Bernard Wolfsdorf, Matthew Beatus and Robert Blanco of Wolfsdorf Rosenthal take a macroeconomic look at the beneficial role immigration plays in the global markets, while focusing on the key role immigration lawyers have in challenging irrational and restrictive immigration policy.
In the dawning of the new, diversified global economic age, where Europe and the US are no longer the lone financial superpowers, it is essential that high-skilled workers, business executives and high net worth investors, in particular, are able to adequately relocate in response to shifting markets that allow them to best maintain and grow their wealth. Nations with rapidly maturing emerging economies are quickly changing the concepts of global mobility, but immigration lawyers still hold the keys to navigating often complex and restrictive immigration laws and regulations.
Credit Suisse Estimates that global wealth is presently over $241 trillion – a greater amount than at any time in history.
While total wealth has continued to grow across the globe since 2000, the wealth of emerging economies has grown much faster than that of the United States and Europe. The proportion of the world’s wealth that comes from emerging economies has doubled since 2000. Not only that, the total wealth growth in emerging economies comes mostly from new wealth creation, whereas wealth growth in mature economies comes mostly from appreciation of existing assets. Technology has not only connected economies, it has contributed directly to tremendous global wealth production. The technology industry drives the growth of emerging markets, since technology companies can be started with a relatively small initial investment in labour, materials and cash.
If current trends continue, the Asia-Pacific region will surpass North America as the wealthiest region in the world by the end of 2015, and will have the world’s greatest number of millionaires. It is reported that China alone presently has 3.02 million millionaires, although since China still appears to be primarily a cash economy, the actual number may be twice as high. Furthermore, according to a recent Global Wealth Report, the wealth of the Asia-Pacific region is expected to grow at 1.5 times the global average, with a high net worth individual wealth-growth annual projection of 9.8 per cent – the highest such growth rate in the world. Newly wealthy individuals from countries with emerging and rapidly developing economies often seek out investments to grow their wealth in more stable markets, and also to take advantage of immigration benefits afforded to high net worth immigrant investors. For instance, a recent study has found that China has the highest rate of millionaire departure in the world, with 76,200 Chinese millionaires – roughly 15 per cent of its total millionaire population – exiting the country between 2003 and 2013. It is no surprise, then, that the American EB-5 immigrant investor programme saw a 94 per cent increase in petitions filed in 2011, a 58 per cent increase in petitions filed in 2012, and a roughly 72 per cent increase in petitions filed from 2013 to 2014. Nevertheless, the United States is not the only nation that offers an appealing immigrant investor programme, and countries throughout the globe are now actively competing for foreign investment through the promise of quick routes to lawful permanent residency and/or citizenship.
To relate effectively to the growing cast of characters on the global economic stage, the United States must welcome the talents and investments of those from around the globe who still look to The United States as the land of opportunity. As President Obama recently said, remarking on the newly announced executive actions on immigration, “For more than 200 years, our tradition of welcoming immigrants from around the world has given us a tremendous advantage over other nations. It’s kept us youthful, dynamic, and entrepreneurial… Our history and the facts show that immigrants are a net plus for our economy and our society.
The challenges faced by the United States in reforming its immigration policies in order to remain a strong player in the global economy have been paralleled in Europe, confirming the need for decisive political action. The American tendency toward protectionism is paralleled in the notion of “fortress Europe” among the general public, policymakers and potential immigrants to Europe. As in the United States, Europe’s labour market faces a shortage of skilled workers. Empirical studies find that in Europe, as in the United States, the effects of economic immigration, especially of skilled workers, are positive, not negative. Although attracting skilled immigrant workers will be essential for Europe as the economy becomes ever more globally interconnected, public discourse and public policy on immigration in Europe lacks a coherent direction, and – if anything – has recently shown a trajectory towards greater restrictions. The enlargement of the European Union and ongoing economic turmoil in Europe has fanned anti-immigrant rhetoric, and even violence against immigrants in some European countries. Though Europe has a clear economic need for skilled immigrants, the competing voices at local, national and European Union levels make the formation and implementation of any coherent policies difficult. Recently, there have been a few positive developments in European policies toward skilled immigrants, such as the 2009 introduction of the Blue Card, which enables highly skilled non-EU citizens admitted to work in one EU country to live and work in other EU countries as well. Nevertheless, highly skilled immigrants to Europe face a patchwork of national policies, requiring temporary permits granted at the discretion of local immigration officials, and thus an uncertain future in their would-be adopted homes.
