Immigrant-Owned Small Businesses Contribute More to Economy Than You’d Think

Written by on June 14, 2012 in Business, Economics, Entrepreneurship, Integration with 1 Comment

In the never-ending debate over the impact that immigration has on the U.S. economy, the role of immigrant small businesses usually goes unnoticed. While mention is sometimes made of the fact that two in five Fortune 500 companies were founded by immigrants, the little businesses—the majority that employ under 100 people—are often forgotten. In large part, this is due to the absence of basic data on the subject. However, a new report from the Fiscal Policy Institute (FPI) finally quantifies the value of immigrant small businesses to the U.S. economy.

Using data from the Survey of Business Owners and the American Community Survey, the report compiles a treasure trove of entrepreneurial information that highlights the enormous role which immigrants play as small business owners:

  • Immigrant-owned small businesses employed 4.7 million people and had $776 billion in receipts in 2007, the last year for which data is available.
  • 18% of all small business owners in the United States are immigrants; higher than the immigrant share of the population (13%) or labor force (16%).
  • The small businesses most commonly owned by immigrants are restaurants, physician’s offices, real estate firms, grocery stores, and truck transportation services.
  • Immigrants comprise 65% of taxi service owners, 54% of dry cleaning and laundry service owners, 53% of gas station owners, and 49% of grocery store owners.
  • Between 1990 and 2010, immigrants accounted for 30% of the total increase in the number of small business owners in the United States.
  • Immigrants from Mexico account for 12% of immigrant small business owners, followed by immigrants from India, Korea, Cuba, China, and Vietnam.
  • Immigrants from the Middle East, Asia, and Southern Europe have the highest rates of small business ownership.
  • Immigrants who have been in the United States for more than 10 years are more than twice as likely to be small business owners as immigrants who have been in the country for 10 years or less.
  • 29% of immigrant small business owner are women. In comparison, 28% of U.S.-born small business owners are women.
  • Among the 25 largest metropolitan areas, immigrants comprise the largest share of small business owners in Miami (45%), followed by Los Angeles (44%), New York (36%), and San Francisco (35%).
  • Among the 50 states, immigrants comprise the largest share of small business owners in California (33%), followed by New York (29%), New Jersey (28%), Florida (26%), and Hawaii (23%).

Taken in sum, this data illustrates that immigrant entrepreneurs are an integral part of the U.S. economy.

As the FPI report puts it, “immigrant small business owners contribute to economic growth, to employment, and to producing the goods and services that support our standard of living.” This is a basic economic fact with broad political implications. The report observes that “understanding who the one million immigrant small business owners are…can only help as the country struggles to achieve a better set of immigration policies.” And a better set of policies would recognize that immigration fuels American entrepreneurship.

Photo by Tyler Olson.

 

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  1. notbuyinit says:

    What is the definition of “immigrant” here? Illegal, Legal, when did they arrive…etc….technically if you are not Native American – you are an immigrant. Just curious. Seems a key detail when factoring the numbers. Without this peice of info this is uttterly useless data. Id have to conclude that by this estimate over 80% of economy is owned by Native Americans??? thatd be great but pretty sure that isnt true….like i said…useless data

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