A More Efficient Visa Policy:The Case for Modifying High-skilled Immigrant Quotas and Privatization of USCIS Review Functions
Saint Thomas Academy
Mendota Heights, MN
In recent years, it’s become increasingly difficult to separate the political rhetoric, picket signs, and Twitter threads from a timeless subject of economics: immigration. While constant discussion of the topic is often reactionary or emotional, scrutiny of the issue has in turn led most to ponder the changes needed in our nation’s immigration policy. Restrictionists point to native low-skilled wage depression and frictional unemployment as detriments of the general migration trends, and this has led to disdain toward immigration in general. As a result, policy directives are rapidly adopting these sentiments with stricter quotas, militarized border security, and nativist legislation such as President Trump’s “Buy American and Hire American” executive order. However, macroeconomics insists that immigrants are imperative to continued growth of our nation’s economy, especially amidst the rise in retiring baby boomers and Social Security costs. The best policy for facilitating expanded immigration involves rethinking high-skilled visas and privatizing visa processing to capitalize on the entrepreneurial promise of immigrants.
Entrepreneurship’s role in economic growth cannot be overstated; economists herald its leverage in “carrying out innovations and enhancing rivalry,” seen empirically through examples such as its accelerating effect on growth in the 1990s. The connection between successful entrepreneurship and immigrants is staggering: foreign-born entrepreneurs founded 33% of venture-backed public companies from 2006-2012, all with a combined market cap of $167 billion in that same period. Even this statistic is implicitly conservative, considering it excludes immigrant-founded or co-founded giants such as Google (Alphabet), eBay, Tesla, and others. This is no coincidence, as studies and surveys, such as one conducted by Aston University, note immigrants’ unique economic dynamism and risk-taking inclinations connected to their initial emigration. In an economy witnessing “financilization,” or escalating movement to the financial sector, of the native labor force, the entrepreneurial potential of immigrants is both stimulating and complementary to American markets.
Immigrants providing significant entrepreneurial human capital are most often those who migrate for educational purposes under F-1 visas, which are administered at a higher rate than any other visa category. Interestingly, though, F-1 nonimmigrant students are disallowed from participating in non-curriculum employment or self-employment. Basic economic theory raises the question: why would the United States prevent students in whom it invests from contributing to the economy? Instead of repealing this counterproductive statute, visa laws instead require F-1 students to apply for H1-B visas in pursuit of entrepreneurial ventures beyond studies. Yet the H1-B visa, like its F-1 cousin, is incongruous with economic logic in another aspect: restrictive quotas, indirectly referred to as “national suicide” by Michael Bloomberg. The quota system is outdated, and disregards actual immigrant demand in keeping with precedents from the 1920s grounded on xenophobia. Today, rational concerns over immigrant wage effects replace that Red Scare prejudice, although wage ramifications wouldn’t result from adjustments of F-1 or H1-B quotas; one study noted that H1-B-driven increases in STEM workers actually raised wages for college-educated natives and had no effect on non-college educated natives. Clearly, expanding or even eradicating quotas for high-skilled immigrant visas would contribute to entrepreneurial potential and economic growth in the long run.
Another major flaw in the application for and transition between visas concerns inefficiencies of the agency assigned with processing applications: the U.S. Citizenship and Immigration Services (USCIS). A recent study found that visa processing times for all immigrant and nonimmigrant petitions by this bureaucracy “surged by 46 percent over the past two fiscal years”; this includes several-month increases in duration each year of processing requests by nonimmigrant entrepreneurs to obtain visas or change their status. This “gross backlog,” as described by a Department of Homeland Security report, accumulates millions of additional migrants awaiting review each fiscal year. As a department progressively unable to manage the flow of immigrants, the USCIS clearly demonstrates diseconomies of scale. The solution: outsourcing the process to independent firms through privatization. Germany adopted this approach in 2017, and the now-contracted system has proven more efficient. Fears over privacy and national security, such as those that rose in Australia when the same plan was suggested in their Parliament, could be easily solved by tasking strict regulation of firms and control over applicant data to the USCIS, which would function in a truer administrative sense in this role. Privatization under such regulation allows not only efficiency and possible cost savings (in reducing the USCIS’ role and transferring fees) but also brings a greater quality of service and higher innovative potential to the oft criticized, sedated process.
In maximizing entrepreneurial potential by a paralleled expansion of current immigration, rethinking visas, altering quotas, and privatizing the applicant review process would be most advantageous. The latter option is theoretical and unproven, but past empirical examples suggest potential in the concept alone; for instance, the Department of Defense’s “competitive sourcing” to the private sector for maintenance, supply, and logistics has both cut costs and amplified productivity. The effect of privatization on visa processing speed, as well as changes to quotas and the visas themselves, is more sure: proposed “startup visas,” an extension of H1-B and F-1 visas with modifications and higher quotas, could create 1.6 million jobs in ten years by some estimates. Economic theory, evidence, and educated predictions all side with these suggested changes. Now, it’s time for the American public to refashion the immigration dialogue into one based not on fear or emotion, but, rather, on excitement over maximizing immigrants’ potential.
References and Endnotes
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