Impact due to changes in immigration law - US



Today, the United States is home to the largest immigrant population in the world. It’s been a great era for immigrant entrepreneurs in the United States, with their numbers increasing for decades: Immigrants accounted for 18% of all self-employed people in 2014, up from 7% in 1980.

Even though immigrants assimilate faster in the United States compared to developed European nations, immigration policy has become a highly contentious issue in America. While much of the debate centers on cultural issues, there are questions on economic effects of immigration in the country.

Foreign Companies operating in USA

All would agree that United States has a complex tax system that significantly affects business decisions and business operations. In the wake of the Trump Administration’s executive order banning entry to immigrants from seven nations with majority Muslim population, I wonder what are the impacts of trump’s executive order on the companies that are founded and incorporated in United States by immigrant entrepreneurs, companies that have been operating in U.S. for a decade or more than that and also has immigrants as employees.

Employees unable to focus wholeheartedly

“The uncertainty and anxiety is already having a secondary impact on the business as people worry about their own situation and their family members, making it hard for them to focus wholeheartedly on business.” Says an Indian immigrant who founded a company in USA, a software platform that helps retailers’ makes decisions based on their data. The company has taken a stance to fight for its employees. Company being incorporated in United States has also received venture capital funding of $20 mn, is ready to invest in immigration support for its employees.

Restaurants being squeezed

An entrepreneur, who came to United States 30 years ago, owns 3 restaurants in New York City, worries about the impact of anti-immigrant sentiment. “Even if my restaurants have yearly revenue of $2 mn, the times have been tough even before the Trump’s executive order as restaurants that are neither fast-food nor fancy have been squeezed,” the restaurant owner said. “The restaurant is barely making it through and the change in immigration law is going to affect them negatively, definitely,” he added. Also his business turned down after 9/11 and he expects the similar thing at the restaurants after the ban. He has been out of the country and worries about his employees, especially one from Syria, who is unable to go meet his family.

Corporate America to be hurt

Another entrepreneur, who moved to San Francisco in late 2010 to create a recruitment company, has set up a truly international company. His 170 employees hail from 23 countries. “60% of my employees are American nationals and 40% are foreigners, and that is what makes the company right in its creativity, experience and culture,” he said. As a serial entrepreneur who has focused on recruiting, he sees big risks to the U.S. economy if companies cannot hire the employees they need. The US has been such a magnet for talent and wealth-creation and innovation, and the truth is that today that is at risk. The economic impact of limiting hiring is high. It will hurt corporate America, and those jobs will go elsewhere.

Ban is bad for business and innovation

A 44 year old serial entrepreneur, prolific angel investor and founder of a non-profit organization focused on expanding the access to computer science. He is also an immigrant from Iran, one of the seven countries targeted by Trump Administration ban, who came to U.S. from Tehran after the revolution. This angel investor has more than 13,000 followers on Facebook. He has created thousands of jobs through his own startups and his investments in companies like Dropbox and Facebook. “Cutting off immigrants is bad policy and I think America should have more immigrants like me,” he said. “A ban is bad for business and bad for innovation. The greatest country on the earth can figure out how to keep terrorists out without trampling the values that makes America great,” he said.


Has the inflow of foreign labour reduced jobs for Americans?

Has the surge in immigration since 1980 led to slower wage growth for native-born workers?

First of all Academic research does not provide much support for this claim. When immigration increases the supply of labour, firms increase investment to offset any reduction in capital per worker, thereby keeping average wages from falling over the long term. Moreover, immigrants are often imperfect substitutes for native-born workers in U.S. labour markets. That means they do not compete for the same jobs and put minimal downward pressure on native’s wages. In contrast, studies find that immigration has actually raised average wages of native-born workers during the last few decades.

Immigrants are at the forefront of the innovation and ingenuity in the United States, accounting for a disproportionately high share of patent filing, science and technology graduates, and senior positions at top venture capital-funded firms.

Immigration generally also improves the government’s fiscal situation, as many immigrants pay more taxes over a lifetime than they consume in government services.

Though immigrants are taking jobs from American citizens, immigrants increase the supply of labour, also they spend their wages on homes, food, TVs and other goods and services.

By putting barriers on talented immigrants – including those already legally in the United States and those seeking to enter – the ban will create a barrier to innovation, ease of doing business, economic development and global impact. Immigrants bring world class skills and expertise to build advanced technology that can create jobs and improve the lives of people everywhere. The ban will have an unnecessary negative impact to the health and safety of those affected and their families, not to mention rejecting refugees fleeing persecution, terror and war.