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Entrepreneurship

When it comes to the health of our economy, it is hard to overstate the importance of entrepreneurship. Companies less than five years old create an average of 1.5 million new jobs for Americans each year.† And immigrants play a particularly important role driving this trend—founding businesses at far higher rates than the U.S. population overall. The United States, however, currently lacks a startup visa that would make it easy for foreign-born entrepreneurs with a proven idea and funding to remain here. This results in many young business owners struggling to stay—at a cost to our economy and its workers.

† Jason Wiens and Chris Jackson, “The Importance of Young Firms for Economic Growth,” September 13, 2015. Available online.

Creating American Jobs

Firms owned by new Americans provide millions of jobs for U.S. workers and generate billions of dollars in annual income. Also, with new business formation slowing in the United States overall, immigrant entrepreneurs make an important impact in many parts of the country.

Key Stats
2.9 million: Number of immigrant entrepreneurs, 2014.
5.9 million: Number of people employed at private, immigrant-owned firms, 2007.
$65.5 billion: Business income earned by foreign-born entrepreneurs, 2014.
50 percent: Rate at which the founding of new business by immigrants grew, 1996-2011.
-10 percent: Rate at which the founding of new business by the native-born declined during the same period.

An Outsize Role

Given that the act of picking up and moving to another country is inherently brave and risky, it comes as no surprise that immigrants tend to be more entrepreneurial than the U.S. population as a whole. In 2014, immigrant entrepreneurs made up 20.6 percent of all U.S. entrepreneurs, despite representing just 13.2 percent of the population overall.

Top Ten States Where Immigrants Punched Above Their Weight as Entrepreneurs, 2014
State Immigrant Share of Self-Employed Population Immigrant Share of Total Population
Florida 33.2% 20.0%
Texas 28.9% 16.7%
California 38.4% 27.0%
Maryland 25.9% 14.8%
Nevada 29.9% 19.3%
New Jersey 32.3% 21.7%
New York 32.7% 22.6%
Illinois 22.1% 13.7%
Arizona 22.0% 13.7%
Virginia 20.2% 12.1%

Recession Recovery

Foreign-born entrepreneurs and the jobs they created were instrumental in the recovery from the Great Recession. Between 2007 and 2011, immigrant entrepreneurs founded a large share of new businesses across the country and in several key states.

Key Stats
28 percent: Share of all new small businesses started by immigrants in 2011.
2x: How much more likely the foreign-born were to start a new business in 2011 than the U.S.-born population.
1 in 10: Number of people employed at a privately owned U.S. company who worked at an immigrant-owned firm in 2010.
Share of New Businesses Founded by Immigrants in Select States, 2007-2011
State Share
California 44.6%
New York 42.0%
Florida 36.7%
New Jersey 35.2%
Illinois 32.1%

Key Industries

As important as the frequency with which immigrants start businesses is the diversity of fields in which they start them. Immigrants start more than 25 percent of all businesses in seven of the eight sectors that the U.S. Bureau of Labor Statistics expects to grow the fastest over the next decade. They also play a large role in founding both Main Street businesses1 and high-tech firms.2

Sources:
1 David Dyssegaard Kallick, “Bringing Vitality to Main Street: How Immigrant Small Businesses Help Local Economies Grow,” New York: Fiscal Policy Institute and Americas Society/Council of the Americas, 2015. Available online.
2 Vivek Wadhwa et al., “America’s New Immigrant Entrepreneurs: Part I,” SSRN Scholarly Paper (Rochester, NY: Social Science Research Network, 2007). Available online.

Share of Businesses Started by Immigrant Entrepreneurs in Seven Key Sectors, 2007-2011
Sector Share
Healthcare and Social Assistance 28.7%
Professional Business Services 25.4%
Construction 31.8%
Retail Trade 29.1%
Leisure and Hospitality 23.9%
Educational Services 28.7%
Transportation and Utilities 29.4%
Immigrants Found both Main Street Businesses and High-Tech Firms
Share of Main Street Businesses Owned by Immigrant Entrepreneurs, 2015 28%
  Neighborhood Services 31%
  Accommodation and Food Services 36%
  Retail 24%
Share of High-tech Silicon Valley Firms Founded by Immigrant Entrepreneurs, 2006-2012 43.9%

Immigrant Subgroups

Looking at specific ethnic and national origin groups within the immigrant population, we find that many exhibit entrepreneurship rates higher than the native-born. At right we highlight the particular contributions of Middle Eastern business owners in Detroit, a group frequently credited with helping to spur the city’s recent economic comeback.

