Updated Mar 28, 2024 - World

Immigrants and Latinos are most entrepreneurial in U.S., study finds

Data: Fairlie, Robert., 2024, "Indicators of Entrepreneurial Activity: 2023"; Chart: Axios Visuals
Data: Fairlie, Robert., 2024, "Indicators of Entrepreneurial Activity: 2023"; Chart: Axios Visuals

Immigrants started new businesses last year at more than double the rate of U.S.-born citizens, according to a recent analysis.

Why it matters: Entrepreneurship can lead to financial success for immigrants, especially those who lack legal status to work. They in turn help fuel the nation's economic growth.

Zoom in: According to the new analysis of federal labor statistics and census data by Robert Fairlie, an economist and professor at UCLA, immigrants had the highest rate of new business creation among U.S. adults. The Wall Street Journal first reported on the study.

  • About 670 out of 100,000 immigrants — or 0.67% of immigrants — launched a new business each month in 2023. The overall average for the adult population was 0.35%. The immigrant data isn't broken down by race or ethnicity.
  • Latinos also had staggeringly higher rates of new business ownership than any other racial or ethnic group.
  • That number was 0.6% for Latinos, or 600 Latinos out of 100,000; 0.34% for Black Americans; 0.31% for Asian Americans; and 0.28% for white Americans.

What they're saying: Many immigrants launch businesses out of necessity, but the entrepreneurial spirit is also embedded in who they are, says Gustavo Suarez, the founder and CEO of Trez, the first payroll platform focused on U.S. Latino businesses.

  • When immigrants come to the U.S., they already have "some type of mindset of wanting to improve their lives, of wanting something better, of wanting to create impact," Suarez says.
  • That mentality aligns with the definition of an entrepreneur, he adds.

Between the lines: Latinos and other communities of color have long struggled to access capital at the same rates their white counterparts do.

  • But the number of federally-backed loans to Latino-owned small businesses hit a record $3 billion in 2023, per the U.S. Small Business Administration, which says that number doubled in just two years.
  • Latino-owned businesses of all sizes contribute $800 billion to the U.S. economy each year, according to the latest Stanford Latino Entrepreneurship report released Wednesday.
  • The median growth rate for Latino businesses was 25% from 2019 to 2022, per the 2023 Stanford report. It was 9% for white non-Hispanic owned businesses.

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