By most economic measures, rural American communities regularly lag behind urban areas, including in unemployment rates, persistent poverty, and labor force participation. While several federally funded programs aim to revitalize these areas, Congress created the EB-5 visa to fuel additional economic growth and job creation without increasing the burden on American taxpayers. Despite the significant economic contributions of EB-5 investors over the past three decades, stagnant immigration policy now threatens the program’s effectiveness, likely blocking around 10 billion dollars in pending investments.
The EB-5 allows foreign nationals to apply for a green card if they make a qualifying investment in a U.S.-based commercial enterprise and create at least ten new, permanent, full-time jobs for U.S. workers––or save ten jobs if investing in a troubled business. Minimum investment amounts range from $500,000 to $1,050,000 depending on the application’s timing and the investment location, for example, in a rural area or an area experiencing high unemployment.
To obtain a green card through this program, the investor must first submit a petition to U.S. Citizenship and Immigration Services (USCIS) with proof of the qualifying investment. If approved, the investor can apply for an adjustment of status from within the United States or file to obtain the visa through a consulate abroad. However, the gap between the petition’s approval and the issuance of the visa or adjustment of status can be significant due to limited visa availability and ongoing green card backlogs.
By the end of December 2023, USCIS reported that 16,283 petitions for immigrant investors had been approved, but that corresponding visas were not available. Each of the approved petitions represents an investment that USCIS verified. However, because investments often remain in escrow until a visa or green card is obtained, these funds may languish for years, hovering just out of reach for the communities and companies that need them.
Green cards are only available to approved investors after decades-old restrictions dictate the number of visas available to each category each year and the share of visas available to each country of origin. Specifically, no country’s nationals may obtain more than 7 percent of available visas across all green card categories in a year. This is particularly problematic for countries with large populations or a strong migration history to the United States, such as China, India, Mexico, or the Philippines. Bipartisan legislative efforts often intend to modernize these parameters because they allow otherwise Congressionally-authorized green cards to go unused.
Unused visas are not only inefficient but also costly. Besides the overall GDP and macroeconomic benefits of visa issuance and business development, EB-5 backlogs cost the U.S. economy billions in unrealized investments. While escrow usage and specific investment data are unavailable to the public, conservative calculations based on publicly available data can provide a reasonable range of estimates.
On the very lowest end, targeted employment area petitions filed before March 15, 2022—when the EB-5 Reform and Integrity Act of 2022 took effect—were subject to a $500,000 minimum investment each. Any petition filed since then on behalf of a targeted employment area investor is subject to an $800,000 minimum, and non-target area petitions are subject to a $1,050,000 investment minimum, a $50,000 increase from 2022.
Based on the minimum investment amounts, anywhere from $8.1 billion to $17.1 billion could be pending release upon issuance of the green card. However, prior issuance data, approval rates, and filing data suggest that $9.5 billion to $13.1 billion is the most realistic. Given that nearly 93 percent of investors obtaining permanent residence through the EB-5 in 2022 did so through regional centers that utilize escrow accounts more often than not, it is likely that the majority of the $9.5 – $13.1 billion is indeed in escrow. As a result, targeted businesses will likely wait several years before being able to access these funds.
Congress and the administration can take action to allow these businesses and communities to benefit much sooner. One option is green card recapture, allowing the U.S. to issue green cards previously authorized by Congress but unused due to administrative delays or other bureaucratic hurdles. While green card recapture can be authorized through various administrative and legislative methods, even a narrow, administrative green card recapture initiative could free up over 300,000 green cards for all backlogged categories. Niskanen’s prior research on green card recapture provides full explanations of available methodologies, and updated findings calculated based on visa issuances through 2023 are included below.
Other options include recalculating how green cards are counted and distributed. For instance, the dependents, i.e., spouses and minor children, of EB-5 investors are allowed to accompany the investor and apply for permanent residence at the same time. However, the green cards the dependents receive count against the overall number of green cards available in the EB-5 category, even though the dependents do not make a qualified investment. In fiscal year 2022, approximately 56 percent of green cards issued under the EB-5 category were issued to dependents rather than principal investors, watering down the program’s efficacy. To remedy this, Congress could exempt all or some dependents from green card allocation numbers, particularly in the EB-5 or other employment-based categories.
Congress could also increase overall green card limits or, more narrowly, revise the country caps. The current 7 percent limit on each country of origin was set in 1990 and no longer reflects the present-day realities of our immigration system. Under current policies, some individuals may breeze through the green card process with near-immediate visa availability. Others who are equally eligible may be stuck in line for decades, simply based on their nationality. Updating these restrictions or the equally outdated overall green card allocations could free up slots sooner for the currently pending investments.
Since the EB-5’s creation in 1990, the program has been essential in attracting foreign direct investment and bolstering domestic economic activity. However, outdated policies likely suggest that around $10 billion is currently sitting in escrow accounts in the U.S., entirely unusable for those meant to benefit from the funds. Rural American communities are often the most in need and most likely to benefit from these investments. Therefore, it is on Congress and the administration to make these investments available sooner and to facilitate revitalizing these communities through green card recapture or modernization of our green card limits and allocations.