Sources:
3 Steve Tobocman, “Guide to Immigrant Economic Development,” Welcoming America, accessed July 5, 2016. Available online.
4 New American Economy, "Reason for Reform: Entrepreneurship," October 2016. Available online.

Key Stats
1 in 5: The share of jobs that left the state of Michigan from 1950 to the early 2000s.3
15,000: Businesses in Detroit owned by Middle Eastern immigrants.4
$36.4 billion: Annual economic impact of MENA immigrant owned firms.
Entrepreneurship Rates for Immigrant Subgroups, 2014
Middle Eastern and North African Immigrants 19.1%
Asian Immigrants 11.1%
Hispanic Immigrants 10.6%
U.S. Workers Overall 9.5%

Fortune 500 Companies

Consistent with past NAE research, a significant number of firms on the most recent Fortune 500 list were founded by immigrants or their children. These companies make enormous contributions to both the U.S. and global economy. They also live on beyond their founders, generating jobs and revenue long after their visionaries retire or move on.

Key Stats
40.2 percent: Share of 2016 Fortune 500 firms with at least one founder who either immigrated to the U.S. or who was the child of immigrants.
18.9 million: Number of people employed by these firms globally.
$4.8 trillion: Revenue generated by those firms, 2014.

Visa Obstacles

Currently, there is no visa for those who want to come to the United States, start a company, and create jobs for U.S. workers. To access a visa, many immigrant entrepreneurs choose to sell a majority stake in their company and then apply for a visa as a high-skilled worker rather than as the owner of the firm. Our broken H-1B visa system, however, means that many entrepreneurs cannot get a visa before the cap is exhausted each year. In 2016, the White House proposed a rule that would make it easier for entrepreneurs to remain in the country, but it is clear a more permanent, legislative fix is needed.5

Sources:
5 Issie Lapowski, “White House Proposes a New Immigration Rule for Entrepreneurs,” WIRED, accessed December 14, 2016. Available online.
6“USCIS Completes the H-1B Cap Random Selection Process for FY 2016,” USCIS, accessed December 14, 2016. Available online.

Key Stats
85,000: Number of people working in private companies allowed to enter the United States on the H-1B visa per year.
233,000: Number of H-1B visa applications submitted in the first seven days of the application window in 2015.6
5: Number of days it took to reach the H-1B cap in 2015.

Low-Skilled Entrepreneurship

Immigrant entrepreneurs are hardly a monolithic group. While much of the attention is focused on high-skilled foreign-born entrepreneurs that drive innovation in Silicon Valley, immigrant entrepreneurs with humbler backgrounds continue to play critical roles in the U.S. economy. Founding retail shops, restaurants, and personal service businesses, these immigrant entrepreneurs help towns and cities across the United States stay vibrant. In sum, the over 2.1 million immigrant entrepreneurs with less than a college degree have a significant economic impact, creating billions of dollars in economic activity and providing jobs to thousands of Americans.

Top Industries Among Immigrant Entrepreneurs with Less than a Bachelor’s Degree, 2015
Sector Number of Entrepreneurs
Construction 444,042
Private households 227,894
Landscaping services 133,274
Services to buildings and dwellings 118,470
Restaurants and other food services 117,773
Total Number (all Industries) 2,104,597
Entrepreneurship Rates of Workers in Various Demographic Groups, 2015
Less-Skilled Immigrants 12.0%
Immigrants with at Least a BA 10.6%
U.S.-Born Population 8.9%
Business Income of Less-Skilled Immigrant Entrepreneurs, 2015
Total Business Income $43 billion
Share of U.S. Total 11%

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