

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

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makmanalp
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.

~~~
loumf
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.

------
isalmon
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
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.

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john_w_t_b
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.

~~~
rayiner
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
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.

------
volandovengo
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.

~~~
tptacek
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.

~~~
loumf
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.

------
codex
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.

~~~
justin66
> 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.

~~~
jerf
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.

~~~
justin66
I think the key thing (arguing the nuance re: wealth is hugely boring and
unimportant) is that codex was arguing about "what actually moves society
forward." His hypothetical ditch-diggers, unless they BURN the money they
earn, will end up moving things forward when they spend their money.

(unless we're talking about a hypothetical society consisting entirely of
hypothetical ditch diggers. again, boring)

~~~
jerf
No, that's looking at the wrong place. Yes, the ditch diggers may make money
and that may go on to generate wealth, but at the point where we're _paying_
the ditch diggers, we're burning wealth. We could either have gotten something
for that money, or nothing, and we chose nothing. There's opportunity cost
there. Quite significant, in fact.

A lot of people make this mistake, including the government and even it seems
to me many economists, always looking to the _next_ transaction and failing to
think about _this_ one. But _this_ one is the one that counts right now. The
mere fact that the dollar wasn't "destroyed" doesn't mean that it did anything
_good_ , and it certainly could have.

~~~
justin66
There's a discussion to be had about the "velocity of money" but this isn't
really the place for it. The point is that if an economy is hydrolocked and
nobody is spending, "throwing away" money can benefit everyone if it unlocks
things.

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

~~~
mhuffman
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>

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

~~~
protomyth
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.

------
enraged_camel
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.

~~~
volandovengo
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.

------
minussohn
Sorry, all people living in the US are immigrants.

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

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

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

Read the comment I replied to, whiz.

------
13b9f227ecf0
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...](http://cis.org/immigration-and-the-american-worker-review-academic-
literature)

~~~
mrb
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...](http://www.forbes.com/sites/stuartanderson/2011/06/19/40-percent-
of-fortune-500-companies-founded-by-immigrants-or-their-children/) 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...](http://books.google.com/books?id=aaimTNHDzZYC&pg=PA32&dq&hl=en#v=onepage&q&f=false)

~~~
13b9f227ecf0
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?

~~~
mrb
_"Business creation is not a particularly useful metric"_

Business creation is wealth creation. It is job creation. It is everything to
the american economy.

 _"I mean, one co-founder had one parent born overseas and the company is
counted as immigrant founded"_

No it is not counted as immigrant-founded. The point of this statistic is to
show that immigration has a positive effect on business creation. In other
words, had the parent never immigrated, the child would not have founded a
business (created wealth) in the USA.

I think the same is true in reverse: americans who emigrate are probably
creating more businesses in countries they emigrate to, than citizens of these
countries. Immigrants are risk-takers who want to take control of their
working lives.

~~~
13b9f227ecf0
> Business creation is wealth creation. It is job creation. It is everything
> to the american economy.

Most new businesses are small businesses. The jobs associated with small
business are significantly worse than those associated with larger business.
You are oversimplifying this.

~~~
mrb
Are you saying the average immigrant founder creates small businesses of
inferior quality than the average business?

