As Congress and President Donald Trump continue to butt heads over a border wall and immigration policy, one of the main issues being overlooked is the contribution refugees and immigrant entrepreneurs have on the U.S. economy. When you pull back the curtain on the issue, the facts are mindblowing.
According to the National Immigration Forum, immigrant-owned businesses employ more than 19 million people and generate $4.8 trillion in revenue. They also play a key role in revitalizing neighborhoods, cities and regions that have seen economic decline.
The bottom line: Immigrants provide rocket fuel for small business on Main Street and for the Silicon Valley start-up universe.
Apart from the supply of skilled labor for the tech industry, and low-cost labor for family farms and retail businesses, immigrants have become key new business creators. A statistical analysis based on American Community Survey and the Survey of Small Business Owners has found that immigrants account for roughly 28 percent of small business owners in the U.S., and they are two times more likely to become entrepreneurs than native-born businessmen.
A demographic analysis reveals they are even more critical to some local economies in the U.S. Immigrants account for more than 40 percent of new businesses in California, New York and New Jersey, according to Wellesley's Sari Pekkala Kerr and Harvard Business School's William Kerr, who recently analyzed U.S. Census Bureau data on firm ownership and the jobs those businesses create.
"This phenomenon is across all ethnicities and education levels," says Dr. Kerr a professor of entrepreneurship who has been tracking the trends for over 10 years. "There are many reasons immigrants start more businesses. Among them: They tend to be more daring and less risk averse, considering they were brave enough to migrate here and tolerate change. Many come to the U.S. specifically to start a business. Others face discrimination in the job market and opt to become business owners."
With all the controversy about America's immigration policy, the topic has jumped to become the No. 1 concern on Main Street, according to the Q1 CNBC/SurveyMonkey Small Business Survey released Monday. The issue matters most to 27 percent of the more than 2,200 small business owners interviewed nationwide. That is a sharp increase from the fourth quarter of 2018 when only 16 percent of small business owners cited it as the issue they worried about most. At that time, jobs and the economy was their top priority.
The survey was conducted by SurveyMonkey from Jan. 28 to Feb. 4. It looked at the views of people across political party affiliation and gender.
Among Republican small business owners, it is a hot-button issue. Forty-two percent cite immigration as the top concern they face, versus 6 percent among Democratic business owners and 19 percent among Independents.
That's not surprising. The sentiment on Main Street may be driven by the skills shortage and curbs that inhibit the formation of start-ups by immigrants in America. This contingent is on the front lines trying to grow their small businesses or jumpstart new innovative ventures, but they are strapped by current immigration policy, small business experts concur.
For example, the quota for temporary H-1B work visas for foreigners with specialty occupations is capped at 85,000 a year, an amount that does not meet U.S. job demand.
"Immigration policy has not evolved to address the key contributions immigrants make to the nation's entrepreneurial ecosystem and to Silicon Valley, says Stuart Anderson," executive director of the National Foundation for American Policy. "The No. 1 problem is there is no visa status for immigrant entrepreneurs. There are now visas for family and employment, such as the HB-1, but none for someone who wants to start a business."
The only exception is the EB5, the so-called millionaire visa that allows a foreigner to be admitted into the country if they are going to invest $1 million in a business that will employ 10 or more workers, or $500,000 in a rural area.
That is a method Dubai-born Sammy Aldeeb has used to attract overseas franchisee investors. He is an immigrant himself who came to the U.S. at 17 years old, thanks to the U.S. immigration lottery program. Twenty years later he now owns 20 franchises throughout the U.S. — i.e. Subway and UrbanBricks — and employs 400 people. "I came here as a student and fell in love with the American dream and never looked back," he said.
As Anderson explains, over the past decade there have been attempts in Congress to pass legislation and create a Start-up Visa, but none have passed. Last month Senators Jerry Moran (R-Kan.), Mark Warner (D-Va.), Roy Blunt (R-Mo.) and Amy Klobuchar (D-Minn.) reintroduced the Startup Act, which would create a visa category for entrepreneurs from other countries who want to launch start-ups in the U.S. The bipartisan legislation was first introduced in 2017. If enacted, it would make 75,000 start-up visas available to international entrepreneurs.
The bill would also establish a visa for 50,000 international students receiving masters or Ph.D. degrees in STEM fields from American universities. Those visa-holders would have the opportunity to obtain a green card and remain in the country after graduating. Finally, the bill would eliminate the per-country cap on employment-based immigrant visas. Currently it has been referred to the Judiciary Committee for review.
Under current immigration law, there's no real avenue for entrepreneurs from other country's to launch start-ups in the U.S. After immigration reform stalled in Congress, President Barack Obama created a workaround called the International Entrepreneur Rule, allowing founders with start-ups that meet certain benchmarks of success to grow their companies in the U.S. for a few years. Trump tried to squash the rule, but that effort was challenged in court. The administration lost and the International Entrepreneur Rule remains intact, but its future is uncertain.
"Many organizations and companies are supporters of the Startup Act including the National Venture Capital Association and the Center for National Entrepreneurship," says Tom Brandt, press officer for Sen. Moran.
"America continues to fall behind in new business development and struggles to retain top talent that could grow our U.S. economy," Moran said in a statement earlier this month. "With a renewed sense of urgency, Congress must prioritize policies that will help recruit and retain highly skilled students and innovators."
Imagine a world without such U.S. innovators as Elon Musk, the wunderkind who emigrated from South Africa to launch Tesla, SpaceX and other disruptive companies; or Sergey Brin, co-founder of Google, who came to America with his family when he was 6 years old.
A new study from the National Foundation for American Policy finds that 55 percent, or 50 of 91 of the country's $1 billion start-up companies, had at least one immigrant founder. These companies are job generators that have created an average of more than 1,200 jobs per company, the vast majority in the U.S.
The collective value of the 50 immigrant-founded companies in the U.S.: a whopping $248 billion.
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