Job Creation Requirements for Investors

Although regional center (RC) investors usually have little to no influence over the administration of job creation, they are required to indirectly create at least 10 full-time jobs which are maintained over a period of two years. However, the JCE is usually responsible for the creation of such jobs and has detailed business plans to ensure they create enough employment for their investors.

In fact, regional center offerings are allowed to use economic impact models to determine how many direct,indirect and induced jobs will be created in the immediate area of the project, based on where and how the investment capital is spent. direct investments must prove 10 direct employees have been immediately hired and maintained by the business, which leaves a lot of uncertainty and risk with the investor. In contrast, RC investments can use economic impact models to determine how many direct, indirect, and induced jobs will be created in the immediate area of the project, based on where and how the investment capital is spent.

What are Direct, Indirect, and Induced Jobs?

• Direct jobs are jobs that are created through either construction or operating activity. These are actual jobs and positions employed by the JCE or by its contractors in the long term construction of the project. While Regional Centers can count other types of jobs, at least 10% of jobs out of 10 jobs per investor required to qualify for EB-5 must be direct jobs.
• Indirect jobs refer to jobs created in adjacent industries as a result of the project’s expenditures. For example, a construction budget includes spending on materials (steel, lumber, etc.) and services (architecture and design, transportation, etc.). This spending, in turn, contributes to job creation in these industries. For example, the more work a transportation or production company gets, the more staff it requires. While these jobs are not directly related to the project, they are indirectly created thanks to the money spent by the project.
• Induced jobs are jobs that are created as a result of the spending of the JCE’s employees on goods and services – such as groceries, healthcare, entertainment, etc. – which are sustained by the circulation of capital in the local economy. In other words, because of the project, there are more people employed in the local economy and those people are using their wages to buy goods from other businesses in the economy, and as a result, those businesses are hiring more workers. This downstream job creation is induced by the development of the project

A classic example of direct, indirect, and induced jobs is in the development of a hotel. The construction and operations of the hotel creates direct jobs (construction workers and hotel employees); indirect jobs (material suppliers, independent contractors), and induced jobs (staff from businesses now opening next door, local restaurants feeding construction staff, gas station attendants pumping gas for hotel guests, etc).

Pre-Investment Jobs

Many RC offerings will have a specific amount of jobs created ahead of time, especially for projects which have already broken ground and therefore employed staff to do so. These jobs may be enough to fulfill every investor’s requirements. If not, be sure to review your offering documents to determine how these pre-investment jobs are allocated between investors. Although each investor has equal shares in the NCE, some NCE’s allocate jobs on a first-come, first-serve basis to those who receive their immigration benefits first, giving late investors the most risk for a petition denial due to insufficient job creation.).