Aug 072012

Immigrant-owned small businesses employ 14 percent of all people working for American small-businesses and 18 percent of all small-business owners in the U.S. are immigrants. The widely publicized (New York Times, Business Week, Huffington Post) new study from the Fiscal Policy Institute’s Immigration Research Initiative identifies immigrant-owned small businesses and their impact on the U.S. economy.

The immigrant share of small-business owners is higher than their share in the overall population—18 vs. 13 percent—as well as the immigrant share of the labor force, 16%. As I’ve speculated before, this could be attributable to the immigrants’ traits. However, immigrant small businesses are slightly smaller than those owned by U.S.-born entrepreneurs—11 vs. 14 percent.

The largest number of immigrants operate small businesses in the professional and business sectors (restaurants, physician’s offices, real estate), followed by retail (grocery stores), construction, educational and social services, and leisure and hospitality. Particularly in the last category immigrants play a disproportionate role: immigrants represent 28% of small-biz owners in leisure and hospitality.

Immigrants made up 30 percent of recent small business growth.

Interestingly, there are more small business owners from Mexico than from anywhere else—12 percent of all immigrant small-business owners. Immigrant businessmen from India, Korea, Cuba, China, and Vietnam follow. Of the Central/Eastern European countries, Poland leads at 2%, followed by “other USSR/Russia,” Ukraine, and Romania at 1% each.

Moreover, immigrants from the Middle East, Asia, and Southern Europe are disproportionately inclined (as opposed to their share in the overall immigration) to be business owners, led by immigrants from Greece (16%) and Israel/Palestine (13%), trailed by Syria, Iran, Lebanon, Jordan, Italy, Korea, South Africa, Ireland, Iraq, Pakistan, and Turkey. Of the Central/Eastern European countries, Poland and Romania rank mid-pack at 6% each and “other USSR/Russia” and Ukraine at 4% each. This may have to do with history: the suppression of private enterprise under state socialism eradicated the ‘business gene’ in populations that tended to be peasants or industry workers in prior periods. Greeks, Jews, Arabs, and Koreans, by contrast, boast a rich history of entrepreneurship in their countries and around the world.

The longer you’re in the U.S., the more likely you are to own a business.

Immigrants who have been here for over 10 years are more than twice as likely to be small business owners as thos who have been here for 10 years or less.

The majority of immigrant small-business owners, 58 percent, have no college degree (about the same as U.S. born ones), but better educated immigrants are more likely to own small businesses—5.4% for those with a college degree vs. 2.8% without. Twenty-nine percent of immigrant small-business owners are women, up from 24% in 1990.

The largest immigrant shares of small-business owners by metropolitan area are in Miami (45% of all business owners), Los Angeles (45%), New York City (36%), and San Francisco (35%). Portland, Oregon, ranks low at 13%. In the top 25 metropolitan areas, immigrants are 10% more likely than U.S.-born workers to be small business owners. Among states, California has the highest share of immigrant small-business owners (33%), followed by New York, New Jersey, Florida, and Hawaii. Oregon ranks mid-pack at 9.2%.

With one in six small business owners being born in another country, it is clear that immigrants are an important part of America’s small business environment. Immigrant small business owners are playing a large role in today’s economy, a role that has grown over the past 20 years in step with the increasing immigrant share of the labor force.

As much as Central European immigrants fall under these conclusions, the region’s share in the small-business statistics is fairly small. This has to do as much with history as with statistics—Central Europeans comprise only 3% of all foreign-born and only 0.5% of all population in the United States. Strength is in numbers and Central European ones are low.

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