Will Snyder’s Proposed Immigration Reforms Boost Entrepreneurship?

During his State of the State address in January, Michigan governor Rick Snyder, who likes to refer to himself as “the most pro-immigration governor in America,” unveiled a bold plan to revitalize beleaguered Detroit—and to boost economic growth in the whole state. He called on the federal government to grant Michigan 50,000 visas over five years for skilled immigrants, especially those in fields like science and engineering who are most likely to work in, and create, high-tech jobs.

He also vowed to make Michigan the second state, after Vermont, to launch a state-sponsored, federally approved effort to attract immigrants willing to invest money in U.S. projects and businesses in exchange for a path to citizenship. “Let’s hold our arms open and say, ‘Come to Michigan, this is the place to be,’ ” he said during his January speech.

Those arms may not be able to open quite as wide as Snyder hopes, however. Targeting visas to a particular state or city would require Washington, DC, to act—which almost certainly isn’t going to happen. Still, Snyder may be able move ahead with the second part of his plan, as long as he improves the state’s current efforts to attract more immigrants.

The part of Snyder’s plan that runs afoul of federal law is his idea of snaring 50,000 immigrant work visas for Michigan over five years, using a visa category called EB-2. EB-2 visas are granted to immigrants with advanced degrees or those whose skills are expected to benefit the American economy or culture. They must already have a job offer. But as it stands now, only the federal government has the authority to grant these visas.

“Our current immigration system is not state-based,” explains Ann Chih Lin, an associate professor of political science and public policy at the University of Michigan. “I’m happy he’s thinking about it and I don’t want to be a wet blanket, but there’s no possible way to promise thousands of visas to Michigan.”

In order to do what Snyder proposes, the federal government would have to get Congress to change the U.S. Constitution to give states some control over visas, or President Obama would have to issue an executive order granting the visas to Michigan. That’s not likely, especially in today’s bitterly partisan Washington.

In January, when a reporter from “Here and Now” asked Snyder how he hoped to accomplish this, Snyder offered no details: “Well, I think that there’s a strong argument to say it’s in the national interest … it’s not asking the federal government for a bailout in any fashion, but hopefully administratively this could be done, and if not, legislatively,” he said.

But Michigan could move forward anyway on several fronts, including Snyder’s idea of a state-run, federally approved center to attract immigrant investors. “Snyder could be a national leader if he said states deserve to be partners in the immigration process,” says Lin, herself a daughter of immigrants. “Some states may decide that immigrants aren’t beneficial to the state economy, but some states might. We should be able to design our own immigration programs to add to federal programs.”

Some Midwestern rust-belt cities like St. Louis are already working to attract immigrants. That city’s Mosaic Project, launched last summer, aims to make St. Louis the fastest-growing U.S. metro area, in large part because of immigration, by 2020. The plan is to connect international college students with area job opportunities, and add a foreign-born focus to current training and small-business programs. Michigan could do something similar, and in fact, the state launched the Global Talent Retention Initiative of Michigan (GTRI) last fall.

In addition, just having a governor who sees immigrants as vital to helping jumpstart urban revitalization and job creation sets the state apart, says Steve Tobocman, a former Democratic state representative and the current director of Global Detroit, GTRI’s partner organization.

“I think you’ll see Governor Snyder recognized quickly at the national level as a Republican with pro-immigration policies,” Tobocman says. “His support on this issue is really going to be key.”

Michigan already offers a friendly home to ambitious immigrants, says Tel Ganesan, who came from India to Michigan to pursue his Master’s degree at Wayne State University in Detroit. After graduating, he earned an MBA from the University of Michigan and founded Kyyba, a Farmington Hills company that helps connect IT and engineering talent to jobs.

“Michigan is extremely conducive to entrepreneurs,” Ganesan says. “Comparatively speaking, the bureaucracy still needs to be improved, but if someone has the right spirit, it’s a great place.”

But could the state do more? While the idea of getting 50,000 EB-2 visas earmarked for the state won’t fly, Snyder could have more success with his plan to attract immigrants with money to invest. In a program that began in the early 1990s, the U.S. Congress created a visa category called EB-5 for immigrants willing to invest at least $500,000 in an American business or project that creates at least 10 jobs over three and a half years in a targeted area, like Detroit.

In return, each immigrant investor gets a green card, which grants legal residency. Tobocman says this type of program has been very successful in other countries like Canada and Australia. In fact, he says, it’s rumored that Toronto and Vancouver boomed largely because of investments from Asian immigrants. “EB-5 makes a lot of sense because it’s low risk and high capital,” Tobocman explains. “A good EB-5 investment is a big construction project, like a stadium.”

