Job Creation Requirements
Job creation is one of the main requirements of the EB-5 program. In a 2012 study by IIUSA, the number one reason for USCIS denials of EB-5 investor’s petitions to become U.S. permanent residences (I-829) revolved around job creation issues. The North Dakota/Minnesota EB-5 Regional Center stresses the importance to minimize the chances of denials based on job creation, by leaving a buffer of projected jobs with the projects we represent. For example, a project (in a TEA zone) with an anticipated job creation of 400 (direct, indirect, or induced) could support $20M in EB-5 financing, but the recommended funding mix may only include $10M in EB-5 financing. We work with each individual company to determine the right EB-5 funding mix.
For each EB-5 investor that invests into a project at least 10 (direct, indirect, or induced) full-time jobs for qualifying U.S. workers must be created within two years of the investment. Full-time employment is considered someone who is benefited and working a minimum of 35 hours per week. A qualified U.S. worker includes U.S. citizens, permanent residents, or other immigrants authorized to work in the United States. According to the USCIS, this does not include independent contractors. Additionally, any jobs filled by the EB-5 investor and his or her family members cannot count towards the 10 new jobs.
- Direct jobs are any new, permanent, jobs created in the company as a result of the EB-5 investment into the respective company.
- Indirect Jobs are created when the business buys goods and services from local firms as a result of the expansion.
- Induced Jobs are created when the employees of the new business spend part of their paychecks on locally produced goods and services.
Indirect and induced jobs are calculated by IMPLAN or RIMS II econometric analysis models and show those jobs that are anticipated to be created collaterally.
In order for construction jobs to count as direct jobs, the construction must last consecutively for at least two years. If a construction project is not reasonably expected to last two years, then only the indirect and induced jobs can be counted.
Calculating Indirect and Induced Jobs
Indirect and Induced job are calculated using IMPLAN or RIMS II econometric analysis models and show those jobs that are anticipated to be created collaterally. The North Dakota/Minnesota EB-5 Regional Center has an economist on staff to calculate the indirect and induced job creation for the projects we sponsor.
- Direct Job Creation Model takes into account the number of direct, W-2 employees the job creating entity hires, along with the total salaries and projected revenues to determine the number of indirect and induced jobs that will be created.
- Expenditures Job Creation Model This model uses the total amount of expenditures going into the project, less soft costs* as the primary input metrics. Based off of those expenditures the number of indirect and induced jobs is determined. No direct jobs are counted, unless they are construction jobs lasting longer than two years.
*Soft costs include architectural, engineering, financing, and legal fees, and other pre- and post-construction expenses that do not involve labor or materials. Sometimes they are described as General and Administrative costs.