Study: Immigrant Entrepreneurship Soaring in U.S.

As America’s economic trend line bends slowly upward, pundits and politicians continue to debate whether this economic policy or that change in the tax code might spur the growth we need to accelerate our progress. This is to be expected in an election year. As the two parties introduce their competing visions for the future, we ought not to lose sight of some basic facts: small business and entrepreneurship remain the engines of job growth and economic recovery. This is not controversial, but the source of that growth may be surprising to some.

According to a recent study from the Partnership for a New American Economy (PNAE), immigrant entrepreneurs are fueling small business growth to an extent that far outstrips their share of the U.S. population. [See Open for Business: How Immigrants are Driving Small Business Creation in the United States, Partnership for a New American Economy, August 2012.]  Among the report’s key findings:

• Immigrants account for just under 13 percent of the U.S. population, yet they established 28 percent of all new U.S. businesses in 2011.

• Immigrants start businesses at more than twice the rate of native-born Americans. In 2011, they created 550 new businesses per month, per 100,000 immigrants, compared to the 270 new businesses per month, per 100,000 native-born.

• Immigrant entrepreneurship is on the rise in the U.S., while entrepreneurship among native-born Americans is declining. Between 1996 and 2011, the business-formation rate increased by more than 50 percent for immigrants, but dropped 10 percent for the native-born, hitting a 30-year low.

• Immigrants tend to start businesses in high-growth economic sectors like retail trade, transportation, health care and social assistance, accommodation, recreation, and entertainment, where in toto, they generate more than 20 percent of all income.

• Immigrant-owned firms are involved in exports to a far greater extent than companies owned by native-born Americans.

Taken together, this is a staggering impact on the U.S. economy, all due to ambitious and hardworking immigrant entrepreneurs. PNAE reports that, “immigrant-owned firms now generate more than $775 billion in revenue, $125 billion in payroll, and $100 billion in income, employing one out of every 10 workers along the way.”

Perhaps what’s most surprising is that this growth is not just driven by immigrants with advanced degrees; a substantial share of these immigrant entrepreneurs have less than a high school education (37.6 percent), and just over a quarter of them (25.4 percent) got as far as a high school diploma. Another 14.7 percent have some college under their belts, and fewer than a quarter (22.3 percent) are college graduates.

In other words, lack of education doesn’t stop these highly motivated immigrants from starting new businesses – and that may be the greatest lesson of all. During this political season, perhaps the real question should be: what can we do to reward this kind of initiative and spur more Americans – native-born and immigrant alike – to create their own businesses? It’s something worth considering.

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