The EB-5 program usually operates through regional centers that connect immigrants with investment-worthy projects. According to the U.S. Citizenship and Immigration Services website, Michigan already has nine of these centers mostly run by economic development outfits such as the Lansing Economic Development Corporation and the Green Detroit Regional Center. But none are operated by the state. And thus far, those centers haven’t been very effective, says Tobocman, because local organizations often don’t understand the program and its complicated rules.

Snyder wants to fix that by establishing a regional center run by the Michigan State Housing and Development Authority (MSHDA). That should help, says Tobocman. “MSHDA is among the most sophisticated offices I’ve dealt with,” he says. To get federal approval, the state must file an application and pay a few hundred thousand dollars in fees. That’s what Vermont did. It was the first state to set up a state-run center and get federal approval.

The approach seems to work, Tobocman, says. When he called Vermont’s state-run EB-5 center for advice during the development of the Global Detroit study, officials told him that the state didn’t do much business until its office was endorsed by both the state and federal governments. Then, a flood of capital from China flowed into the state. Now, Tobocman says, Chinese investors are very familiar with the list of projects endorsed by the state of Vermont. “Suddenly, it has marketing cachet,” he says.

Getting federal approval for an EB-5 office run by MSHDA might be time-consuming. But it’s definitely within the realm of possibility, unlike persuading Congress or the Obama administration to allot 50,000 employment-based EB-2 visas over five years.

What is clear is that, except for a few examples like these state-run centers, states still have their hands tied by the federal government when it comes to immigration issues. In 2011, Utah tried to initiate state immigration reform. The state legislature passed bills that established a guest worker program and created programs to integrate migrant workers into the state through visas and other initiatives. Utah’s governor quickly signed the legislation. But under federal law, the state doesn’t have the authority to implement the reforms. Just last month, Utah officials announced the state was delaying the legislation’s implementation until 2015 in order to give the federal government time to act.

So what could Michigan do? Tobocman believes that Snyder has already informally approached the Obama administration to move MSHDA’s EB-5 center application forward quickly. In the meantime, there are still nine existing EB-5 centers not affiliated with the state that could be utilized. Tobocman says he’s also had meetings with another rust belt city (he declined to specify which one) about pursuing immigration incentives in partnership with Detroit, whether through an EB-5 center or a formal request for executive approval of EB-2 visas.

Given the limited state authority, the ideal solution is making immigration reform at the federal level a priority, suggests Ganesan. “What’s missing is a lack of will,” he says. “We need to communicate to the American people the key differences between legal and illegal immigrants. Entrepreneurship and immigration are the pillars that took this country to where it is. Why wouldn’t we take this surgical strike to fix immigration?”

Yet whatever the state manages to do can help, he adds. The United States’ growth has traditionally been fueled by immigrant entrepreneurs, he points out. So it makes perfect sense to use that strategy in Detroit. “The native population [of Michigan] might not have the appetite for taking that risk [in Detroit], but immigrants do,” he says. “They don’t know what they don’t know, so they’re willing to jump into it.”

How exactly will Michigan try to move forward on the vision laid out in Gov. Snyder’s State of the State Address? It’s unclear. We repeatedly contacted Snyder’s office to ask how he will convince the federal government to act on his proposals, but our calls weren’t returned.

However, Snyder did just sign an executive order a few weeks ago to open a state Office for New Americans, headed by a Grand Rapids entrepreneur named Bing Goei. As Michigan continues to look for ways to bolster its economy and promote cities like Detroit as a destination for tech-minded entrepreneurs, it’s clear Snyder intends to keep legal immigration a key part of the discussion.

Sarah Schmid Stevenson is the editor of Xconomy Detroit/Ann Arbor. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET_AA

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One response to “Will Snyder’s Proposed Immigration Reforms Boost Entrepreneurship?”

  1. Bob WilcoxAll Hat, No Cattle says:

    So the plan is to bring 50,000 immigrants to the US, because of course immigrants who are wealthy and want a visa are optimal entrepreneurs. Entrepreneurs already in the US can’t be enticed to Detroit? EB-5 and EB-2 have strong track records building economies in other cities? Swinging befuddled ideas around like a dead cat is not quite the same thing as good government, nor is it good economics.

    Detroit’s strengths are its cost of living, location, and youthful professionals. Its weaknesses are brand, infrastructure, debt-burden, education level, and poverty level. Bankruptcy court is addressing debt burden, and good state government could address infrastructure with eminent domain law, and address educational attainment with money. Poverty and brand can only be reversed with economic growth.

    A state government with ideas could grasp the burgeoning entrepreneurial energy apparent on the streets, feed that native excitement with infrastructure and education, and attract immigrant dollars and brains from all over the US. The governor’s idea is predicated on ignoring the strengths and weaknesses of Detroit, and hoping that a magic painless cure will arise from “somewhere else”.