In case you’ve missed the hours upon hours of new coverage, immigration reform is shaping up to be one of the most polarizing topics in the 2016 presidential race. The rhetoric these past few months has been contentious to say the least, including calls to escalate border patrols, apprehend and deport illegal immigrants, build walls along our borders and place a moratorium on visas.
Needless to say, the topic has elicited strong emotions on both sides of the aisle. Rather than jump into the political fray, I’d instead like to look at the hard data for answers as to how immigration has impacted entrepreneurialism in the U.S.
Just The Facts
You might wonder what a border wall has to do with the amount of startup businesses in a community, or how a moratorium on visas impacts innovation. But I submit to you that the impact of immigrants—and the policies that affect them—on U.S. entrepreneurship is actually quite meaningful.
According to the Partnership for a New American Economy, immigrants started 28 percent of all new U.S. businesses in 2011, despite accounting for just 12.9 percent of the U.S. population. Moreover, more than 40 percent of the Fortune 500 in 2010 had been founded by an immigrant or the child of an immigrant.
According to a 2012 Kaufman study, immigrants were nearly twice as likely as native-born residents to start a business each month. In fact, many of those all-American brands that define our image—brands such as Kraft, U.S. Steel, Proctor & Gamble, Google and Intel—were all founded by immigrants.
That’s Wall Street. But what about Main Street, where you and I live, work and play? Turns out the entrepreneurial impact of immigrants is quite significant here too—while they comprise 18 percent of businesses overall, they make up 28 percent of “main street” businesses (retail, neighborhood services, accommodation and food services etc.). These are precisely the types of businesses that give a town or city its own unique character. They are also a huge boost to local economic growth.
For those worried that immigrants are taking away good-paying jobs from native-born Americans—the impact has likely been overstated. Take for example a study by Halifax Partnership, which found that immigrants in their community supplemented the labor pool as the domestic population aged out of the workforce without any negative impact on local unemployment rates.
The data speak clearly enough such that in some communities the positive impact of immigrants on entrepreneurship and local economic development is getting more attention than walls and deportations. Philadelphia, for example, has set up a hub to attract and assist immigrant entrepreneurs and a similar effort exists in St. Louis as well. Elsewhere, cities like Chicago, Nashville, and Dayton are looking to stem population decline and stimulate economic growth by actively attracting immigrants and encouraging them to start and grow businesses.
In his book “The Next 100 Years,” Futurist George Friedman predicts that decades of low birthrates in developed countries will result in western nations competing for immigrants towards the end of the first half of the 21st century. It’s worth considering that if even a small part of his prediction turns out to be remotely correct, countries like Canada and New Zealand that are currently increasing their immigration rates will have a substantial advantage in the competition for international entrepreneurial talent.
At JumpStart, we do our best to look past the passions and politics of the day and focus on the hard data to draw our conclusions. And when it comes to economic development, sparking innovation, and creating a lasting culture of entrepreneurship, the data speaks very clearly.
Not only has immigration played a vital role in our historic economic growth, but our ability to continue leading the world in entrepreneurship and innovation will likely depend heavily on our ability to augment our perspectives and our talent pool with the next generation of ambitious immigrants.