The Big Story: Boosting legal immigration will benefit startups, U.S. global leadership. As federal policymakers continue to debate much-needed updates to the nation's immigration system, a report released this week found that the U.S. risks losing its status as the world’s largest economy by 2030 if policymakers do not take steps to expand and increase legal immigration. The study, conducted by FWD.us in collaboration with George Mason University, highlighted how U.S. gross domestic product (GDP) could double by 2050 if the level of permanent and temporary immigrants was increased to more than two million each year.
The study found that current U.S. population trends and immigration levels will lead to the U.S. economy being roughly three-quarters the size of China’s by 2050—and that an influx of legal immigrants would also help keep entitlement programs like Social Security and Medicare from going insolvent. The report’s findings make it clear that policymakers need to take definitive legislative action on immigration. The Biden administration has already hit the ground running on immigration reform efforts by rolling back some of the Trump administration’s immigration policies and proposing a massive overhaul of the country’s immigration system. And, in a victory for technology companies that rely on high-skilled foreign workers to grow, the White House earlier this month allowed the previous administration’s ban on the issuance of new non-immigrant visas—including the H-1B visa program for high-skilled workers—to expire. But further efforts to pursue legislative solutions have yet to pass both chambers. Although the House last month passed a component of Biden’s immigration plan that would give approximately 2.3 million ‘Dreamers’ specified legal protections from deportation and would provide a pathway to citizenship if they meet certain criteria, legislation has not yet been taken up in the closely divided Senate.
Startups and technology companies have long expressed the need for policymakers to expand visa programs for high-skilled workers and modernize the country’s immigration system in order to improve U.S. innovation and global competitiveness. And as the recent report shows, Dreamers, legal immigrants, and other talented foreign-born workers make significant contributions to the U.S. economy. Previous studies have also found that immigrants drive job growth and creation, with immigrant founders launching new ventures at rates that exceed those of natural-born U.S. citizens. With the future of U.S. global leadership and the solvency of critical entitlement programs at stake, lawmakers must act quickly to update the country’s immigration system—such as by passing a startup visa program—to spur on long-term job growth and competitiveness.
Policy Roundup:
European data protection authority moves to block Mailchimp following Privacy Shield rollback. The Data Protection Authority of the German State of Bavaria recently took steps to bar an unnamed German company from using U.S.-based marketing company Mailchimp after an inquiry found that the company used the service to send newsletters to its customers. The DPA said that the company did not take steps to determine whether “additional measures” were needed to comply with the European Court of Justice’s decision last year—known as Schrems II—which invalidated the EU-U.S. Privacy Shield and created uncertainty around other legal mechanisms for transatlantic data transfers.
Supreme Court’s Google v. Oracle decision a win for startups and developers. The U.S. Supreme Court ruled in a 6-2 vote on Monday that Google’s reimplementation of JAVA application programming interfaces (APIs) for its Android mobile operating system constituted fair use and was not copyright infringement. As we noted earlier this week, the ruling signals that startups and developers should be able to continue to use APIs—which promote interoperability across computer programs and systems—without facing liability for copyright infringement.
Justice Thomas criticizes social media. The Supreme Court this week also dismissed a lower court ruling that found that former President Donald Trump violated the First Amendment when he blocked people from his personal Twitter account while in office. Justice Clarence Thomas issued a 12-page concurrence arguing that large Internet companies are "sufficiently akin" to a common carrier as a result of Section 230 and should be "regulated in this manner.” Legal experts were dubious of Thomas’ claim, with Daphne Keller—the director of the Program on Platform Regulation at Stanford's Cyber Policy Center—noting that the justice’s concurrence ignored a long history of legal cases upholding Internet companies’ First Amendment right to moderate user-generated content.
Tax hike in White House’s infrastructure plan would disproportionately impact tech companies. Tax experts said that President Biden’s proposal to increase the corporate tax rate over the next 15 years—from the current top rate of 21 percent to 28 percent—as part of his recently introduced $2 trillion infrastructure plan will likely have the greatest impact on U.S. technology and pharmaceutical companies. Although the startup community is receptive of the administration’s infrastructure proposal—including, in part, efforts to boost high-speed Internet access across the nation and plans to more equitably distribute funding to entrepreneurs—companies have expressed concern that the tax hike will unnecessarily harm small businesses as the U.S. emerges from the pandemic.
Senate working on legislation to address semiconductor shortage. President Biden said this week that Senate leaders are planning to introduce legislation to address the global semiconductor shortage. U.S. companies remain concerned that the shortage—which is affecting access to microchips and other critical components used by automakers, electronics manufacturers, and technology companies—could last through 2022.
Startup Roundup:
Upcoming webinars to examine SSBCI 2.0. The Center for American Entrepreneurship, Right to Start, and Cromwell Schmisseur are holding two webinars to discuss the reauthorization of the State Small Business Credit Initiative (SSBCI), which provides funding to states to support small business credit initiatives and equity investments. The first webinar—to be held next Tuesday at 2 p.m. ET—will provide an introduction to the SSBCI and offer guidance for how stakeholders can engage with the program. The second webinar—to be held at 2 p.m. ET on Tuesday, April 20th—will discuss implementation of the SSBCI and offer solutions for how the government can better manage the program.
Venture funding surges in the first three months of 2021. While historically only a fraction of a percent of startups are backed by venture capital, the first quarter of 2021 saw a record $72.7 billion in venture investment in seed through growth-stage technology companies. First quarter funding was approximately double last year’s totals and represented a 57 percent increase from the fourth quarter of 2020. We should expect this number to continue to tick up slightly as seed and early-stage investments tend to experience data lag.
