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EB-5: Direct, Indirect, and Induced Job Creation at Regional Centers

If you are interested in obtaining your permanent resident status “green card” by investing in an EB-5 regional center, your investment will need to create at least 10 new jobs within a two year period. There are a number of different kinds of jobs that may qualify and be credited toward the 10 job requirement by the U.S. Citizenship and Immigration Service (USCIS). These different types of jobs are often described as “direct,” “indirect,” and “induced” jobs. This article will explore these different terms and what kinds of jobs the USCIS will require to grant you your green card under the EB-5 foreign investor program. If you have questions about the EB-5 visa category, please contact our experienced immigration attorneys or call The Law Firm of Shihab & Associates, Co., LPA at the nearest office close to you to consult with an attorney.

What Kinds of Jobs Created are Credited under the EB-5 Program?

The USCIS recognizes two types of jobs that may be credited to you as newly created jobs under the EB-5 program: “direct” and “indirect” jobs. Additionally, what economists refer to as “induced” jobs may also be included under the USCIS label of “indirect” jobs.

What are “Direct” Jobs?

The USCIS defines “direct” jobs as ones held by employees who work directly for you or the regional center and are on the payroll. These are employees who are directly hired by your new commercial enterprise or the regional center. There will usually be evidence of a direct employer-employee relationship, including payroll records, tax documents, and I-9 forms. The USCIS will require an extensive list of documentary evidence for “direct” employees.

This definition is more limited than how economists would use the term “direct” jobs. When economists use the term, they are often referring to the “direct employment impacts” that an investment may create for the economy, which could also include “indirect” jobs. This can create confusion, because the USCIS may request evidence or documents for “indirect” jobs as if they were “direct” jobs. “Direct” workers according to economists may not necessarily be “employees,” but may be workers who are directly located onsite. However, USCIS defines “direct” jobs narrowly, as jobs in which there is a direct employer-employee relationship.

What are “Indirect” Jobs?

The USCIS defines “indirect” jobs as those created by your investment outside of your new commercial enterprise. This is a much broader category of persons who may work throughout the economy. These types of jobs could include onsite workers such as independent contractors, offsite workers such as suppliers or consultants, or “induced” jobs that are jobs created in the economy based on the increased expenditures of your commercial enterprise and the regional center. Economists typically label these “induced” jobs separately, however the USCIS combines these types of jobs together under the label of “indirect” jobs. These types of jobs need not be proven directly, but can be estimated by an expert economist using “reasonable methodologies,” which means the use of an input/output (I/O) model.

For regional centers, proving the creation of indirect jobs is very important. When you invest in a regional center, typically there will be almost no employees needed for your new commercial enterprise, and all of the estimated job creation will be in the form of “indirect” jobs under the EB-5 regulatory definition.

How are “Indirect” Jobs Calculated?

“Indirect” jobs are calculated through the use of an economic input/output (I/O) model. This is typically done at the business plan phase by an expert economist. This economic modeling will serve as the basis for your initial I-526 petition to be conditionally approved for permanent resident status.

An expert economist will build this economic model with “input,” which is data you provide for the economic modeling forecast. The projected creation of new jobs is the “output” for the purpose of meeting the EB-5 visa requirement. The “input” data is based on reasonable assumptions made about your investment, business plan, and the progress being made to execute it. This generally consists of projected revenues, expenditures, evidence of direct job creation that will likely lead to indirect (or induced) jobs, and all other relevant information.

When you file your I-829 petition after two years to remove the conditions on your permanent resident status, you will need to demonstrate to the USCIS that the I/O economic model forecasted an accurate prediction of job creation. This means that you must show that what the economic model predicted was accurate enough to be likely to have created at least 10 indirect jobs. This can be established through a preponderance of the evidence, using evidence of actual revenues, expenditures, and onsite jobs such as general ledgers, invoices, receipts, bank statements, and tax returns.

The “input” data for a multi-investor regional project will be used by the USCIS to tally the total job creation credit assigned to the entire project. This total project job creation credit will then be divided by the number of investors, and must be equal to or greater than 10 new jobs created per investor. At the time you apply for your I-829, for your petition to be approved, the present value of this “input” data for the regional center must be sufficient to support a finding of at least 10 new jobs per investor.

One important aspect of economic modeling is that it does not generally distinguish between part-time and full-time jobs. USCIS requires the creation of full-time jobs; however, they credit all jobs forecasted with I/O economic models as “full-time.” Therefore, the full-time job requirement is somewhat relaxed, and is one of the beneficial factors for immigrants to invest through an EB-5 regional center.

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If you seek to immigrate to the United States as an immigrant investor, contact the experienced attorneys at The Law Firm of Shihab & Associates. Our lawyers have more than 50 years of combined experience in a variety of complex legal matters.

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