The introduction of startup visas could boost American entrepreneurship and create at least 1.6 million U.S. jobs over the next 10 years, according to a new report by the Kauffman Foundation.
The report details how the updated bipartisan immigration plan Startup Act 3.0, which provides visas for highly-educated foreign-born entrepreneurs, could stimulate the economy by adding between 500,000 and 1.6 million jobs over the next decade. Such visas would be available to a “fixed-pool” of 75,000 foreign-born H-1B and F-1 visa holders.
The foundation projected three different scenarios for the startup visa’s effects. In two scenarios, companies founded by startup visa holders would create between 500,000 and 889,000 jobs – equivalent to between 0.5 percent and 1 percent of GDP. The third scenario, which projects a minimum of 1.6 million new jobs, forecasts that half the companies under the visa program would be technology and engineering firms established by H-1B holders, “who typically are employed in science, technology, and engineering.”
“There’s hope that 2013 finally may be the year the United States implements comprehensive immigration reform,” Dane Stangler, director of research and policy at the Kauffman Foundation, said. “However, that legislation would fall short if it fails to create a new visa for the thousands of potential foreign-born entrepreneurs who are already in the country, particularly those who are likely to start technology and engineering firms. Increasing their numbers would accelerate U.S. economic and job growth and help offset the steadily declining numbers of native entrepreneurs.”
In January, President Obama called on Congress to create a startup visa, stating that while foreign students gain valuable skills and degrees in the U.S in fields such as engineering and computer science, a comprehensive immigration policy would ensure that talent remains in the country and drive the nation’s competitiveness. Last month, experts from MIT also spoke about how immigration policy reform could boost the economy and build STEM talent in the U.S.
Durable Goods Orders Slump, Amid Positive Signs
New orders for manufactured durable goods decreased in January, falling 5.2 percent, following a 3.7 percent gain in December and ending a four-month period of growth, according to the U.S. Department of Commerce. However, the decline was due primarily to a steep plunge in the transportation category, and other indicators proved generally positive.
The overall value of durable goods orders decreased by $11.8 billion in January to a total of $217 billion. Transportation equipment posted the largest decline, plummeting 19.8 percent to $59.7 billion. Excluding the often volatile transportation category, new orders actually rose 1.9 percent, representing the largest gain in over a year.
“Demand for machinery such as construction equipment and generators jumped by the most in more than two years…indicating companies were relieved the U.S. avoided the brunt of the so-called fiscal cliff of tax increases and budget cuts slated to take effect at the start of the year,” Bloomberg News notes. “Growing demand from abroad will probably supplement gains in investment to ensure manufacturing keeps contributing to economic growth”
New orders for machinery surged 13.5 percent to $35.3 billion in January, while electrical equipment and components rose 1.4 percent to 10 billion, and fabricated metal products inched up 1 percent to $29.4 billion. Meanwhile, demand for core capital goods, which serves as a key gauge of future business investment, jumped 6.3 percent, marking the largest increase since December 2011.
“The increase in core capital goods suggests companies are willing to expand their production capacities despite worries that automatic government spending cuts will slow the economy in the coming months,” the Associated Press explains. “The report suggests manufacturing is picking up.”
Construction Equipment Exports Surge
Exports of U.S.-made construction equipment grew 13 percent in 2012 to $26.7 billion, according to the Association of Equipment Manufacturers (AEM). In previous years, construction equipment exports grew by 42 percent in 2011 and 28 percent in 2010, after recession-era contraction of 38 percent in 2009.
The top destinations for U.S.-made construction equipment were Canada (up 12 percent totaling $8.1 billion), Australia (up 43 percent totaling $3.8 billion), and Mexico (up 13 percent totaling $1.8 billion). Other major growth destinations included Chile, South Africa, Brazil, Belgium, Peru, and Russia.
In general, growth was slowest in the Asian market, where demand increased 2 percent to $3.2 billion, and the South American market, where demand rose 6 percent to $4.6 billion respectively.
“Exports have been called a bright spot for the U.S. economy, and this has been especially true for construction equipment manufacturers. Exports have been essential to our industry’s rebound as we continue to struggle with uneven U.S. markets,” Al Cervero, AEM vice president and construction sector leader, said. “With this global slowing and continued domestic market uncertainties, it’s more important than ever for our lawmakers to enact job-creating export and manufacturing policies.”
Consumer Confidence Improves
The Conference Board’s Consumer Confidence Index increased 11.2 percentage points to 69.6 in February, marking the sharpest gain since November 2011 and the first gain in four months.
The findings reflected widespread optimism in consumer perceptions. The proportion of survey respondents who expect business conditions to improve over the next six months rose to 18.9 percent in February from 15.6 percent in January, while those expecting business conditions to worsen declined to 16.5 percent from 20.4 percent.
“Consumer Confidence rebounded in February as the shock effect caused by the fiscal cliff uncertainty and payroll tax cuts appears to have abated. Consumers’ assessment of current business and labor market conditions is more positive than last month,” Lynn Franco, director of economic indicators at the Conference Board, said. “Looking ahead, consumers are cautiously optimistic about the outlook for business and labor market conditions. Income expectations, which had turned rather negative last month, have improved modestly.”
Respondents’ views on current conditions were also optimistic. Those saying business conditions are “good” rose to 18.1 percent last month from 16.1 percent, while those stating business conditions are “bad” fell to 27.8 percent from 28.4 percent. However, labor market conditions were more mixed, with those saying jobs are “plentiful” climbing to 10.5 percent from 8.5 percent and those claiming jobs are “hard to get” rising to 37 percent from 36.6 percent.
Jobless Claims Plummet
New initial jobless claims fell sharply in the latest week reported, indicating that employment may be stabilizing despite uneven results in recent months. According to the U.S. Department of Labor, seasonally adjusted unemployment insurance claims for the week ending February 23 dropped to 344,000, a decrease of 22,000 from the previous week’s total.
In addition, the four-week moving, which smoothes out volatility to provide a more accurate long-term picture, fell by 6,750 to 355,000 for the week.
The latest weekly improvement exceeded expectations, as economist polled by MarketWatch had forecast jobless claims to fall to only 362,000. Continuing claims dropped by 91,000 to 3.07 million, reaching the lowest level since June 2008.
“Overall, average claims are down about 3 percent from where they were a year ago. They’ve largely been hovering in the 330,000 to 375,000 range for the last three months – a level that seems to be consistent with the U.S. economy adding about 180,000 jobs each month,” CNN Money notes. “But that’s barely enough to keep up with population growth and not enough to make a significant improvement in reducing the unemployment rate.”