In the United States, restrictive policies on legal immigration for highly skilled foreign workers and wealthy foreign investors have hindered recovery from the economic recession of the late 2000s by limiting the ability of the country to fully participate in the rise of the global economy. The rationale behind such policies is generic at best and insidious at worst. For instance, many politicians will promote restrictive immigration policies as necessary to protect jobs for American workers, and also use such rhetoric as a fear tactic to garner votes and win re-election. Objectively, however, such restrictive immigration policies hurt the US economy and make it a weaker player in the global economy.
The fear that foreign nationals “take away jobs from American workers” is based on the unfounded assumption that the number of jobs in the economy is fixed. In fact, this number is limited only by the number of capable individuals in the economy willing and able to work to meet economic demand, as well as the number of thriving businesses in existence that drive such economic demand. This has been exemplified in the US economy in recent years by the tremendous job creation following the rise of technology companies such as Qualcomm, Google, Amazon, Apple, Cisco, Oracle and Microsoft, to just name a few.
Contrary to common sentiment, immigrants working and investing in the United States actually create new jobs and improve the wages of US workers. In the United States, highly skilled occupations, such as those in the science, technology, engineering, and mathematics (STEM) fields, have long been absorbing more professionals from abroad than are available within the United States – and more than the US education system produces. Misguided “protectionist” immigration policies, such as arbitrary limits on the numbers of H-1B visas and employment-based green cards available for workers in skilled occupations, prevent the United States from maximising the valuable contributions of foreign skilled workers, such as STEM workers, and push them to make their contributions elsewhere in the global economy. Furthermore, foreign-born STEM workers do not undercut compensation rates for American workers in their fields. In fact, foreign-born STEM workers actually earn, on average, somewhat more than their American counterparts: they are not the cheap alternative source of labour that many fear. Truly, as leaders across a plethora of US industries have publicly commented, the US demand for highly skilled workers is so high that even the current inflow of H-1B workers cannot meet it.
Currently 18 per cent of Fortune 500 companies are founded by immigrants, while more than 40 per cent are founded by either immigrants or the children of immigrants. The newest Fortune 500 companies are even more likely to have been founded by an immigrant. As a January 2015 article from Inc magazine notes, immigrants in the US now create over 25 per cent of all new businesses in the country, despite making up only 13 per cent of the population. The report goes on to describe that such businesses are some of the most successful and fastest-growing in the country, and notes that “immigrant-owned businesses pay an estimated $126 billion in wages per year, employing one in 10 Americans who work for private companies. In 2010, immigrant-owned businesses generated more than $775 billion in sales. If immigrant America were a stock, you’d be an idiot not to buy it.” According to a 2008 Kaufman Foundation Study entitled “Foreign-Born Entrepreneurs: An Underestimated American Resource”, more than 50 per cent of all Silicon Valley tech start-ups founded in the US between 1995 and 2005 were immigrant founded. Furthermore, a January 2015 article in TechCrunch notes that these immigrant-founded companies have employed over 560,000 workers and generated over $63 billion in sales. While just 20 per cent of venture-funded start-ups with an initial public offering before January 2006 had at least one immigrant founder, 33 per cent of such companies with IPOs between 2006 and 2012 had an immigrant founder. These companies include prominent names like Facebook, LinkedIn and Zipcar, and have an extraordinary total market capitalisation of $900 billion. The economic importance of immigrant-founded start-up companies can no longer be ignored.
While China and India are increasingly welcoming environments for business, and other countries like the UK, Canada, and Australia are taking bold measures to welcome immigrant investors and entrepreneurs, as a report from the Partnership for a New American Economy states: “The American immigration system continues to raise barriers to these individuals, driving away the bright foreign students who attend our universities and keeping out the aspiring businesspeople who would otherwise come here.”
