What Do These Terms Mean? Direct, Indirect, and Induced


Joseph Whalen

There are two realms that utilize some identical terms but the meanings are not the same for both. Of course, I am talking about labels
for jobs! The two realms are: EB-5 and Economics. The terms under review are: Direct, Indirect, and Induced jobs. The terminology, as “formal labels” came
from Economics, so I will start there.

A “Direct” job is right there on-site. An “Indirect” job is at a “supplier” to the “on-site” business(es). An “Induced” job is at a business that benefits
from the increased expenditures of employees of both the “Direct” employer and the “Indirect” employers. These are simplistic definitions drawn from

Within EB-5 law, there are two types of jobs. There are: “Direct” employees and “Indirect” employees. An “EB-5 Direct employee” has a direct
employer-employee relationship with the EB-5 alien investor/entrepreneur. An “EB-5 Indirect employee” does not have that relationship. EB-5 Indirect
employees ONLY exist within the Regional Center context, but an EB-5 Direct employee exists within both the Regional Center context and
the stand-alone entrepreneur context.

These differences have confused many people within and without government. Because an “EB-5 Direct employee” CAN exist in either context,
when there is some doubt or confusion about whether a true “EB-5 Direct employee” is being referenced USCIS had been erring (heavily) on the side of
caution and automatically taking the stricter interpretation. In other words, they were assuming that the reference was to a TRUE EB-5
Direct employee. Most such assumptions were incorrect from the start and through a deeper examination of the Regional Center Proposal (and later the I-924
Application) supporting documentation could have been avoided, in my opinion. Such assumptions are a systemic problem at USCIS.

Much confusion should have been laid to rest years ago. The problem was the reluctance of USCIS HQ to actually inform the EB-5 stakeholders and USCIS
adjudicators in a blunt manner as I am doing here and now. Do not mix apples and oranges, kids! In addition, the Economists producing
Economic Analyses (EAs) for their clients applying for Regional Center Designation (Licensure) did not know the EB-5 definitions and thus confused some
USCIS adjudicators unintentionally. The conflicts that ensued raged for years as each “camp” within USCIS (those that “got it” and those that “did not”)
only caused delays and often lead to foolish conclusions (the “did nots” having won). The AAO [1] was not immune to the

few USCIS adjudicators are Economists or have a grasp of the subject matter so the situation is not a surprise. Things are getting better. USCIS has hired
Economists within the EB-5 Program and that is good thing – to a point. This is because the Economists are not necessarily coming on board with a “legal
mind set”. Since most EB-5 self-petitioners utilize the Regional Center route, this discussion will concentrate on that context.

These hyper-technical matters should be hashed out and settled during the I-924[2] Proceedings. The problem until just recently was they were not! USCIS has been in an “experimental mode” for a few years and thankfully, it looks like the experiment is
coming to a close. (Goodbye, Frankenstein!)

To backtrack a little bit, the Economic Analysis (EA) mentioned above will be based upon a comprehensive, detailed and, credible Business Plan (BP). There
are two varieties of Plans used when applying for Regional Center Designation or Amendment. They are: a “general” plan or a Matter of Ho-Compliant
plan. It depends on whether any Specific Projects are already at the heart of an application or if the applicant is just seeking Regional Center
Designation for later development. Either is legal. Each has advantages and drawbacks, so it’s a coin toss, in my opinion, but I would rather go with a
“general” plan just to show the Applicant’s “Knowledge, Skills, and Abilities” (KSAs). Should this “entity” be allowed to be a Regional Center or
are they incompetent? Can they write a decent BP and EA based upon that BP? Have they drawn in the required mental-muscles to comply with not just EB-5,
but also the Securities, OFAC, IRS, NEPA, NHPA [3], and “other” regulatory
aspects of investing and development? What “kinds of commercial enterprises” are they using for their “hypothetical” projects and do they have a grasp of such type of business? I would rather see an “entity” apply for a broad scope and demonstrate overall competence
first so that they would likely be a lasting addition to the Regional Economic Infrastructure than a “flash in the pan”!

That’s my two-cents, for now.

USCIS’ Administrative Appeals Office, the highest Homeland Security appellate body.

Regional Center Application, Amendment, and/or Dummy I-526.

Look them up!

About The Author

Joseph Whalen is not an attorney. He is a former government employee who is familiar with the INA. His education is in Anthroplogy with a concentration in Archaeology and has both a BA (from SUNY Buffalo) and an MA (from San Francisco State University) in Anthroplogogy. He previously worked as an Archaeologist for the U.S. Forest Service before becoming an Adjudicator with INS which became USCIS.

The opinions expressed in this article are those of the author(s) alone and should not be imputed to ILW.COM.