Commentary / Innovation should know no bounds: limits set by our immigration law make no sense

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From where I sit on the 29th floor of a Downtown office building, looking at the confluence of the rivers, Pittsburgh looks like the center of the universe. The three rivers helped this community to develop into a capital of industrial might, with raw materials coming down the Allegheny and the Monongahela being transformed into a steel industry that transported its products across the country and around the world.

Much of the labor that mined the raw materials, produced the steel, operated the barges and railroads, organized the workers and managed the enterprises was provided by immigrants. Scottish-born Andrew Carnegie built a steel empire that has employed hundreds of thousands of Americans, and gave away an estimated $350 million to help nonprofit institutions to flourish.

Our country needs to do more to remove the obstacles that keep future Andrew Carnegies from succeeding.

A hundred years ago, in 1912, the view from my vantage point would have been blackened with industrial smoke on an otherwise clear day. That year, President William Howard Taft vetoed a bill developed by the congressionally mandated Dillingham Commission to restrict immigration.

The nation was dealing with record numbers of immigrants, an economic downturn and growing public antipathy to newcomers. The president vetoed the bill with a mixed message, extolling the "sturdy but uneducated peasantry brought to this country and raised in an atmosphere of thrift and hard work ... [which] contributed to the strength of our people and will continue to do so."

Fortunately, the rhetoric of ethnic and social inferiority is mostly gone from today's immigration debate, but the challenges continue for immigrants contributing to "the strength of our people."

I'm all for legal creativity to keep immigrants here making their significant contributions, but hopefully changes in immigration law and policy will make it easier for well-educated immigrants to overcome roadblocks that keep them from contributing expertise, capital and job-creating innovation.

In his latest State of the Union address, President Barack Obama, a Democrat, said of foreign students that "hundreds of thousands of talented, hardworking students in this country face another challenge: the fact that they aren't yet American citizens. ... [Many came] to study business and science and engineering, but as soon as they get their degree, we send them home to invent new products and create new jobs somewhere else. ... That doesn't make sense."

The Department of Homeland Security then announced administrative reforms to tinker with the system "in support of the president's efforts to meet 21st century national security and economic needs," it said. "This would include creating a 'startup visa,' strengthening the H-1B program, and 'stapling' green cards to the diplomas of certain foreign-born graduates in science, technology, engineering and math fields."

While some would argue about the contribution of undocumented aliens, there is near unanimity that legal immigration creates jobs, promotes innovation and strengthens our nation, and that our immigration system is broken.

Academic institutions in the Pittsburgh region educate tens of thousands of foreign students and scholars. They study under the watchful eye of educators and the government, the U.S. Immigration and Customs Enforcement.

Once they have completed their degree, immigrants may apply for an employment authorization known as Optional Practical Training. It gives the student one year to apply what he or she has learned in school. Students whose degree is in a field designated as science, technology, engineering or math may obtain an additional 17 months of Optional Practical Training if their employer uses E-Verify to verify the employment authorization of all its workers.

What if a student is involved in a start-up or has founded a business? Here is where problems begin for people who should be welcomed into the workforce with open arms but aren't.

Most students aren't STEM students and, of those who are, even a smaller number work for E-Verify participants. So, at the end of Optional Practical Training, a student needs to secure ongoing authorization to remain in the U.S. and work. The choices are limited and more so for a founder or start-up employee. Optional Practical Training allows time for a business to begin.

The White House initiative, Startup America, is intended to create the "right policy environment ... to celebrate, inspire and accelerate high-growth entrepreneurship throughout the nation."

One of the stories on the Startup website features Pittsburgh serial entrepreneur Manu Kumar, who has helped found four companies, including Sneaker Labs when he was here on an Optional Practical Training, and which he sold for $100 million. After a journey through the system to citizenship, he said, "I can also see that there were several points along the journey where I almost failed -- not because of lack of ability or effort, but because of a system that presented challenges for an immigration entrepreneur in the United States. ... Innovation knows no bounds."

After Optional Practical Training, the first visa usually considered for ongoing employment is the H-1B. There are 85,000 new, cap subject H-1B visas per year (20,000 of those for workers with master's or greater education). The supply has been arbitrarily set and is gone before the fiscal year is over.

This fiscal year, visas ran out in November 2011, so they will not be available again until October 2012. That's not a problem unique to business founders or start-ups (and students may obtain the colorfully named benefit of "cap-gap" protection by a timely filed H visa).

The H visa mandates that the employer offer and be able to pay the foreign worker the "prevailing wage." It also requires that there exists an organizational structure so there is an employer-employee relationship between the company and the H-1B beneficiary.

But if the start-up does not yet have sufficient capital, does not have a sufficient corporate structure to separate a founder and majority shareholder from the employer, or the founder's part-time work is not sufficient to still keep the business afloat, then the government may bring the business and another great idea to an end in the U.S.

The H isn't the only possible visa. There are several others, each of which needs to be explored for the former student or new entrepreneur. But none is a perfect solution, and each has its own impediments.

For example, if the person is Canadian or Mexican and works in a field listed in the North American Free Trade Agreement, the TN visa is a possibility, but only to someone who is not a principal owner of the start-up. Self-employment is prohibited on a TN visa -- another roadblock.

For a truly brilliant person with a great idea and some real capital, he or she may be a candidate for the O-1, "alien of extraordinary ability" visa. Of course, "alien of extraordinary ability" doesn't include all founders or employees of all start-ups. The government requires a great deal of evidence in several categories to be convinced to grant such a visa.

If the entrepreneur is also an investor in the enterprise, he/she may be eligible for a Treaty Investor (E-2) visa. This visa is available to citizens of countries that have a particular type of treaty with the U.S. and who invest a "substantial" amount of money in a U.S. enterprise -- this is active investment.

"Substantial" is not a specific amount of money, but an amount sufficient to start a business of the type the alien is seeking to create or invest in. The investor from a treaty country who is bringing his/her investment capital and skill to a well-thought-out new business may qualify for this visa even if the investor is the owner of the company and is not paying himself the prevailing wage.

There are more visa categories. All raise issues and create problems for start-ups and founders; issues that could be resolved by reform of the immigration law. That won't happen anytime soon. So, recently, the Obama administration jumped on the bandwagon to encourage highly skilled immigrants to come to the U.S., to work, invest, create jobs and stay.

"Innovation knows no bounds." Our immigration law sets boundaries which limit innovation in the U.S. That makes no sense.


Robert S. Whitehill chairs the immigration group of the law firm of Fox Rothschild. He can be reached at rwhitehill@foxrothschild.com .


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