Immigrant entrepreneurs are vital to American prosperity

Immigrant entrepreneurs are vital to American prosperity
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Immigration policy continues to vex America. For more than a century, the United States has proudly defined itself as the world’s great melting pot of immigrant cultures and talents — a nation whose most recognizable monument is the iconic statue of Libertas, the Roman goddess of freedom, who lifts her torch to illuminate the “golden door” of opportunity for “your tired, your poor, your huddled masses yearning to breathe free.” 

And yet, few issues have more sharply divided the modern political landscape. Should immigration policy be humanitarian in nature or focus on the skills and economic value of applicants? Should the 12 million undocumented immigrants among us be granted residency status, offered some kind of pathway to citizenship, or deported? And what should be done about the 800,000 people who were brought to the United States illegally as children, but have grown up as Americans?

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As policymakers grapple with these difficult questions, two critical realities are too often forgotten amid the haze of fractious political debate — the connection between entrepreneurship and economic prosperity, and the importance of immigrants to American entrepreneurship. 

 

Thriving entrepreneurship is critical to economic prosperity. Recent research has demonstrated that new businesses, or “start-ups,” are disproportionately responsible for the innovations that drive economic growth, and account for an outsized share of new job creation. 

Foreign-born entrepreneurs have been a prominent feature of America’s economic landscape for decades. Iconic American companies founded or co-founded by immigrants include Dow, AT&T, DuPont, Levi Strauss, Anheuser-Busch, Pfizer, Goldman Sachs, Sun Microsystems, Google, Yahoo, eBay, YouTube, PayPal, Tesla, Facebook, and LinkedIn. 

A study released this week by the Center for American Entrepreneurship found that 43 percent of Fortune 500 companies — and 57 percent of the top 35 companies — were founded by immigrants or a child of immigrants. These companies are headquartered in 68 metro areas across 33 states and employ millions of Americans.

Unfortunately, American entrepreneurship is in trouble. Between 2000 to 2006, the economy produced an average of 510,000 new firms each year. Since 2009, however, the number of new businesses launched annually has dropped to about 400,000 — meaning that the United States is producing about 100,000 fewer new firms each year.

Even more alarming, the number of new firms as a percentage of all firms has fallen near a four-decade low — and this decline is occurring in all 50 states, in all but a handful of the more than 360 metro areas examined, and across a broad range of industry sectors, including high-technology.

Given the important role that start-ups play as a principal source of innovation, economic growth, and job creation, such circumstances amount to nothing short of a national emergency. Revitalizing American entrepreneurship is a critical pathway to the faster economic growth necessary to generate the opportunity, jobs, and wage growth the American people deserve. 

Immigrants — and specifically foreign-born entrepreneurs — are essential to that revitalization. Research shows that immigrants are twice as likely as native-born Americans to start a new business. Though just 14 percent of the population, immigrants account for a quarter of all business owners — and even higher rates among high-tech startups — a reality that should not be a surprise.

To immigrate requires a willingness to pick up one’s life and move, often at great personal and financial risk, to a different country, with a different culture, and often a different language — a profoundly entrepreneurial act.

And yet, the United States is one of only a few industrialized nations that does not have a visa category for foreign-born entrepreneurs. In recent years, many other nations — including China, Germany, France, New Zealand, Australia, and Chile — have overhauled their immigration laws to roll out the red carpet for foreign-born entrepreneurs, including American entrepreneurs.

With these realities in mind, Sen. Jerry MoranGerald (Jerry) MoranFormer USA Gymnastics CEO pleads Fifth at hearing GOP, Trump at odds on pardon power Lawmakers request meeting with Amtrak CEO over funding for route MORE (R-Kan.) and Mark WarnerMark Robert WarnerVirginia Dems want answers on alleged detention center abuse Wray defends FBI after 'sobering' watchdog report Top Dems: IG report shows Comey's actions helped Trump win election MORE (D-Va.) have proposed, as part of their recently re-introduced Startup Act, the creation of a new “entrepreneur visa.” To qualify, applicants would have to meet national security requirements and have raised $100,000 in private funding to validate themselves as entrepreneurs and authenticate their business idea. Visa recipients would be admitted on a contingency basis so long as their business is producing verifiable revenue and creating jobs for non-family members. 

A 2013 study by the Kauffman Foundation concluded that an entrepreneur visa would create between 500,000 and 1.6 million new American jobs within 10 years.

Most importantly, an entrepreneur visa will help ensure that the United States and American workers are not disadvantaged in the increasingly fierce global competition for new companies, innovation, faster economic growth, and expanding economic opportunity. 

John Dearie is president and Ian Hathaway is research director at the Center American Entrepreneurship.