Immigrant business owners complement U.S.-born counterparts
BOSTON – Immigrants in Massachusetts and New England are more likely to be self-employed, but the businesses they own tend to be in different industries than those owned by the U.S. born, according to a new study published by Pioneer Institute. In addition, the study finds that immigrant entrepreneurs tend to have either high or low levels of formal education, helping to account for the diversity of the businesses they create.
“It’s clear that immigrant entrepreneurs are a positive force in Massachusetts and New England,” said Pioneer Executive Director Jim Stergios. “Entrepreneurship is consistently linked to higher economic growth and more opportunity.”
In “Immigrant Entrepreneurship in New England,” author Josh Bedi finds that immigrants make up 9 percent of the New England population, but account for 13.72 percent of all businesses. In Massachusetts, they are 14.2 percent of the population and own 15.59 percent of businesses.
In both New England and Massachusetts, immigrants are more likely than U.S.-born entrepreneurs to own businesses in the wholesale trade, retail and transport, and accommodations, food, and other services sectors.
Across New England, they are also more likely to be in education, healthcare and social assistance. But in Massachusetts, immigrant entrepreneurs are less likely than U.S.-born entrepreneurs to be in that sector and more likely to own businesses in manufacturing and agriculture, forestry, fishing, and hunting.
Patterns suggest that instead of crowding out businesses owned by the U.S. born in the same industry, immigrant-owned businesses are more likely to fill gaps in other industries.
Immigrant entrepreneurs are also more likely to come from the tail ends of the educational spectrum. They are both more likely to have a graduate degree and to have less than a high school diploma. As a result, they open both small, low-growth businesses like restaurants and gas stations, and large, high-growth businesses in fields such as technology at higher rates than U.S.-born entrepreneurs.
This can be partially explained by the U.S. immigration system, which favors immigrants with high education levels and those admitted for humanitarian reasons, who tend to have lower levels of education.
In Massachusetts, immigrant entrepreneurs’ educational attainment is generally lower compared to U.S.-born entrepreneurs, but immigrant-owned Fortune 500 companies contribute disproportionately to job growth and revenue creation.
There is considerable evidence that immigrant-owned businesses tend to face disadvantages that are more problematic than those faced by their U.S.-born counterparts. For example, immigrants are restricted in the types of employment they may pursue in a way that the U.S. born are not.
Although immigration policy is largely a federal responsibility, state governments could take steps that would enhance economic competitiveness. There is evidence that immigrant entrepreneurs struggle more with occupational licensing regulations, particularly in low-skilled occupations where safety and consumer protection don’t warrant the restrictions.