Immigration has long been recognized as an important contributor to entrepreneurship worldwide. With a strong drive to start things anew, immigrants have an innate entrepreneurial spirit. In creating economic success for themselves immigrant entrepreneurs energetically pursue businesses which generate employment, benefit the communities wherein they thrive and pay billions of dollars collectively in taxes. Nowhere has this been better chronicled than in the land of opportunity. Here is a quick look into the magnitude of positive impact that immigrant entrepreneurs have had in the US.
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Business starters
Forbes reports that immigrants start a quarter of all businesses in the US. In the states of California, New York and New Jersey immigrants start and run as many as 40% of all new businesses. However the quality, profitability and propensity for job creation of immigrant-owned businesses vary widely. Many immigrant businesses only hire a small number of employees, usually also immigrants, and from a similar racial-ethnic identity as the business owner. Harvard researchers recently concluded that immigrant-run businesses generate lower-paying jobs on average.
Traits of owners
A significant percentage of businesses started by immigrants in the US are family-owned and run. This makes for an interesting set of characteristics. With multiple generations involved in the business there is a wider range of age groups at the owners’ table. Many immigrant business owners also still have families from the country they come from and they continue to send financial support to their families there through money transfer services such as Ria Money Transfer. There is a higher percentage of women business owners among immigrant entrepreneurs than the US average. Statistically immigrant business starters in the US are younger and are less likely to have college degrees than native born entrepreneurs. Immigrant-owned businesses seem to benefit from these diversities in age, gender and experience, because they show a definite propensity to grow faster.
Nature of business
A large percentage of immigrant-owned businesses are engaged in imports, exports or some form of international trade. Most often these international transactions are conducted with the regions from where the founders originated. Other businesses commonly owned by immigrants are restaurants, real-estate agencies, transportation services, grocery stores, small clinics and the like. Research also showed that although immigrant-run businesses had less of a tendency for large scale expansion, their per capita turnover was comparable to the average in their respective industries. One study found that 51 percent of all US startup companies that are worth upwards of $1 billion today were started by immigrants.
By the numbers
According to a 2019 report published by New American Economy (NAE) more than 45 percent of the Fortune 500 companies have been founded by at least one immigrant or the offspring of an immigrant. In 2017 immigrants in the US earned $1.5 trillion in incomes and paid $405 billion in taxes. Over three million immigrants owned and managed their businesses. They collectively created more than eight million jobs. The percentage of immigrant entrepreneurs in the economy continues to be on the rise. The share of immigrant workers in the labor force is also increasing. The already sizable role of immigrants in the US economy expands further each year.
Observations
The propensity for entrepreneurship, compared to the general population, is markedly higher among immigrants and even higher among refugees. The economic value of entrepreneurship in terms of employment and wealth creation is widely acknowledged. The volume of immigrant entrepreneurship as well as its positive impact is disproportionately higher in some states such as California, New York, New Jersey and Hawaii. What this signifies is that much of the US still has much to gain from the positive economic impacts of immigration.
Two important factors which impede several states from profiting from immigrant entrepreneurship are unconstructive anti-immigrant rhetoric and the absence of supportive policies. Sizeable economic gains can come from adopting a constructive approach to immigration. Consider the example of New York. This state has 35 firms which recently entered the list of American Fortune 500 companies. These businesses generate revenue amounting to 56.3 percent of the state’s total GDP. They also provide employment to millions of the state’s residents. More than 83,000 businesses in New York City alone are owned by foreign-born entrepreneurs. Immigrant entrepreneurship is not just profitable, it is indispensable.