigners driving salaries down, you should quit targeting the H-1B which has a legitimate prevailing wage requirement (and we can argue for days whether the DOL does a good job of deciding what prevailing is, and I'll say it does, but that's a different issue).

The L-1 visa for employees of multinationals has almost as many people entering the country per year, but has NO prevailing wage requirements. Yup, I can bring in a person from another country and pay them federal minimum wage to be an engineer.

...

My opinion on calls to end the H-1B used to be pretty negative but maybe we do need a startup visa. My problem with the startup visa is that it's pushed by VCs and favours that model heavily. Want to bootstrap? Want to raise angel investment for a year or two? Good luck.

In any case, the US has a labour force of 150 million. We're talking about 85k a year.

Could we agree that letting small / medium businesses hire a reasonable number of H-1Bs easily would not demolish the the US economy or significantly? Let the cap be for the large ones.

loumf2• 13 years ago

They will drive salaries down by simple supply/demand (but that's not a reason to not to do it -- just like increasing the number of engineering graduates is a good idea regardless of wage effects).

Totally agreed on the cap for large companies and not small ones. There is a lot of precedent for small companies having different rules, and this is one where being small is a huge disadvantage.

In my case, it's because I might hire one H-1B in a year and can't take the risk that I will lose them to a lottery. A company hiring 100 can risk losing a % of that.

codex• 13 years ago

Job creation is the wrong metric. One could employ a million people digging ditches and then filling them up again, and ultimately nothing will have been accomplished save for some wealth redistribution.

Wealth creation is the key metric. While harder to measure, it's what actually moves society forward.

justin663• 13 years ago

> One could employ a million people digging ditches and then filling them up again, and ultimately nothing will have been accomplished save for some wealth redistribution.

This is kind of obviously wrong. Just substitute "entertainment" for the ditch digging and it should become apparent why. Those people might have made their money in a silly way, but much of it will be spent, and that is important.

jerf2• 13 years ago

Wealth is goods and services people want. People want entertainment. People do not want ditches dug, then filled in again. Entertainers are generating wealth; a soft, fuzzy sort of wealth centered on meeting needs very high up the Maslow hierarchy, but wealth nonetheless, a luxury good. The ditch diggers and fillers are not.

13b9f227ecf04• 13 years ago

The important metric is wealth creation beyond the wages the immigrants themselves capture. The picture right now is that immigrants to the USA clearly do produce wealth, however they capture all the benefits for themselves and it winds up a wash or net loss to the society at large.

enraged_camel2• 13 years ago

I'm a current H1B holder. I would quit my current job and start a company if my visa status allowed me.

I've been working for over 4 years. As things stand, I have to wait for another ~5 years before I get my green card and start adding jobs to the economy. And that's assuming the US government does not delay it by making me jump through various hoops like they did with my H1B application.

volandovengo3• 13 years ago

Apparently there were some recent changed to the H1B which actually allow people on this visa to start their own companies. you should look into it.

rayiner2• 13 years ago

I always find "who creates jobs" comments silly. Consumer demand is what creates jobs.

mhuffman• 13 years ago

maybe...maybe not, depending on who you ask and how you look at it.

example: http://en.wikipedia.org/wiki/The_Century_of_the_Self

Entrepreneurs in America: Who creates jobs?

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