Immigration and Entrepreneurs

By at 29 August, 2011, 2:09 pm

The federal government has failed to please all sides in the immigration debate.

The current system fails to maintain secure borders. It fails to deal with the demand by businesses and consumers for workers, both low skilled and high skilled, and the fact that immigration benefits the economy by complementing the native-born workforce. It also leaves millions of undocumented workers in a kind of limbo. And it imposes burdens on businesses to serve as immigration police – a job meant to be performed by federal law enforcement.

So, immigration reform clearly is needed. Unfortunately, efforts that fail to deal with the issue in a comprehensive way will only leave substantial problems to deal with down the road.

The worst case scenario would be legislative changes that actually make matters worse, such as border crackdowns without expanding and making more efficient legal immigration channels; trying to deport undocumented workers who have otherwise abided by the law and contributed to the economy; and inflicting additional costs on entrepreneurs and businesses in terms of immigration enforcement mandates.

Another aspect of the immigration story that has been largely ignored in the reform debate is entrepreneurship among immigrants. Considering that immigrants clearly are risk takers, it should surprise no one that immigrants often are entrepreneurial in terms of their career choices.

Consider key findings from two recent reports on immigrants and entrepreneurship:

• In a February 2011 Brookings study, Zoltan Acs and David Hart of George Mason University reported that the founding teams of 16 percent of high-impact, high-tech companies – firms that are responsible for a significant chunk of the nation’s economic and employment growth – include at least one immigrant.

• In March 2011, the Kauffman Foundation released its “Kauffman Index of Entrepreneurial Activity 1996-2010.” That report found: “Immigrants were more than twice as likely to start businesses each month than were the native-born in 2010. The immigrant rate of entrepreneurial activity increased sharply, from 0.51 percent in 2009 to 0.62 percent in 2010, further widening the gap between immigrant and native-born rates. The native-born rate is 0.28 percent.”

For the sake of our economy, it is critical that immigration reform be done right, rooted in sound economics as opposed to cheap politics. That means expanding opportunities for immigrant entrepreneurs, not cutting off these important channels of innovation, economic growth and job creation.


Raymond J. Keating serves as chief economist for the Small Business & Entrepreneurship Council.

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