Economic stimulation is the goal of the EB-5 program, and job creation is a close companion of economic growth. Consequently, the creation of a specific number of particular kinds of jobs is one of the program’s most basic stipulations.
In short, each investor must create a minimum of 10 permanent full-time positions for qualified employees. But what does that mean, and how are these jobs counted?
Two Ways to Create Jobs
An immigrant investor can create jobs in two ways: by choosing to independently invest in a specific project, or by investing through an EB-5 regional center to sponsor a project. The second option is decidedly more popular, likely because it facilitates fulfilment of the crucial job creation requirements.
By taking the first route, the investor limits his/her EB-5 job creation numbers to positions created directly by and for the fledgeling business in which the investment is made. These direct jobs are usually those filled by employees carrying out the business’s everyday operations. Construction jobs may also count as direct jobs if construction is more than a two-year undertaking.
The second route, however, allows an investor to include not only direct jobs, but also indirect and induced jobs in the job creation total. Jobs that originate from spending to carry out the demands of the investment project are considered indirect jobs. From supplies and equipment to legal and maintenance services, if the investment requires it but it’s not actually a part of the new enterprise, it may count toward indirect jobs.
Rather than being related to the expenditure required by the project itself, induced jobs are created in the local community by the new employees’ increased purchasing power.
Remember, the requirement is 10 permanent full-time positions for qualified employees.
- Full time— the job keeps the employee busy for at least 35 hours per week
- Permanent—the position (not the person filling the position) must remain constant
- Qualified—the employee cannot be an independent contractor or an amalgamation of part-time workers and must be a US citizen or an immigrant lawfully employable in the US
Adding Them Up
To determine the economic impact of an EB-5 investment, including the number of jobs created, it’s often necessary to enlist the services of an economist. If the investor chooses the direct investment 2 of 2 option, he/she may count only direct jobs; when investing through an EB-5 regional center, indirect and induced jobs are included.
The economist’s report verifies that the EB-5 investment project can be expected to deliver the number of jobs promised by the business plan and its budget. Typically, input/output modelling is the methodology of choice, and four models have made their way to the forefront of USCIS approval: REMI, REDYN, IMPLAN, and RIMSII, with IMPLAN and RIMSII used most widely.
An economist who calculates the economic impact and job creation of an EB-5 project take into account a set of factors including construction spending, salaries, revenues, and tenant occupancy. These must be well documented to calculate job creation accurately, and jobs created by construction are not enumerated in the same way as those created by operations. At the end of the initial two-year period, when it’s time to file Form I-829, the investor will use this information to prove that the promised jobs were successfully delivered.
For more details about EB-5 job creation and economic impact reports, contact EB5 Economist at (800) 775-1988.