Immigrant investment programmes around the world are enjoying new levels of popularity, many of which offer streamlined application processes and fast avenues to permanent residency and/or citizenship. These programmes encourage the relocation of high net worth investors who not only bring with them the requisite capital investment, but also their families and business activities, which yield a much larger economic impact than simply the required investment amount. In the US, the EB-5 immigrant investor programme requires a minimum investment of $500,000 into a commercial entity which must then create 10 new full-time jobs. Studies estimate that this programme has resulted in over $8.6 billion of capital investments and the creation of tens of thousands of jobs in the United States since the programme’s creation. Indeed, during the recent economic recession, the EB-5 programme provided a vital source of funding for investment projects, as well as job creation for local workers that otherwise would not have occurred. However, the US EB-5 programme yields benefits that reach beyond the immediate investment project. Investors do not limit their economic activity to EB-5 investments, but rather purchase property, start businesses and spend money in the economy. Furthermore, once investors become permanent residents, they are taxed on their worldwide income. Because the EB-5 programme is funded through application fees paid by the investor, all of this occurs at no expense to the US taxpayer.
Unfortunately, acquiring US permanent residence through the EB-5 programme can be an arduous process spanning many years due to processing delays and country quotas. This serves as a deterrent to would-be foreign investors, as similar immigrant investor programmes around the world allow individuals to obtain residency, or even citizenship, in a matter of months, rather than years. Countries such as St Kitts and Nevis and Antigua & Barbuda offer “citizenship-by-investment” programmes where foreign investors can obtain citizenship through a US$250,000 contribution to a local economic programme, or the purchase of real estate for US$400,000. For those who choose to purchase real estate, the property can be used as a personal residence with few restrictions on resale. Furthermore, St Kitts and Nevis has no physical presence requirement, while Antigua and Barbuda only requires investors to spend a few weeks in the country. Importantly, citizenship in both countries allows visa-free travel to over 100 countries including North America and Western Europe.
Immigrant investment programmes are also popular in Europe, especially among European Union countries that allow the right of work and establishment among the 28 member countries. For example, Malta requires investments of €150,000 to €650,000, with the choice of investing in approved financial instruments, purchasing a residence for five years or contributing to a local economic programme. Hungary offers permanent residency for an investment of €300,000 into government bonds with a maturity of at least five years.
Immigrant investment programmes offer a mutually beneficial opportunity to improve local economies and investors’ quality of life. Furthermore, such programmes can be tailored to benefit the areas of the economy most in need. With the success of programmes offering quick processing times and immediate or fast paths to citizenship, more and more countries have followed suit, offering their own programmes to attract high net worth investors. Countries with overly burdensome requirements, such as large investment amounts, high risk and long processing times – the US included – will struggle to compete with an increasing number of simpler, cheaper programmes that offer numerous financial, social and other benefits.
Globalisation, rapidly accelerating now through technology, has the potential to eradicate poverty and universally increase human understanding and material security. One major obstacle slowing these advances is the barriers erected by governments through restrictive and counterproductive immigration laws. While a world of open borders remains a utopian dream and not a realistic policy goal, it is nonetheless disturbing that the United States continues to struggle to enact comprehensive immigration reform. Even the successful EB-5 regional centre programme remains provisional and requires an extension by Congress every three years. Immigration laws can be cruel, and economic pressures have provoked increasing harshness in governments and officials across the US and Europe. Those unfamiliar with the Kafkaesque systems and processes that immigration lawyers navigate daily are always shocked to discover the absurd realities: business plans delayed while key players await visas; a lawful permanent resident for 20 years with a US-citizen wife and three US-citizen children, deported for a decades-old misdemeanour conviction; or a refusal to expedite visa interviews to bury a relative, on the basis that the relative is already dead.
The collective knowledge and advocacy abilities of immigration lawyers are the key to awakening from such nightmares. Global migration benefits all, as bold individuals who leave the familiarity of their home environments bring countless benefits and make great contributions to their new homes and often send remittances back to family in their home countries.
Many of the day-to-day responsibilities of immigration lawyers may appear mundane. However, our vast collective experience gives us the knowledge and ability to challenge irrational immigration restrictions wherever they arise. Immigration lawyers have a key role to play in resolving the conflict between narrow-minded territorialism and a global world of ideas advancing at lightning speed, and therefore have an indelible responsibility to bring their unique knowledge and ability to action.