Immigration & Entrepreneurship
Entrepreneurship and business creation are key drivers of a healthy, growing economy. Immigrants in particular play an important role in job creation in the United States because they are more likely to start a new business than the native-born population. One in four American entrepreneurs are immigrants, a number that has increased dramatically over the past decades. Immigrant-founded companies account for 1 in 5 of the top Fortune 500 companies, and of the 2018 Fortune 500 companies, nearly half (43.8%) were founded by immigrants or their children.
In 2019, immigrant entrepreneurs made up 21.7% of all business owners in the United States, despite making up just over 13.6% of the population and 17.1% of the U.S. labor force.
Importance of Entrepreneurship
Although immigrants make up only 17 percent of the American workforce, they have won 39 percent of our Nobel Prizes in science, comprise 31 percent of our Ph.D. population, and produce 28 percent of our high-quality patents. As of 2018 there were 13 million people employed by the 44% of Fortune 500 firms founded by immigrant entrepreneurs or their children, generating $5.5 trillion in FY2017.
But it isn’t just businesses that an economy needs, but rather new businesses to ensure healthy economic growth. Nearly all net new jobs and almost 20% of gross job creation come from newly created businesses. The startup of new businesses, however, has been steadily declining. Whereas new firms represented about 15 percent of all firms in the late 1970s, that share had declined to about 8 percent by 2011. Not only are there fewer new startups, but these new startups are also creating fewer jobs. The gross number of jobs created by new firms fell by more than two million between 2005 and 2010.
With new business formation slowing in the United States, immigrant entrepreneurs play a critical economic role in creating jobs for all Americans.
Number of People Employed by Fortune 500 Firms Founded by Immigrant Entrepreneurs, Millions
Dollars Generated by Fortune 500 Firms Founded by Immigrant Entrepreneurs, Trillions
Businesses Started by Immigrant Entrepreneurs in Key Sectors
Immigrants start more than 20 percent of all businesses in seven of the eight sectors that the U.S. Bureau of Labor Statistics expects to grow the fastest over the next decade.
Entrepreneurs with Less than a College Degree
Although most of the attention is focused on high-skilled foreign-born entrepreneurs such as those creating high-tech businesses, there are over 2.1 million immigrant entrepreneurs with less than a college degree that also have a significant economic impact, creating billions of dollars in economic activity and providing jobs to thousands of Americans.
Source: New American Economy
Visa Issues for Immigrant Entrepreneurs
Despite the proven contributions that immigrant entrepreneurs make to the economy, the U.S. still lacks a startup visa specifically for immigrant entrepreneurs who have a business idea and solid investment. Consequently, many entrepreneurs struggle to remain in the U.S. There is not currently a visa specifically for entrepreneurs who want to come to the United States, start a company, and contribute to job creation for the U.S. economy. As such, many immigrant entrepreneurs make the difficult decision to sell a majority stake in their company and then apply for a visa as a high-skilled worker rather than as a business owner. The lags in the H-1B visa system, however, mean that many entrepreneurs cannot get a visa before the annual cap of 85,000 people is exhausted each year.
Source: New American Economy
The International Entrepreneur Rule
In 2016, the White House proposed a rule that would make it easier for entrepreneurs to remain in the country, and in early 2017 the International Entrepreneur Rule (IER) was formally adopted by the Department of Homeland Security (DHS). Unfortunately, not much progress has been made due to the Trump Administration putting the IER on hold, but with renewed support from the new Biden Administration, the IER could quickly become an essential pathway to citizenship for foreign-born entrepreneurs who seek to build businesses in the United States.
The DHS estimates that 2,940 entrepreneurs would come to the country annually through the IER, and after adjusting for expected business failure rates, it is projected these entrepreneurs could produce approximately 100,000 jobs over ten years if they produce only the minimum number required for IER parole extension. If these entrepreneurs mirror the average job growth of other similar firms in the U.S., it is projected that more than 160,000 jobs may be created over ten years. If 50% of the businesses started by entrepreneurs retained through IER are high-growth STEM firms, over 300,000 jobs are projected to be created over ten years. And if more startup founders make use of IER than DHS projected, they could create 1,000,000 jobs during this period.
Source: The Progressive Policy Institute
Potential Number of Immigrant Jobs Retained through IER
About the Data
The following public sources were used:
• New American Economy, "Entrepreneurship"
• Harvard Business Review, "Immigrants Play a Disproportionate Role in American Entrepreneurship"
• National Bureau of Economic Research, "Immigrant Entrepreneurship"
• Center for American Entrepreneurship, "Immigrant Founders of the Fortune 500"
• Progressive Policy Institute, "Long Live the International Entrepreneur Rule: An Opportunity to Boost Jobs and Economic Growth is Hiding in Plain Sight"
• Ewing Marion Kauffman Foundation, "The Importance of Young Firms for Economic Growth"
• FiveThirtyEight, "Corporate America Hasn’t Been Disrupted"