MacroScope

Immigrant small business owners: bringing big bucks to Main Street

June 15, 2012

What would Main Street America look like without immigrants?

Picture vastly fewer restaurants (37% of the industry’s ownership is foreign-born), hotels and accommodation (43% foreign-born ownership), dry cleaning and laundry facilities (54% foreign-born), and nail salons (37%). It would be that much harder to go out for a treat (bakeries, 32% immigrant-owned), fill up the tank (gas stations, 53%), or grab a bottle of wine on the way to a dinner party (beer, wine and liquor stores, 42%).

As President Barack Obama announces a big shift in immigration policy that will offer greater leniency to individuals under 30 who came into the United States as undocumented children, a new report from the New York-based Fiscal Policy Institute highlights just how broad a role immigrants play in the world’s largest economy.

In his speech this week, President Barack Obama hinted at the new policy:

If we truly want to make this country a destination for talent and ingenuity from all over the world, we won’t deport hardworking, responsible young immigrants who have grown up here or received advanced degrees here. We’ll let them earn the chance to become American citizens so they can grow our economy and start new businesses right here instead of someplace else.

Most people have a notion of how immigrants contribute to their community’s economy. Take an inventory of any main street or downtown area, and you’re likely to find more than a few small businesses – doctors’ offices, nail salons, grocery stores – whose owners hail from overseas. The Fiscal Policy Institute report is the first survey to take a macro look at the state of small business ownership among immigrants across the country. It found that immigrants are not just employees, but increasingly, employers.

The immigrant share of small business owners, at 18 percent, is higher than the immigrant share of the overall population (13 percent) and the immigrant share of the labor force (16 percent).

More than half – 57 percent – of these small businesses have at least one paid employee in addition to the owner, the same share for both U.S.- and foreign-born business owners. And, of those with employees, the average number of employees is 13.6 (11.0 for immigrants, 13.9 for U.S.-born).

Their contribution to the economy is no small potatoes.

Small businesses – firms with at least one and fewer than 100 people working for them – employed 35 million people in 2007, according to the most recent SBO, accounting for 30 percent of all private-sector employment.

Of these small businesses, firms for which half or more of the owners are immigrants employed an estimated 4.7 million people, 14 percent of all people employed by small business owners. These firms generated an estimated total of $776 billion in receipts in 2007, the most recent year for which these data are available.

David Kallick, the author of the report, said the numbers were a reminder that in cracking down on immigrants, states like Arizona and Alabama may be doing themselves an economic disservice.

The fact that so many business owners are immigrants serves as a reminder of how important it is that we get immigration policy right, and also a warning, in a way, about the danger of creating a climate that feels hostile to immigrants.

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