Maybe We Should Build A Wall To Keep Immigrants In

It wouldn't be much of a stretch to rewrite the plaque at the base of the Statue of Liberty to read: "Give me your tired, your poor, your huddled masses yearning to . . . become entrepreneurs."

Hamdi Ulukaya, a billionaire and founder, president and chief executive officer of Chobani Inc.. Photographer: Chris Ratcliffe/BloombergBLOOMBERG NEWS

In the midst of overheated debates about immigration and an ugly upsurge in nativism, it's worth reminding ourselves that entrepreneurial immigrants make an outsized contribution to new business creation. And new and young companies are the primary source of job creation in the American economy.

The contributions of entrepreneurial immigrants have been well documented:

Immigrants are twice as likely to become entrepreneurs as native-born Americans.

As of 2016, first generation immigrant entrepreneurs represented 30% of all new entrepreneurs in 2016, up substantially from 13% in 1996.

Forty-three percent of founders of the 2017 Fortune 500 are immigrants or the children of immigrants.

Immigrants constitute 15% of the general U.S. workforce, but they account for around a quarter of U.S. entrepreneurs (defined as the top three initial earners in a new business) and account for a about a quarter of U.S. inventors.

Immigrants account for more than 90% of the growth in self-employment since 2000, with particularly significant contributions since the Great Recession.

Firms founded by immigrants close at a faster rate than firms founded by natives, but those that survive grow at a faster rate in terms of employment, payroll, and establishments, a phenomenon called "up or out," which is how young firms create more jobs.

Half of America's startup companies valued at $1 billion or more (as of January 1, 2016) were started by immigrants.

Despite those contributions, our inadequate HB-1 visa system coupled with anti-immigration rhetoric and attempts to further limit legal immigration are driving many foreign students to return home when they've completed their education, driven away many other skilled immigrants who have tired of the interminable and uncertain wait for a green card and discouraged talented people abroad to seek more hospitable countries like Canada.

But the real flashpoint in the immigration debate has been around Latin American immigrants, fueled by baseless claims of an "invasion" on our southern border. (From the end of the Great Recession, more Mexican immigrants returned to Mexico from the U.S. than migrated here, according to a 2015 Pew Research Center study.) Meanwhile, Hispanics have made significant contributions to the entrepreneurial economy:

The five areas with the highest startup activity in the 2017 Kauffman Startup Activity Index were, in order, the metropolitan areas centered on the cities of Miami, Austin, Los Angeles, San Diego, and Las Vegas—all cities with heavy concentrations of Latinos.

Among minority ethnic and racial groups, Latinos have the highest rate of new entrepreneurs.

The Latino share of all new entrepreneurs rose from 10% in 1996 to 24% in 2016.

Far from the hothouse of Silicon Valley and its venture capital-backed startups, the vast majority of Latino entrepreneurs, like 99% of all entrepreneurs, are what I call bedrock entrepreneurs. Typically, they start modest businesses (sometimes with themselves as the only employee), largely fund those businesses out of their own pockets and the pockets of their family and friends. They start small; they try to minimize losses and avoid failure, and methodically grow their businesses over the long haul.

Although there are no definitive studies, many observers ascribe higher rates of entrepreneurship among immigrants to personal characteristics like a willingness to take risks (as they did when they moved to an unfamiliar country), a strong sense of identity and intrinsic motivation. Many Latino immigrants, facing discrimination and lacking good English skills, have little choice but to be entrepreneurial. As a result, they are likely to perceive opportunities that other people miss, possess an ability to persist through the myriad difficulties of entrepreneurship and draw on deep reserves of motivation to succeed.

In addition, as politicians debate the ultimate fate of people who were brought to the U.S. illegally as children, they might want to remember this: Immigrants that came to the U.S. as children are more likely to start larger firms than immigrants who arrived as adults and have lower closure rates. Moreover, a 2017 survey conducted by the Center for American Progress found that among the DREAMers under Deferred Action for Childhood Arrivals (DACA) some 5% of respondents started their own business after receiving DACA. Among respondents 25 years and older, that figure rises to 8%. Meanwhile, among the American public as a whole the rate of starting a business is only about 3.1%. According to the U.S. Hispanic Chamber of Commerce, which represents the interests of more than 4.37 million Hispanic-owned businesses, if both the DREAMers and recipients of Temporary Protected Status (TPS) were forced to leave the United States, the U.S. economy would experience a $597 billion reduction in gross domestic product (GDP) over the next decade.

With entrepreneurship in long-term decline, we need all the entrepreneurs we can get. Thirtyyears ago, about 800,000 new companies in the US were being formed per year, and in some years there have been as many as 13 million people aspiring to start their own businesses. Today only about 600,000 businesses are being formed per year and the number of aspiring entrepreneurs has dropped to about 10 million. Immigrants, with their strong propensity for new business creation, can help reverse that decline, create jobs, help lift our economy and contribute to the general well-being of the country—but not if we drive them away.

If you enjoyed this article, I encourage you to check out my latest book: Building On Bedrock.