MBA Research

Trend #44: Immigration Reform

How will new immigration rules affect the health of businesses? Will proposed changes strengthen or weaken our economy? How will the workforce be affected? This month’s Action Brief explores what is on the minds of business leaders as they anticipate and prepare for potential changes related to immigration reform.

The current administration has proposed or enacted the following measures which have heightened the immigration debate:

  • Temporarily banning immigrants from certain countries and all refugees coming into the U.S.   while a new vetting process is discussed and developed
  • Building a wall along the U.S.— Mexico border
  • Withholding federal funds for sanctuary cities
  • Increasing deportation of undocumented immigrants and documented immigrants with criminal records

 

Many business executives are not framing their views on immigration along political lines as much as they are on the potential effects of immigration changes to their businesses and the overall economy. Nationally, immigrants make up 13 percent of the population and 17 percent of the workforce. Several industries stand to be heavily affected by immigration reform depending on which of the proposed actions take place including science, technology, engineering, and math (STEM); construction; restaurants; hotels; and agriculture (including dairy producers).

The business community is especially concerned about the effect of proposed rule changes and potential adjustments to the skilled-employment visas (e.g., H-1B, L-1, etc.). Fans of these programs say they help employers fill jobs that Americans lack the skills to do. Critics are concerned that the programs enable companies to undercut jobs and wages for American workers.  

The fate of many immigrant entrepreneurs also hangs in the balance. It is estimated that 10 percent of Americans are employed by private, immigrant-owned firms. Immigrants to the U.S. are almost twice as likely to start businesses than native-born Americans. In addition, over half of privately held American companies worth $1 billion or more have at least one immigrant co-founder, according to a study by the National Foundation for American Policy.

While the U.S. is struggling to define new immigration policies, other countries are rolling out welcome mats for entrepreneurs. Canada, Australia, Brazil, Chile, Ireland, Singapore, South Korea, Spain, and the United Kingdom have all created visas specifically targeting entrepreneurs. Many U.S. companies, new and established, are now rethinking their global perspective based on anticipated restrictions for entering the United States. Businesses are considering whether to locate their business in the U. S. or other countries based on talent availability. At the same time, business must also factor in global tariff agreements which are being renegotiated. These agreements will impact over all costs and affect  the businesses’ ability to import and export supplies they need and products they wish to sell. 

Alessandro Babini, a French citizen and entrepreneur, with a company based in Cambridge, Massachusetts, fears deportation due to an expired visa. The fate of his company, which makes fitness gadgets, is unclear. He has a small staff, and he volunteers in his community to help other start-ups. He is one of many foreign-born entrepreneurs who is asking if doing business in the U.S. is worth it.

Economic considerations are key in this debate. While immigrants can burden public resources such as welfare, food stamp programs and use of medical providers, many also pay taxes and contribute to the health of the economy as consumers. Many illegal immigrants pay into the social security system without ever recouping their investments. Wage depression is real and documented, while its effects are heavily debated.

Businesses are preparing for potential changes in some of the following ways:

  • Asking non-citizen workers to refrain from leaving the country based on concerns that they may be denied re-entry
  • Analyzing and vetting their internal applicant reviewing and hiring processes
  • Verifying that all employee documentation is up to date (e.g. I-9 forms)
  • Preparing for extensive visa related audits, inspections, and investigations from immigration labor agencies, which can be time consuming and costly
  • Anticipating workplace raids by U.S. Immigration and Customs Enforcement Agents and learning about their rights in the event of a raid

 

Implications for the Classroom

Learning opportunities for students abound as almost every community across the U.S. has immigrants. Students can start by identifying immigrants in their area and asking themselves what role those individuals play economically within their communities.

If there are immigrants, or foreign-born students in your classroom, invite them to share personal family experiences related to their status and business implications if they are comfortable doing so.

Have students read the story of Juan Carlos Hernandez Pacheco, a successful restaurant manager who was arrested and is being detained at an Immigration and Customs and Enforcement facility.

https://www.nytimes.com/2017/02/27/us/immigration-trump-illinois-juan-pacheco.html

Ask students whether or not they feel Mr. Hernandez should be deported based on his history. This example will help students realize the complexities that our current administration, lawmakers, and business leaders are facing as they take the next steps in immigration reform.

Update: Mr. Hernandez was released from immigration detention on March 1, 2017. The following link provides further information:

http://www.cnn.com/2017/03/01/us/juan-carlos-hernandez-pacheco-hearing-release/