As the Senate Gang of Eight rolls out its immigration bill, a new report is highlighting the economic benefits that come from bringing more foreign-born into the United States.
According to a new report, the Kaufman Index of Entrepreneurial Activity released by the Kaufman Foundation, immigrants were twice as likely to start businesses as native-born Americans in 2012. The share of immigrant entrepreneurs rose to 27.1 percent in 2012 compared to 13.7 percent in 1996. The share of native-born entrepreneurs dropped from 86.3 percent in 1996 to 72.9 percent in 2012. But foreign-born entrepreneurs weren’t the only ones seeing a marked increase in entrepreneur shares of the population. The number of new Latino entrepreneurs has also nearly doubled, from 10.5 percent to 19.5 percent since 1996.
Lead researcher Robert Fairlie says that not only is the Latino share of entrepreneurs increasing over time, but it is outpacing other ethnic groups as well.
“The Latino rate is higher than the rate for African-Americans, Asians, whites. Of the four major racial ethnic groups, Latinos have the highest rate,” Fairlie says. “That’s a relatively new pattern because that wasn’t the case fifteen years ago.”
Although the study did not seek to explain the reason for the high number of Latinos and immigrants who start businesses, Fairlie suggested natural population patterns may be behind the growth. He says that having more Latinos logically leads to more Latino entrepreneurs.
“Latino patterns are following the patterns of the immigrant population,” Fairlie says. “It’s population growth and the fact that Latinos are becoming an increasing share of the nation.”
He also attributes the bigger share of immigrant entrepreneurs to the idea that immigrants are more entrepreneurial by nature.
“Immigrants move from their home country to the U.S. and in that sense a lot of people argue that they are just different,” Fairlie explains.
But he also suggests that immigrants may also be more entrepreneurial by circumstance, saying that immigrants may have needed to become more resourceful in order to get around obstacles they face finding employment once in the United States.
“They face barriers getting a job in the United States even considering different educational levels. Sometimes the experience doesn’t transfer over to the U.S. labor market so they have to make their own jobs,” Fairlie says.
With the proposed Gang of Eight immigration bill, immigrant entrepreneurs may have an easier time applying for visas and finding employment. The Senate plan creates startup visas for entrepreneurs and will include a new merit-based visa option for especially talented immigrants.
Overall however, the number of entrepreneurs dipped in 2012. The report states that the decline in business creation may be due to improving labor market conditions. While the number of entrepreneurs declined a bit, the number still remains slightly above pre-recession levels.
The Kauffman report is part of the Annual Index of Entrepreneurial Activity. The study measures the rate of people creating businesses each month. The most recent report added the data for 2012 and updated the overall Entrepreneurial Index, which dates back to 1996.