Just how Much Impact has EB-5 had? New Data Gives us a Better Idea

At an event from JTC and Invest In the USA, EB-5 experts analyzed a recent report that demonstrates the tangible effect EB-5 has had on the U.S. economy.

EB-5 has always been an impact initiative, designed to create jobs and bring investment to American communities as it facilitates immigration. But explaining the scope of EB-5’s impact to lawmakers and the general public has been difficult because of a lack of useful information from U.S. Citizenship and Immigration Services (USCIS).

This is especially important at a time when the Regional Center Program requires reauthorization to continue past September 30th, 2027, and comments from public officials have cast doubt on the effectiveness of the program. To help make the case for EB-5, Invest In the USA (IIUSA) commissioned an in-depth study to examine the true impact of EB-5 investment.

JTC and IIUSA gathered a group of EB-5 experts for a virtual event where they went through some of the results in the resulting report and discussed what they can tell us about EB-5, what we stand to lose if the program doesn’t continue, and just how effective the program could be without unnecessary constraints.

New data in the IIUSA report

The report, The EB-5 Program: Driving American Prosperity Through Foreign Investment, was produced by IIUSA and Fourth Economy in an effort to put actual numbers to the achievements of EB-5. To get the relevant data, they had to combine information released by USCIS, information found on I-526 and I-924a forms, and voluntary reporting from participating Regional Centers. As Fourth Economy Vice President Dr. Jerry Paytas explained, this was no small undertaking.

“For the period in which we did this study, 2016-2019, there were 26,000 pages of those forms that had to be data-entered,” he said.

Moderator Lee Y. Li, Director of Policy Research and Data Analytics for IIUSA, stressed the value of Regional Center participation. When USCIS fails to provide enough data, the industry must come together to prove EB-5 is actually working as intended.

“If we can work together, it’s very promising that we can fill this informational gap,” said Li.

The study included data from 68 Regional Centers that reported a total of $11.9 billion in EB-5 investment, which amounts to 68% of the $17.5 billion total reported on I-526 forms for the period.

“It’s actually been great seeing how much economic impact EB-5 has really been able to have in the United States,” said CanAm Enterprises COO Christine Chen. “EB-5 has evolved into a very sophisticated industry, with investors asking insightful questions. Being able to provide them with information with which they can make a decision – it’s good for the longevity of the program.”

By incorporating the available data from USCIS and the Regional Centers into a mathematical model, Fourth Economy was able to estimate totals for EB-5 investment, job creation, and more. They found that from 2016 to 2019, EB-5 contributed $184 billion to U.S. GDP while generating $14.5 billion in total tax revenue. Perhaps most importantly, they calculated that EB-5 has exceeded expectations when it comes to job creation.

EB-5 has been creating far beyond the minimum number of jobs

“We all know the purpose of EB-5 is job creation,” said Li. Each EB-5 investor is required to create at least 10 full-time jobs, but according to the report, the average EB-5 investment is actually creating 45 jobs, for a total of 1,654,000 jobs created during the period.

Dr. Paytas explained that this number includes the initial jobs created directly by the project, indirect jobs “from all the industries that are supporting and supplying the direct activity,” and induced jobs that “multiply through the economy as all that spending happens.” At 4.5x the minimum of 10 jobs per investor, this average represents the kind of impact EB-5 stakeholders have long believed the program capable of, but lacked hard data to prove.

“The one thing I really like about EB-5 is its ability to cut through the noise,” said JTC Director of Sustainability Services Dr. Ed Smith. “You’re talking about investment that brings jobs to communities that are in need of job creation.”

In addition to the number of jobs, the report also covered the average wage for each created job, noting that the average of $73,760 per job is “significantly higher (+48%) than the average wage of approximately $50,000 for workers in private industries reported by the U.S. Bureau of Labor Statistics in the United States during that period.”

This high average could silence a lot of critics who believe EB-5 only creates hospitality and service-industry jobs. Since those jobs likely have lower salaries than the average, there must be a good number of high-paying jobs being created through the program to produce the average in the report.

“These are good jobs that EB-5 is creating,” said Dr. Paytas.

Li also pointed out that this per-job average could be even more significant for workers in rural areas, where the cost of living is lower. Thanks to the EB-5 Reform and Integrity Act of 2022 (RIA), there has been high demand for rural projects.

Chen related some of her experiences with rural investments, noting that in addition to jobs, projects like rural broadband require training local workers to fill those jobs, providing them with competitive skills. In addition, other industries such as transportation, housing, restaurants, grocery stores, and more would need to fill positions in order to cater to the workers moving to these communities for the EB-5 project.

“You’re creating whole new industries in those areas outside of where the EB-5 investment is taking place,” she said. “That might not have happened without such a big push for this industry in those regions.”

“EB-5 creates jobs, and good-paying jobs,” said Li, summing it up perfectly. “This is the first time we’ve seen an economic impact report on EB-5 that focuses on labor income.”

EB-5’s effect on the U.S. economy

One thing that sets EB-5 apart from other government impact initiatives is that EB-5 doesn’t offer tax incentives, meaning it involves no loss of revenue for the government. On the contrary, it generates tax revenue both from the investments themselves and from the projects those investments fund.

The report estimates that “EB-5 investment generated $14.5 billion in total tax revenue in 2016 to 2019 alone, more than the construction industry in the United States.” This includes local, state, and federal taxes, helping reduce budget deficits at all levels of government.

“We’re talking significant tax revenue for local governments and state governments,” said Dr. Paytas.

“This is one of the stronger talking points or benefits to EB-5, when we’re looking at it as an economic development tool: this is money that’s coming into the community, not circulating throughout the community,” said Dr. Smith. “This is money that’s coming into the community in order to stimulate the economy.”

“Unlike other federal economic development programs, EB-5 costs the federal government nothing. All of that is net new investment into the United States,” said Dr. Paytas.

What does this data suggest about the RIA era and EB-5’s future?

The study only focused on the years 2016 through 2019, before the passage of the RIA, which helped expand EB-5’s reach through the reserved rural visas that have brought investment to communities previously untouched by EB-5.

“The definition for rural is very specific. It’s very narrow. There are certain states where there are no rural areas,” said Chen. “A lot of these places that have historically not seen a ton of EB-5 are seeing an intense amount of investment right now.”

With the addition of these new reserved categories, it’s possible the distribution of EB-5 investment across states and districts (as covered in the report) could have been even more impressive. And while some of the numbers were eye-catching, the report makes it clear that they could have been better.

“EB-5 could become a much larger generator of jobs and economic growth if these constraints and uncertainties were removed,” said Dr. Paytas, who highlighted some of the constraints limiting EB-5’s potential, such as the visa cap, long processing times, and the periodic reauthorization of the Regional Center Program that can sometimes lead to lapses. The report estimates just how much of an impact EB-5 could have if the yearly visa allocation were larger and more resources dedicated to the program.

“There is such a constant need to educate and remind lawmakers about how much good EB-5 has done,” agreed Chen. With this new information, she said, “the impacts cannot be ignored.”

“This investment tool brings jobs to communities that further support community revitalization efforts,” said Dr. Smith. “With the effective collection of data and utilization of that data, we’re able to advance individual projects forward and the EB-5 industry as a whole.”