Without Immigrants, the Fortune 500 Would Be the Fortune 284
December 6, 2017
For Donald Trump and the populist wing of the Republican Party, immigrants are the enemy, taking jobs away from Americans and eating up public revenue. Since being elected, Trump has sought to curtail immigration in several ways: moving to cut legal immigration by as much as half over the next decade; building a wall along the Mexican border; ending the DACA program that protected so-called DREAMers from deportation; and even limiting “startup visas” for high-tech entrepreneurs entering the United States. This has occurred in the wake of a large body of evidence showing that immigrants, both skilled and unskilled, provide a great benefit to the U.S. economy.
Now, a new study from the Center for American Entrepreneurship shows just how big a role immigrants have played in creating America’s largest and best-performing companies. The study identifies companies on the 2017 Fortune 500 list that were founded either by first-generation immigrants or their second-generation children. Its findings are nothing short of incredible.
More than 40 percent (43 percent) of today’s Fortune 500 had a first- or second-generation immigrant among their founders, even though just 14 percent of the U.S. population is foreign-born. Nearly a fifth (18.4 percent) of these companies were founded by first-generation immigrants, and another quarter (24.8 percent) were founded by their children. All told, these 216 immigrant-founded companies accounted for $5.3 trillion in global revenue in 2016 and employ more than 12 million workers worldwide. Immigrant-founded companies make up more than half of the Fortune 25 (52 percent) and Fortune 35 (57 percent).
Rather than preventing people from getting jobs and costing the government money, these immigrants have created an amount of wealth greater than the GDP of Japan, the world’s third-largest economy.
These immigrant-founded companies span all sectors of the economy, as the chart above shows. Immigrant-founded companies make up 46 percent of all Fortune 500 companies in high tech, 43 percent in wholesale and retail, roughly half of consumer goods and transportation companies, 56 percent of industrial and media companies, and almost two-thirds of Fortune 500 business service corporations.
Across the United States, 68 metropolitan areas and five non-metropolitan areas in 33 states are home to Fortune 500 corporations founded by immigrants or their offspring. In Wisconsin, Massachusetts, Virginia, Florida, Iowa, and remarkably, New York, a majority of the Fortune 500 companies fit this designation. In Kansas and Delaware, all of them do
Among metros, immigrants founded 31 companies in New York (56 percent of all Fortune 500 companies in the metro), 11 in Chicago (50 percent), 10 in San Jose (59 percent), nine in Houston (45 percent), eight in Dallas (42 percent), and six in LA (50 percent). But immigrant-founded companies are not just a product of big cities and metro areas. Indeed, immigrant-founded companies make up 45 percent of the Fortune 500 corporations located outside of metro areas in the United States.
The study adds to the huge body of literature that shows that immigrants have long powered American science, technology, innovation, and entrepreneurial startup companies. Immigrants account for nearly two-thirds of all Nobel Prizes given to U.S.-based research, and make up huge shares of this country’s science and technology workforce. The U.S. would not have anything close to its current science and technology workforce without immigrants. And immigrants have played an outsize role in high-tech startup companies as well as their larger and more established Fortune 500 counterparts, as members of the founding teams of roughly one-third of all venture-backed companies and more than 40 percent of Silicon Valley high-tech startups.
While Trumpists claim that immigrants damage local economies, my own research shows just the opposite: Metros with higher shares of immigrants have higher rates of innovation, higher concentrations of high-tech business, higher incomes and wages, and more knowledge-based economies. The economies of leading metros like the San Francisco Bay Area, Miami, New York, L.A., Houston, Seattle, and D.C. are literally dependent on immigrants who make up large shares of their highly-educated and highly-skilled talent bases. Of course this is nothing new: Immigrants have driven the growth of America’s cities and regions for the past century or more.
And it’s not just these high-skill immigrants that have an economic impact. The children and grandchildren of less-skilled immigrants often become high-skilled immigrants. According to one study, some of the most successful foreign-born entrepreneurs were those who were brought here as children. Often, the parents of great entrepreneurs are not high-skill programmers with multiple degrees. Rather, they these future entrepreneurs more closely resemble today’s DREAMers. Surely a handful of them will go on to start successful companies, creating countless jobs in the process.
No matter the psychological salve they might provide for anxious and resentful members of the white working class, anti-immigrant policies are actually harmful to everyone. Immigrants of all skill levels are essential not only for creating and sustaining big companies, but for building thriving metro economies. As I have noted in CityLab, the places with greater immigrant diversity are better off economically in the short, medium, and long term. The economics of immigration are so clear, it is laughable that the nominally pro-business Republican party has embraced such draconian measures. Stymieing immigration will only set the “forgotten” parts of America back even further.