Pioneer Institute Study Finds Outdated U.S. Immigration System Delays Creation of 150,000 Businesses and 500,000 Jobs

Global competitors seizing opportunities to attract top talent

BOSTON--(BUSINESS WIRE)--A clogged and outdated U.S. immigration system delayed the creation of 150,000 businesses and 500,000 jobs from 2013 to 2021, according to a new study from Pioneer Institute. “Missing the Boat: Outdated Immigration Policies and Threats of International Competition” by University of Wisconsin-Superior Professor Joshua Bedi highlights how the U.S. is losing global talent due to its restrictive and Kafka-esque immigration system.

“Even with more than 180 highly specific visa categories, the current system provides few pathways for immigrants to become entrepreneurs,” said Professor Bedi. “This undermines our economy and global competitiveness.”

Barriers to Entrepreneurship and Job Creation

Professor Bedi outlines how the current immigration system blocks business and job growth, particularly for immigrants who are 80 percent more likely to start a business than U.S.-born citizens. Despite this entrepreneurial potential, outdated and overly complicated policies create significant barriers.

Immigrants face three primary pathways to entrepreneurship, each riddled with bottlenecks. The first is permanent residency through a green card, which grants most labor rights equal to U.S. citizens. The U.S. grants 675,000 green cards annually, but 99 percent of immigrant visa applicants are rejected, leading to massive backlogs. By 2018, the average wait time for a green card had doubled to four years, with applicants from India and Mexico often waiting nearly a decade.

The second pathway is through work visas, most of which require employer sponsorship, restricting entrepreneurial freedom. Over 75 percent of H1-B visa applications—reserved for highly educated workers—are denied, further limiting access to global talent.

The third option is investor visas (E-Visas), designed for individuals who invest in the U.S. economy. In 2023, only 70,000 E-Visas were issued, typically requiring a minimum $80,000 investment.

Due to these restrictions, many immigrants turn to non-immigrant visas like student or work visas as indirect routes to permanent residency, further clogging the system. In 2023 alone, more than 10 million non-immigrant visas were issued, highlighting systemic inefficiencies.

“America needs to walk and chew gum at the same time on immigration,” said Jim Stergios, Pioneer Institute executive director. “While the administration focuses on stemming illegal immigration, we must also fix the chaotic patchwork of rules blocking legal entrepreneurs—people ready to contribute to our economy and society.”

A National Security Risk

Restrictive immigration policies not only harm the economy but also pose a national security risk. Attracting immigrants with STEM degrees is crucial, especially since nearly two-thirds of U.S. AI firms have immigrant founders. Losing this talent to more welcoming countries threatens America’s leadership in key technologies.

Global Competitors Seize the Opportunity

While the U.S. struggles with its outdated system, at least 15 countries have established start-up visas in recent years. Canada, for example, is aggressively courting U.S.-bound talent stuck in visa backlogs.

Canada has simplified its visa system, offering only four categories, which streamlines the process and reduces bottlenecks. It also uses a points-based system that ranks applicants based on education, language proficiency, employment status, and whether they earned a degree from a Canadian institution. This approach prioritizes immigrants most likely to positively impact the economy.

Other countries, including Australia, Germany, Great Britain, New Zealand, and Singapore, have adopted similar points-based systems to attract skilled immigrants. These nations leverage streamlined immigration policies to pull top global talent away from the U.S.

Policy Recommendations

Professor Bedi calls for sweeping reforms to unlock the economic potential of legal immigration:

• Increase legal immigration quotas, especially for highly educated workers.
• Adapt immigration quotas to reflect labor market needs.
• Simplify the visa system from over 180 categories to just three permanent types.
• Implement a points-based system to prioritize high-impact immigrants.

“Our competitors are streamlining their immigration processes to attract top talent,” said Bedi. “If the U.S. doesn’t modernize its system, we risk losing the next generation of innovators and entrepreneurs.”

About Pioneer Institute

Pioneer empowers Americans with choices and opportunities to live freely and thrive. Working with state policymakers, we use expert research, educational initiatives, legal action and coalition-building to advance human potential in four critical areas: K-12 Education, Health, Economic Opportunity, and American Civic Values.