Thursday, March 5, 2009

Immigrant Entrepreneurs - The Key to U.S. Economic Recovery

According to homeland house, “…small business is the bedrock of American commerce and industry…small firms generate 60 to 80 percent of the new jobs. Small firms employ about half of all private sector employees, shell out more than 45 percent of total U.S. private payroll, create more than half of non-farm private gross domestic product (GDP), and provide jobs for 40 percent of our high tech employees.

Did you know that immigrants represent a significant proportion of business owners and therefore will play a key role in the U.S. economic recovery? It’s true.

And don’t think that immigrants only serve as cheap labor. US News & World Report featured a report by Global Entrepreneurship Monitor (report) by researchers from Babson and Baruch colleges which “debunks the myth that poor immigrants do not contribute much to economic growth…In fact, a not-insubstantial number become entrepreneurs. For example, according to the report, about a quarter of early-stage businesses started by Mexican-Americans are started by people of lower household income (under $40,000).”

Partly because of language barriers, partly due to culture, and partly out of desperation; immigrants tend to be entrepreneurs, and set up shops and small businesses on their own. For instance, a survey of 28,000 companies found that immigrants were key founders in more than a quarter of all the engineering and technology companies set up in the U.S. between 1995 and 2005. The researchers say the "startling statistics" they have put together show that the U.S. economy depends upon the high rates of entrepreneurship and education among immigrants to "maintain its global edge."

Statistics from the Small Business Administration Supports This Claim:

* According to Census 2000, immigrants constitute 12.2 percent of the total U.S. work force, and 12.5 percent of the total population of U.S. business owners. The total business income generated by immigrant business owners is $67 billion, representing11.6 percent of all business income in the United States.

* Immigrants are nearly 30 percent more likely to start a business than are non immigrants, and they represent 16.7 percent of all new business owners in the United States.

* Immigrant business owners make significant contributions to business income, generating $67 billion of the $577 billion in U.S. business income, as estimated from 2000 U.S. Census data.

* Business owners from Mexico constitute the largest share of immigrant business owners.”

National Statistics

* A 2006 Study by Duke University and the University of California at Berkeley indicates that 25% of engineering and science companies were founded with at least one immigrant. Nationwide, these immigrant-founded companies produced $52 billion in sales and employed 450,000 workers in 2005.

* A 2006 study by Stuart Anderson, National Foundation for American Policy and Michaela Platzer, Content First, found that immigrant-founded venture-backed companies are concentrated in cutting edge sectors: high-technology manufacturing, information technology and life sciences.

Massachusetts — a case study

* A 2006-2007 study commissioned by The Immigrant Learning Center, Inc. (5) found that immigrant entrepreneurs contributed to the Massachusetts Biotechnology industry in the following ways: 25.7 % of bio tech companies in New England have at least one foreign-born founder.

* Bio tech companies in New England with at least one immigrant founder produced over $7.6 billion in sales and employed over 4,000 workers in 2006. 12 % of founders of MA bio tech firms are women.

* The preliminary evidence suggests that immigrants have been key contributors to the creation of new businesses and intellectual capital in the very successful biotechnology industry in Massachusetts.

From the nail salon, to the beauty supply store, to the convenience store, to high-tech. industries, immigrants have led the entrepreneurial trend in much of the country. The businesses they start will undoubtedly generate much needed jobs which will in turn help stimulate the U.S. economy. So, while the Republicans are talking about “sealing the boarders,” it might be wise to think about immigration reform in a different light.


T L said...

I don't want to sound prejudiced, but I often wonder if immigrants are given preferential treatment when it comes to financing their businesses. It would be interested to find out what proportion of new immigrant businesses are financed by US banks and how long these immigrant entrepreneurs have resided in this country when they apply for loans, etc.

Food for thought.

Anji said...

I’m an immigrant entrepreneur too ! Perhaps immigrants also have a different approach. It’s amazing what you can learn and offer just by exchanging cultures.

I think that TL raises and interesting point. I’m in France and I had help to start up my business, but it wasn’t financial, it was in the form of training in order to cope with all the red tape. I also received some sessions because I was a woman.

Unfortunately people do tend to think of immigrants as lazy spongers. I say judge every person on their own merits

Iam Robert said...


You are right, there are progarms out there both at the state and federal level to help. However, there are also programs for native born minorities--we just aren't taking full advantage of them. Now the reasons for this are many, but I think the chief one is awareness--native born blacks just don't know what's available to them. And that will be the subject of a post soon.

Iam Robert said...


Show 'nuff. People should be judged individually.

And by the way, American is a nation of immigrants--that's what makes us strong and interesting.

My main question is how do we let native folks know what's available to them? I conducted a brief market survey and only found state programs (many of which were backed by federal funding).