Aug 17, 2019 - Politics & Policy

Immigrant-owned businesses contribute billions to U.S. economy

A gold Statue of Liberty shinning

Illustration: Sarah Grillo/Axios

Immigrants in the U.S. are twice as likely to start businesses as their native counterparts for a myriad of reasons, generating at least $1 trillion in annual sales revenue, per the New American Economy (NAE).

Driving the news: President Trump recently issued an immigration rule that targets legal immigrants "who are likely to use public benefit programs" — positioning them as a burden on taxpayers. However, studies show that immigrant-owned small businesses in the U.S. generate billions of dollars in tax revenue each year.

The big picture: No matter where they relocate, immigrants frequently have more capital to start new enterprises than native-born citizens due to personal savings and family loans, the National Bureau of Economic Research has found.

Why immigrants are more likely to start small businesses:

  • Some economic researchers suggest that cross-cultural experience helps "internationally mobile individuals to develop skills and knowledge that augment their ability to identify entrepreneurial opportunities."
  • Other studies theorize that discrimination in the labor market pushes immigrants to start their own ventures, per the Harvard Business Review.
"Outsiders face a tough struggle fitting into a new culture. They must figure out how to deal with, and overcome, frustration, loneliness and a steep learning curve.
And that’s why immigrants make such great entrepreneurs—they’re once again outsiders facing many of the same kinds of obstacles. Been there, done that."
— Adrian Furnham, Wall Street Journal

By the numbers:

  • 1 out of every 5 entrepreneurs in the U.S. is an immigrant. Approximately 3.2 million immigrants run their own businesses, says NAE, a group that supports immigration.
  • These businesses generate $1.3 trillion in total sales and $405.5 billion in tax revenue annually.
  • Almost 8 million Americans are employed at immigrant-run businesses, according to NAE.
  • Nearly half of all immigrant-owned startups are in accommodation and food service, retail trade, professional and technical services, says the National Bureau of Economic Research.
  • In 2012, immigrants started 40% of new businesses in California, New Jersey and New York. These states have some of the largest immigrant populations in the country, the National Bureau of Economic Research found.

Plus, Latino immigrants are more likely to start small businesses than American-born Latinos, according to the U.S. Small Business Administration.

Go deeper... Study: Immigrants and their kids founded 45% of U.S. Fortune 500 companies

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