America Needs Immigrant Entrepreneurs

June 28, 2018

5 minutes

“Murderers.” “Rapists.” “Animals.” “Invaders.” What about entrepreneurs?

In his frequent tirades on immigrants, President Donald J. Trump distorts the facts, invents statistics and relies on inflammatory language to describe those who leave their country of origin to seek a better life in the United States. And he completely ignores the positive role immigrants play in the U.S. economy.

What Trump refers to as a “flood” of immigrants pouring across the U.S. southern border with Mexico has slowed to a trickle in the last two decades. Rather than “invade” and “infest” our nation, immigrants offer an antidote to what ails us.

Designating immigrants as “murderers” and “rapists” flies in the face of data that show that undocumented immigrants are much less likely to commit crimes or be incarcerated than their native-born counterparts. And legal immigrants are even less likely offenders than their illegal counterparts.

Before you insist that Trump is protesting illegal immigration, consider that his administration has tried to clamp down on all forms of legal immigration, starting in week one with a travel ban targeting seven Muslim-majority countries and moving on to the issuance of fewer visas, limits on the number of refugees and asylum-seekers, an end to DACA, or the Deferred Action for Childhood Arrivals program, and even an effort to deny immigrant entrepreneurs the opportunity to establish a business in the U.S.

It is on this last category that I want to focus.

It’s no secret — except, perhaps, to the Trump administration — that immigrants tend to be more entrepreneurial than native-born Americans. Which makes perfect sense. Immigrants have to work harder because of an initial handicap, so to speak. They are different: they are “the other.” In order to succeed, they have to overcome the stigma associated with the color of their skin, perhaps, or their native customs — and excel at what they do just in order to be accepted.

Scholars of immigrant entrepreneurship theorize that immigrants have “intrinsic capabilities — risk propensity, high education, unique knowledge, or identity — that increases the likelihood of entrepreneurship compared to their host country counterparts,” according to a Kauffman Foundation review of immigration research.

Immigrants are twice as likely to start a business as native-born Americans, for example. Forty-three percent of the 2017 Fortune 500 companies were founded or co-founded by a first- or second-generation immigrant, according to the Center for American Entrepreneurship. Those 216 companies generated $5.3 trillion of revenue and employed 12.1 million workers worldwide last year, according to the CAE.

In other words, in their role as entrepreneurs, immigrants are providing employment opportunities for Americans — high-paying jobs at established companies — not stealing jobs from American workers.

“The net result of immigrants’ innovation and entrepreneurship is job creation,” according to an article by John Dearie, founder and president of the CAE, and Douglas Holtz-Eakin, president of the American Action Forum.

Immigrants’ success isn’t limited to business. Immigrants have been awarded 39%, or 33 of 85, of the Nobel Prizes won by Americans in chemistry, medicine and physics since 2000, according to the National Foundation for American Policy. The three-fold increase in the period 1960-2017 compared with 1901-1959 illustrates the positive impact of legislation that ended some of the “national origin” quotas (The Immigration and Nationality Act of 1965) and increased quotas for employment-based green cards (Immigration Act of 1990).

Economists may disagree about a lot of things, but there are two areas where they seem to have reached broad consensus, according to Ian Hathaway, research director at the CAE: “the importance of entrepreneurship to economic growth and job creation, and the outsized role that immigrants play in founding American companies.”

While immigrants account for less than 14% of the population, they founded “almost a quarter of all new businesses, nearly one-third of venture-backed companies and half of Silicon Valley high-tech startups,” according to Hathaway’s research.

To restrict immigration now would be tantamount to tightening the vise around the economy, which relies on innovation and disruption to drive productivity and growth. Business dynamism, or the process by which new firms are created and old ones die off, has been slowing for more than three decades, across all 50 states and most metropolitan areas, according to research by Hathaway and Robert Litan, both nonresident senior fellows at the Brookings Institution.

Yet the U.S. remains “one of only a few industrialized democracies that does not have a designated visa for foreign-born entrepreneurs” who want to establish a business in the U.S., the CAE’s Dearie said.

Introduced a handful of times in Congress, most recently in September 2017, the Startup Act has never been able to gather critical mass. The act would have opened the door to foreign-born entrepreneurs with advanced degrees in STEM fields (science, technology, engineering, math), a verifiable business plan and private funding source to establish a business and remain in the U.S. as long as the business was creating a specified number of non-family jobs.

Last year’s effort at a startup visa ran into opposition in the Senate Judiciary Committee, whose Republican members seem to have decided that legal immigration is already too high; that the only way they would support a startup visa was if there were an offsetting decrease in other visas.

This is America First?

As a work-around to congressional stonewalling on a startup visa, President Barack Obama used his pen (executive action) to craft the International Entrepreneur Rule to encourage immigrant entrepreneurship. While not as effective as a legislative solution, the rule would have granted qualified foreign entrepreneurs temporary residence for five years to build a business operation.

Trump put a hold on the rule before it could go into effect in July 2017 and last month moved to rescind it. Does that sound like the act of someone who supports a program of legal immigration for foreign entrepreneurs?

Creating a hostile environment for immigrant entrepreneurs is not the way to Make America Great Again. One of Trump’s predecessors, Ronald Reagan, understood as much. According to his former aide Linda Chavez, Reagan used to say he had another term for illegal alien: “willing worker.”

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