The Role of Skilled Immigrants in the Current Economy

The age-old debate on immigration and immigrant workers has outlasted a number of market cycles. It will also outlast this recession, which, coincidentally enough, has brought out the …

The age-old debate on immigration and immigrant workers has outlasted a number of market cycles. It will also outlast this recession, which, coincidentally enough, has brought out the polarizing opinions of not just many ordinary citizens, but many members of Congress as well. Recessions and other times of economic, social and political upheaval tend to do that as all Americans are forced to take a closer look at what they believe and how they live their lives. The government must do this as well, and in the process questions about immigration laws inevitably come up.

Is America too lax with its immigration policies? Are we helping immigrants at the expense of our own citizens? In times of crisis do we look out for number one and abandon all others? If citizens are having such a hard time in this economy wouldn’t immigrants have it even harder? Does that mean that we must help the most misfortunate first, even if they’re foreigners?

As this economy has clearly shown us, there are no easy solutions that allow us to help a significant amount of people without hurting another significant amount of people. For example, as home prices have decreased more people have been able to afford homes – but those homes used to belong to other families whose financial hardships forced them out, creating a glut of inventory and thereby lowering housing prices. The same theory can hold true for immigration laws, depending on how strict or lenient they are.

The immigration debate becomes even more complex when discussing skill immigrants, or those who can potentially benefit our economy through their specialized skills, businesses or investment dollars. During good times America seems to maintain a mutually beneficial relationship with these immigrants…but what happens during the bad times? NuWire set out to explore.

One Job, Two Candidates

February 17 was a significant turning point in the U.S. economy. It was the day that the American Recovery and Reinvestment Act of 2009 was signed into law. Inside that law was an amendment called the Sanders Amendment, which essentially prevented U.S.-based companies that received money from the Federal Reserve or from the Troubled Assets Relief Program (TARP) from hiring non-American citizens. The law stated that any company receiving such funds must make American citizens their primary recruitment base for the next two years. Only if they are unable to find U.S. citizens to employ are these companies allowed to hire workers who are here on H-1B visas, which are given to foreign workers with specialized skills who are looking for U.S.-based employment.

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The sentiment that companies must make a genuine attempt to fill their positions with American citizens was furthered by the introduction of a new bill by Sens. Dick Durbin (D-Ill.) and Charles Grassley (R-Iowa). The bill would prevent businesses from placing ads aimed at only attracting H-1B workers. It would also prevent companies from creating a workforce where more than 50 percent of its employees hold the H-1B or L1 visas. Under this new bill foreign professionals who possess the H-1B or L1 visas, which are both designated for skilled immigrants, would only be considered for a position after a company had made a “good faith” attempt to hire Americans, regardless of whether that company received federal aid.

The potential benefits for American citizens are clear: outsourcing decreases and they get first dibs on employment opportunities. This could lower unemployment rates, stabilize many American’s household incomes, stimulate spending and eventually return this country to some semblance of normalcy. The potential disadvantages for non-citizens are clear as well: they would be passed up for employment not because they lacked the education or experience, but because they lacked the paperwork. Some would argue that this is a form of discrimination that America should be above, while others would argue that America has to help its own before helping others.

Still, the question remains whether or not America will suffer if its skilled labor pool decreases. Many of the H-1B and L1 visa holders are IT specialists from India and China who work for companies like Microsoft and Intel. What will these workers do if they can’t secure employment? They may go back to their home countries, or “they [may] look to other developed countries that have made visas available and much easier to obtain,” said Jennifer Parser, an attorney with the Labor and Employment and Immigration Practice Groups at New York-based Ward and Smith.

These workers will not only leave behind the jobs, but the economic benefits that come with employing a skilled worker as well. Like the skilled Americans who have been laid off, foreign workers who are unable to find other employment or to renew their visas will likely have to sell or abandon their homes. Unlike skilled Americans, however, most will also have to leave the country, cashing in other assets like cars, and taking their future spending and investment dollars, which would have otherwise been pumped into the economy, with them.

Investing in America

Speaking of investment dollars, there is also a visa program designed for immigrant investors who wish to put their money to good use here. The EB-5 program grants permanent resident status to any immigrant, along with their families, who invests more than $1 million in a newly created or struggling commercial enterprise. Though the program has numerous contingencies – one of the largest ones being that the money must create 10 or more full-time jobs – it is an easy way for immigrants to expedite their paths to American citizenship if they have the staying power. The immigrant investor must maintain his investment interest for at least two years before the permanent citizenship status can be granted. “This assures that the investment is not just made to support the investor and his family,” Parser said. “They must be serious investors because their [residency] is conditional. [The government] must see that the investment is ongoing and that they must be prepared to hire citizens.” Like the proposed Senate bill and the Sanders Amendment, the jobs created with this foreign money are designed for citizens.

Parser believed that the economy can only benefit from these types of immigrants, as they have more to give than what they could possibly take from the system. “If you think about it, foreign investors will need real estate brokers, contractors for home renovations, personnel for their businesses, insurance agents, bankers, lawyers, accountants – the list goes on and on,” she said. This vicariously creates even more demand from the U.S. workforce. Therefore, even though the EB-5 program may appear to some to be an easy way for wealthy foreigners to buy American citizenship, it may also be an easy way for America and Americans to reap the benefits of money they would not have otherwise seen. For every foreigner who utilizes the EB-5 visa, there are not only 10 or more permanent jobs created directly from his investment funds, but there are more than 10 individuals who will benefit from the added business they will receive from that foreigner.

This can be an extremely beneficial program during economic downturns, as it allows foreign money to supplement the funds of wounded U.S. investors. In fact, this program was supposed to expire in March 2008, but has so far been extended. It is now set to expire this September, though the program has many supporters who, like Parser, think it is a vital program for our economy. “Anyone who feels the [EB-5] program is bad for the economy doesn’t want to see jobs created,” she said. “I don’t know if the program will be extended. It probably will, but I don’t know. If it’s not extended people who have money to invest will look toward other countries with educated workforces like Australia and Western Europe. Both countries have made it easy for people to invest.”

Immigrants have played a crucial role in the success and development of America. The country was founded by immigrants, and has gained a reputation over the centuries for being a melting pot. Immigrants have also taken many of the jobs that, in good times, Americans didn’t want. They often worked for wages that were smaller than what was fair, in exchange for the opportunity to live in this country. Today it’s clear that there is still a strong relationship between immigrants and America, with both parties benefiting and suffering from this relationship in various ways. What is unclear, however, is how America’s changing landscape will affect the role of the immigrant, and whether certain concessions will continue to be made for foreigners who bring something to the table, such as a specialized skill or substantial investment fund.


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