Immigrant Entrepreneurs Drive Main Street's Growth

An Essay by Laura Collins, Director of the Bush Institute-SMU Economic Growth Initiative

In cities and towns in all reaches of America, businesses started by immigrants are critical pieces of the fabric of our economy and communities.

Neighborhood services and restaurants along Liberty Avenue in Queens, N.Y. (Shutterstock)

My children attend a Montessori preschool started by an Indian immigrant. Like many, she did not come to this country to start a business. But after multiple college degrees in the U.S. and some years working in corporate America, she opened her first Montessori school. Nearly 15 years later, she owns two schools, employs 100 women, and touches the lives of hundreds of students each day.

She greets students and parents each weekday morning, cup of coffee in hand. Her warmth and passion carry over to her staff. These schools provide a service to the largely professional, dual-income families in these suburbs. But they are also important anchors in these communities.

This woman embodies the best of immigration to the United States. Like so many other immigrants, her creativity helps sustain the economic health of her city.

Immigrants are entrepreneurs

Immigrants are a force among entrepreneurs in the United States. In 2015, immigrants started new businesses at twice the rate of native-born Americans. Whether the small mom-and-pop stores that dot our communities or one of the giants of American capitalism, immigrants drive much of American business creation.

Whether the small mom-and-pop stores that dot our communities or one of the giants of American capitalism, immigrants drive much of American business creation.

Nowhere is that more evident than in America’s largest, most successful companies. In 2019, nearly 45 percent of the Fortune 500 companies in the United States were founded by immigrants or the children of immigrants.

These companies, such as Alphabet (Google’s parent company), Apple, and Amazon, are economic powerhouses both at home and abroad, employing thousands of people. Some help drive innovation. Others, like Verizon and UPS, provide important services. Companies like Dollar Tree, Home Depot, Kroger, and Costco supply our consumer goods.

Even some iconic American brands were founded by immigrants or their children, including The Walt Disney Company, Levi Strauss & Company, Ford Motor Company, and Harley-Davidson. Collectively, these immigrant-founded companies brought in $6.1 trillion in revenue and employed 13.5 million people.

The economic and cultural significance of these large companies is clear. But few of them would anchor Main Street.

Most immigrant entrepreneurs own the types of businesses that populate Main Street. In fact, immigrants start more than a quarter of all “main street” businesses — retail, neighborhood services, and accommodation and food service. These businesses are vital to the economic health of their communities.

One of the most important ways these operations contribute to the local economy is through job creation. According to the Bush Institute’s handbook of immigration facts, America’s Advantage,  immigrant entrepreneurs who have employees hire, on average, more than 11 employees.

Immigrant-owned businesses can lay the economic foundation for faster growth. When a business is successful, it attracts additional investment from other entrepreneurs. This creates a cycle of success — more businesses, more consumers, and a better business environment.

When this happens in economically-distressed communities, these immigrant entrepreneurs do the heavy lifting of revitalizing the neighborhood, one new business at a time.

It is not just about economics, though. Main Street businesses are essential to the day-to-day lives of all people in the community. These stores are where we get our groceries and grab a meal out; they are where we get haircuts and manicures; they tailor and dry clean our clothes. In these subtle but important ways, immigrant entrepreneurs weave the fabric of our cities and towns.

It is not just about economics, though. Main Street businesses are essential to the day-to-day lives of all people in the community. ... Immigrant entrepreneurs weave the fabric of our cities and towns.

Certainly, these benefits accrue whether the entrepreneur is an immigrant or a native-born American. So why focus on immigrant entrepreneurialism?

Immigrants punch above their weight as entrepreneurs. Immigrants are only 13.5 percent of the population. But they are more than 20 percent of entrepreneurs in the United States.

And as for Main Street? Immigrants own 61 percent of gas stations;  58 percent of dry cleaning services; 53 percent of grocery stores; 45 percent of nail salons; 43 percent of liquor stores; 38 percent of restaurants; and 32 percent of both jewelry and clothing stores. If you live in a community with many immigrants, there is a good chance that an immigrant started the store that provides your day-to-day needs for goods and services.

Expanding immigrant entrepreneurship

Immigrant entrepreneurship is powerful in both tangible and intangible ways. So how can communities encourage more immigrant entrepreneurs to start businesses in their neighborhoods?

In a 2015 paper, Bringing Vitality to Main Street: How Immigrant Small Businesses Help Local Economies Grow, the Fiscal Policy Institute (FPI) and Americas Society/Council of The Americas (AS/COA) lay out a toolkit for communities to foster immigrant small business ownership. Their recommendations focus on how the public and private sectors can come together to create a welcoming environment for immigrants and fertile ground for both immigrant entrepreneurs and native-born entrepreneurs to start new businesses.

The private sector, for example, is crucial in addressing needs that are unique to the immigrant entrepreneur, like language barriers and discomfort with our political and regulatory systems. These are an issue of assimilation that naturally fades over time. Nonprofits can speed up this process by providing invaluable assistance to overcome these normal barriers.

Governments must commit to an environment that fosters entrepreneurship of all residents. The policies that benefit the immigrant entrepreneur will also benefit the native-born American entrepreneur. All levels of government can impact the business environment, but cities play a particularly important role.

Fostering immigrant entrepreneurship is just one piece of a larger welcoming agenda that cities should adopt. Cities like Dallas are already hard at work implementing a Welcoming Plan through its Office of Welcoming Communities and Immigrant Affairs.

Dallas Mayor Eric Johnson celebrates Immigrant Heritage Month in June 2019 with an outdoor art installation. (City of Dallas)

The federal government, too, could help foster immigrant entrepreneurialism. Unlike other similarly situated countries, the United States does not have a visa category for immigrants who want to start a business. Would-be immigrant entrepreneurs must find a way to emigrate through other avenues or take their chances in another country, like Canada, that has a startup visa.

Entrepreneurship is one of the most effective growth engines of our economy, and immigrants’ willingness to open new businesses is a key component. Policies at all levels of government should recognize this importance, remove unnecessary barriers to starting a new business, foster a welcoming culture for immigrant entrepreneurs, and provide a dedicated legal channel for entrepreneurs to emigrate to the U.S.

Without these changes, the U.S. may not produce the next Facebook. More importantly, people like my children’s Montessori school director may never have the chance to anchor a community.

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