Immigrants Don’t Start More Businesses

The New York Times on November 2nd ran a column by Harvard Business School Professor Thomas McGraw claiming that immigrants are better than American natives at innovation and creating new businesses as entrepreneurs. He stated in his column that “our overly complex immigration law . . . endangers our tradition of entrepreneurship.”

Fact Check: McGraw builds his case by citing examples of innovative immigrants who created new businesses in the U.S. But he builds his case on various speculations as to why immigrants allegedly have these superior talents, rather than statistical analysis.

A good source of relevant statistics, noted the Washington-based Center for Immigration Studies, is the March 2011 Current Population Survey conducted by the Census Bureau. It found that native-born Americans, on average, have a slightly higher level of self-employment than immigrants. The percentage of the former is 11.7 percent, compared with 11.5 percent for the latter. Both self-employed groups earn approximately the same income.

The impression that immigrants generally are more likely to start and maintain businesses probably derives from the fact that certain groups of immigrants, but not all, are highly entrepreneurial. The top four countries of their origin are 1) Korea(26 percent self-employed) 2) Canada (23.2 percent self-employed) 3) United Kingdom (16.9 percent self-employed) 4) Russia (16.9 percent self-employed).

U.S.immigration policy, however, significantly discriminates against immigrants from these countries due to its reliance on family connections of immigrant applicants to previous immigrants as the leading criterion for admission. Immigrants from the four leading countries of origin during the past decade all have rates of self-employment lower than those of U.S.natives. Those countries are Mexico (8.9 percent self-employed), China 9.2 percent self-employed), India (9.9 percent self-employed) and the Philippines (5.8 percent self-employed).

On average, legal immigrants today are less skilled and educated than native-born Americans, and they are proportionately more likely to receive public assistance. Current immigration policy does not focus on admitting the most able people to contribute to our economy.

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