The Big Story: Proposed visa changes could ease pathways for entrepreneurs
This week, the Biden administration announced a proposed rule to modernize the H-1B visa program, potentially easing the ability of foreign entrepreneurs to grow their startups in the U.S. The H-1B program allows employers to hire foreign workers for specialty occupations and is a significant source of talent in the innovation ecosystem. The rule itself is a mixed bag of policy changes, but it is encouraging that policymakers may improve pathways for foreign startup founders.
Most importantly for founders, the proposed rule would affirm that founders with majority ownership of their startups are eligible for an H-1B, without giving up ownership or control to another party, like a corporate board. Founders would also be permitted to perform other duties associated with launching and growing a startup that do not typically fall within the duties of a specialty occupation, like fundraising activities. Other relevant changes include expanding the organizations exempt from the program’s statutory cap and lottery system and shifting the selection process from selection by registration, to selection of the individual candidate. The selection change would permit the candidate to choose which employer they would like to work for, which could be a win for startups.
But the rule also contains provisions that could make life harder for startups, including narrowing the definition of “specialty occupation” in a way similar to a previous Trump administration rule, which could restrict the degrees eligible to qualify for certain occupations. Studies have found that, for example, “more than half (51 percent) of U.S.-born individuals and 18 percent of temporary visa holders working in computer occupations have a degree other than computer science or electrical engineering.” That means any effort to further restrict eligibility by narrowing eligible degrees may exclude experienced professionals crucial for success, and could limit innovative talent.
The proposed rule is undergoing a 60 day notice and comment period as it moves forward. Engine has repeatedly called for policymakers to expand pathways for immigrant founders and talent to come to the U.S. to lend their skills and ideas. STEM talent shortages in critical fields continue to abound—it is crucial policymakers work to bolster our talent pipeline so that the U.S. remains at the forefront of innovation.
Policy Roundup:
U.S. Trade Representative abdicates leadership on key digital trade rules for startups. The Biden administration announced the decision to withdraw its support for certain WTO e-commerce proposals this week, including those related to cross-border data flows which are critical for startup success abroad. Challenges like data localization measures pose significant hurdles for startups, creating unjustifiable costs, impacting their scalability, and diminishing their competitiveness. Data-related barriers to trade are among the foremost encountered by U.S. startups—as Engine told USTR earlier in the week in comments to the agency—and the administration should reverse course to support digital trade policy that enables startup success.
Senate leader calls for funding AI startup priority. The Senate on Tuesday held an AI Insight Forum focused on innovation, where senators heard from some members of the startup ecosystem, including those advocating for the creation and funding of the National AI Research Resource (NAIRR). Following the Forum, Majority Leader Charles Schumer (D-N.Y.) called for a substantial $32 billion multi-year investment in AI research and innovation, including by funding the NAIRR and passing the CREATE AI Act, a bill that would establish it. The NAIRR—which Schumer called a “great idea” that “everyone likes”—will benefit startups both through the direct provision of resources and by bolstering AI talent pipelines, and Congress should swiftly pass the CREATE AI Act. The next AI Insight Forum will be next Wednesday focused on workforce issues.
Administration announces designation of 31 Tech Hubs to fuel innovation. President Biden and Secretary of Commerce Gina Raimondo announced the designation of 31 Tech Hubs across the country this week, which stand to catalyze investment in critical technologies, create jobs, and bolster national security. The Regional Tech Hubs program was implemented as part of the CHIPS and Science Act to support technological ecosystems through direct regional investment. Earlier this year, Engine joined a letter of coalition partners calling for adequate funding of programs authorized under the CHIPS and Science Act, including the Tech Hubs programs.
Engine underscores importance of independent contractors to startup ecosystem. This week, Engine submitted a statement for the record to the House Committee on Small Businesses emphasizing the role independent contractors play in the startup ecosystem, following a hearing on the Department of Labor’s rulemaking. Independent contractors give founders the flexibility in building their teams during early growth stages, and the administration’s attempts to reclassify independent contractors could limit startups' ability to hire necessary talent, potentially forcing them to make challenging choices between hiring full-time employees they cannot afford or forgoing crucial roles, hindering their growth. Policymakers need to consider the unique challenges faced by startups when considering worker classification.
Startup Roundup:
#StartupsEverywhere: Tulsa, Oklahoma. Shatterbox is on a mission to address talent shortages, promote diversity, and equip the next generation to excel in specialized industries. We talked to Founder and CEO Dustin Baker about the labor shortage, diversity in apprenticeship programs, and potential improvements to the Small Business Administration.
