Democrats Want To Shutdown The Government To Protect DREAMers — Here’s An Economic Case For Doing So

December 6, 2017

3 minutes

While Washington was focused on tax reform (and a number of unfolding scandals) last week, Congress now faces another monumental challenge—pass a spending bill by Friday, or risk a government shutdown. The biggest obstacle to completing a deal is a threat by Democrats to withhold support for any bill that doesn’t establish the legal right of “DREAMers”—the 800,000 immigrants brought here illegally as children—to stay in the United States permanently.

Most of these pleas, rightly in my view, are of a humanitarian nature—how can we expel these children and young adults from the only country they know? They were brought to the United States through no fault of their own, and sending them back to countries they have little to no connection with would be manifestly inhumane. Right? Aren’t they Americans too?

Reasonable people may disagree with that view, so let me make another case for DREAMers to stay—the impact many of these immigrants will have on entrepreneurship, job creation, and economic growth in the coming decades. Let me explain.

Economists are famous for disagreement about a lot of things, but two topics—the centrality of entrepreneurship to economic growth and job creation, and the substantial contribution that immigrants make in founding American businesses—are not among them. This consensus was reached through a sizable research literature—for example, though accounting for less than 14 percent of the population, immigrants found nearly a quarter of new businesses, about one-third of companies backed by venture capital, and half of all high-tech startups in Silicon Valley.

New evidence today from the Center for American Entrepreneurship, a policy and advocacy organization in Washington, adds to that body of work—finding that more than 43 percent of companies in the 2017 Fortune 500 were founded by an immigrant or the child of an immigrant. Among the Top 35, that share is 57 percent. These companies produced $5.3 trillion in global revenue in 2016 and employed 12.1 million people worldwide. They span a range of industries and are headquartered in 68 metropolitan areas across 33 states.

So, what’s that got to do with DREAMers specifically, and with economic growth two or three decades from now?

First, as I just described, immigrants are twice as likely as native-born Americans to start new businesses—a relationship that increases among high-growth, high-value, and high-tech firms. As DREAMers come of prime entrepreneurship age in two to three decades, they will start tens of thousands of American companies. Some of them may land in the Fortune 500.

Second, research has shown that among immigrant entrepreneurs, those who come here as children are among the most successful in terms of business growth and survival. This makes sense, given that many foreign-born entrepreneurs come here to seek opportunity, and, lacking in established networks or formal education or both, must forge their own way. Their children are instilled with these values—embodied with the American Dream from a young age.

Third, current immigration policy explicitly favors the well-educated or those backed by formal investors—a practice that is likely to become even more restrictive. There are good reasons for prioritizing visas in this way, but the issue is much bigger than that. Many foreign-born founders of Fortune 500 companies would not have been allowed into this country under current policy; they were poor, uneducated, and coming to America to escape hardship. The Age of Mass Migration from Europe (1850-1920) produced many of these American entrepreneurs.

Children raised by immigrants in the United States during this era founded some of America’s most iconic companies. Imagine our economic landscape without Ford, Disney, McDonald’s, Boeing, and UPS—all companies founded by second generation Americans in the first half of the 20th century. In the modern era, this group includes Apple, Amazon, Costco, Home Depot, and Netflix, among many others.

Who will be the next generation of foreign born American founders or native born Americans raised by immigrants? And will we prevent them from ever setting foot on American soil?

The economic case for welcoming immigrants couldn’t be clearer—they disproportionately drive entrepreneurship, creating jobs and increasing economic prosperity for all Americans. Congress can take an easy step this week towards sensible immigration policy by ensuring the ability of DREAMers to stay in the United States for good. Doing so is not only the right thing to do, it’s the necessary thing to do.

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