Immigrant Business Owners, Startup Visas and Strengthening Entrepreneurship

By SBE Council at 13 May, 2014, 4:50 pm

by Raymond J. Keating-

As we celebrate entrepreneurs and their small businesses during National Small Business Week 2014, we should not forget the contributions that immigrant entrepreneurs make to our economy and the need for policy changes to modernize U.S. policies. These changes would include reforms that would help the U.S. attract talented entrepreneurs to startup, build and maintain their businesses in our country.

Startup visas are catching fire across the globe, but a bipartisan bill that would establish these visas in the U.S. is idling in the U.S. Senate.

According to the Kauffman Foundation’s “Index of Entrepreneurial Activity 1996-2013” report, “Immigrants were nearly twice as likely to start businesses each month as were the native-born in 2013.”

Unfortunately, the rate of entrepreneurial activity, according to the Kaufmann gauge, has declined for both the native born and immigrants in recent years, that is, falling for the past four years for the native born and for the last three years for immigrants. However, the longer-term trends are clear. The rate of entrepreneurship among immigrant rose markedly from 2001 to 2010 – an increase of more than 100 percent. Meanwhile, as noted in the report, “The native-born rate has remained relatively flat over the last eighteen years. The result of these contrasting trends is that immigrants were substantially more likely to start businesses each month than were the native-born in 2013.”

It follows: “A growing immigrant population and rising entrepreneurship rate contributed to a rising share of new entrepreneurs that are immigrant…. The immigrant share of new entrepreneurs is 25.9 percent up from 19.1 percent in 2003.”

In March of this year, Kaufmann also noted that “between 2000 and 2011, the number of self-employed immigrants in high-tech industries increased by 64 percent, compared with 22.6 percent for U.S.-born.”

For good measure, a 2011 report from the Partnership for a New American Economy:

• “More than 40 percent of the 2010 Fortune 500 companies were founded by immigrants or their children.”

• “Just shy of 20 percent of the newest Fortune 500 companies — those founded over the 25-year period between 1985 and 2010 — have an immigrant founder.”

• “Fortune 500 companies founded by immigrants are not confined to a small subset of industries or fields. Instead, they range across aerospace, defense, Internet, consumer products, specialty retail, railroads, insurance, electronics, hospitality, natural resources, finance, and many other sectors.”

Again, this should be acknowledged during National Small Business Week 2014. Looking ahead, policymakers need to pass immigration reform measures that open the doors to individuals willing to contribute to our economy by working and taking risks.  There’s the need for comprehensive immigration reform, but incremental measures will help too.

To strengthen economic growth and U.S. competitiveness, it is imperative that the U.S. be more welcoming to entrepreneurs from across the globe. Unfortunately, America is losing that hospitable edge, along with the entrepreneurs who can keep us on the leading edge of innovation and quality job creation.

An important piece of legislation languishing in the U.S. Senate would create a startup visa for entrepreneurial immigrants. The Startup 3.0 Act sponsored by Senators Jerry Moran (R-Kan.), Mark Warner (D-Va.), Chris Coons (D-De.) and Roy Blunt (R-Mo.) also includes other pro-growth measures to encourage successful startups.  Our global competitors have already moved to create entrepreneur visas. Canada, the UK, Ireland along with other countries are busy recruiting talented entrepreneurs.  Meanwhile, political dithering is costing the U.S. quality talent and businesses that could be adding to our innovative capacity and GDP.

The U.S. has benefited, and continues to benefits tremendously from immigrants starting up and building businesses.  Whether these individuals arrive at our doors ready to take their ideas to the marketplace, or work to gradually build the skills and capital necessary to someday open a business, the U.S. cannot afford to waste any more time when it comes to modernizing our immigration policies.

_______

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

Keating’s new book, published by SBE Council, is titled Unleashing Small Business Through IP: Protecting Intellectual Property, Driving Entrepreneurship. It’s available from Amazon.com here.