Editorial Staff

Report: Immigrant Entrepreneurs Provide Economic Benefits, but Face Significant Obstacles

/in , , , /by Editorial Staff
Share on Facebook
Share on Twitter
Share on
LinkedIn
+

More likely to start innovative businesses, but getting into the U.S. is increasingly difficult

BOSTON – Immigrants have started a quarter of all businesses in Massachusetts despite making up just 17 percent of the state workforce, and those establishments appear to be more innovative than those founded by native-born Americans. Despite these contributions, shrinking federal visa caps and red tape are among the factors making it more difficult for immigrants to come to the U.S., according to “Immigrant Entrepreneurs and the Barriers They Face: An Academic Literature Review,” published by Pioneer Institute.

The innovative nature of these businesses is demonstrated by the fact that establishments with at least one immigrant founder are 35 percent more likely to hold a patent than those without an immigrant founder.

“Immigrant entrepreneurs contribute more than their share to the prosperity Massachusetts has enjoyed in recent years,” said Pioneer Executive Director Jim Stergios. “They prove every day that the American Dream is alive and well.”

Many immigrant entrepreneurs who came to this country with little money or education thrive, but their highly educated counterparts are also critical. Massachusetts is second among the states in the number of international college students per capita. Twenty-five foreign-born graduates of the Commonwealth’s colleges and universities have founded unicorn companies (private start-ups worth $1 billion or more).

But the number of international students in the U.S. has fallen every year since 2016. The pandemic certainly played a role in the recent decreases, but 60 percent of respondents to a 2019 Institute of International Education survey said the social and political environment here made them less likely to come.

“For Massachusetts to attract and retain the most talented people, we have to leverage the colleges and universities that are among our biggest economic advantages,” said Aidan Enright, who co-authored the review with Joshua Bedi.

Even more foreign-born prospective college students – 83 percent – cited the visa application process as an obstacle.

In the U.K., the average processing time to get work authorization is less than 56 days. Here, Optimal Practical Training authorizations allow foreign students studying in the U.S. to accept temporary employment in areas directly related to their field of study. OPT authorizations take between 213 and 426 days.

H1B visas allow employers to petition for highly educated foreign professionals to work in “specialty occupations” that require at least a bachelor’s degree or its equivalent. As recently as 2003, the annual cap on those visas was 191,000; today it’s 85,000. And because H1B runs a lottery system, 74 percent of applicants are rejected before their filings are even adjudicated.

In a recent CNN interview, Gov. Charlie Baker said he would like to see the federal government do something to expand eligibility for work permits to groups of asylum seekers arriving in states like Massachusetts who want to but can’t work.

Occupational licenses that often erect barriers to market entry while providing little to no quality or safety benefits can also be an obstacle for immigrant entrepreneurs. A 2022 Institute for Justice study found the licensing process for new entrepreneurs to be exceptionally burdensome in Boston.  For example, to start a food truck company an entrepreneur has to undertake 37 steps, complete 12 government forms, perform seven in-person activities, go through nine agencies, and pay nine fees costing an average total of $1,536.

About the Authors

Josh Bedi is Senior Fellow in Economic Opportunity at Pioneer Institute. He began his undergraduate career with the International Business Program at Mississippi State University and received a Bachelor of Business Administration in Business Economics and a Bachelor of Arts in German. At Mississippi State, he worked with Germany Trade and Invest as a Service Industries Intern. He earned his Ph.D. and was a Mercatus Center Fellow at George Mason University. He is now working at Copenhagen Business School as a Postdoc in Entrepreneurship at the Department of Strategy and Innovation. There, he works under the Mærsk McKinney Møller Chair in Entrepreneurship.

Aidan Enright is Pioneer’s Economic Research Associate, responsible for analyzing data and developing reports on the state’s business climate and economic opportunity. Prior to working at Pioneer, he worked as a tutor and mentor in a Providence city school and was an intern for a U.S. Senator and the RI Department of Administration. Aidan earned a Bachelor of Arts in Political Science and Economics with a concentration in U.S. national politics from the College of Wooster.

About Pioneer

Pioneer Institute’s mission is to develops and communicates dynamic ideas that advance prosperity and a vibrant civic life in Massachusetts and beyond. Success for Pioneer is when the citizens of our state and nation prosper and our society thrives because we enjoy world-class options in education, healthcare, transportation and economic opportunity, and when our government is limited, accountable and transparent. Pioneer believes that America is at its best when our citizenry is well-educated, committed to liberty, personal responsibility, and free enterprise, and both willing and able to test their beliefs based on facts and the free exchange of ideas.

Get Updates on Our Economic Opportunity Research

Related Posts:

Study Finds Massachusetts Graduated Income Tax May Be a “Blank Check” and Not Increase Funding for Designated Priorities

Advocates claim a proposed 4 percent surtax on high earners will raise nearly $2 billion per year for education and transportation, but similar tax hikes in other states resulted in highly discretionary rather than targeted spending, according to a new policy brief published by Pioneer Institute. That same result or worse is possible in Massachusetts because during the 2019 constitutional convention state legislators rejected — not just one, but two — proposed amendments requiring that the new revenues be directed to these purposes.

Post-Pandemic Prospects: Tech Leaders’ Prescription for Preserving a Healthy Economy

0 Comments
/
Host Joe Selvaggi talks with Chris Anderson, President of the Massachusetts High Technology Council, about the reasons why Massachusetts has a thriving tech sector, what challenges his members have faced in the pandemic, and what he sees as the most prudent path toward future prosperity in the commonwealth.

Report: Proposed Graduated Income Tax Might Not Increase State Education and Transportation Spending

While supporters of a state constitutional amendment that would impose a 4 percent tax rate hike on annual income over $1 million claim additional revenue from the surtax will fund public education and transportation needs, the amendment in no way assures that there will be new spending on these priorities. In fact, without violating the amendment, total state education and transportation funding could stay the same or even fall, according to a new review published by Pioneer Institute.

New Study Highlights Economic Fallout from California’s 2012 Tax Hike

A 2012 income and sales tax increase in California, named “Proposition 30,” stifled business activity, accelerated out-migration among the wealthy, and ultimately reduced the state’s tax base, according to a new study published by Pioneer Institute that aims to share empirical data about the impact of tax policy decisions.

Wealth Migration Trends: Remote Work Technology Empowers Workers to Live Anywhere

0 Comments
/
Host Joe Selvaggi talks with Pioneer Institute’s Andrew Mikula about his recent research into migration trends of high-income individuals, how pandemic-related technologies may accelerate that movement, and what challenges these changes present for policy makers.

New Study Finds Pandemic-Spurred Technologies Lowered Barriers to Exit in High-Cost States

Both employers and households will find it easier to leave major job centers as technologies made commonplace by the COVID-19 pandemic have led to a rethinking of the geography of work, according to a new study published by Pioneer Institute.

Interstate Legal Skirmish: New Hampshire Takes Massachusetts Telecommuter Tax to the Supreme Court

0 Comments
/
Host Joe Selvaggi talks with legal scholar and George Mason University Law Professor Ilya Somin about the details, the merits, and the likely implications of the Supreme Court case, New Hampshire v. Massachusetts, on state taxation power, federalism, and the power to vote with one’s feet.

Connecticut’s Painful Journey: Wealth Squandered, Lessons Learned, Promise Explored

0 Comments
/
Host Joe Selvaggi talks with Connecticut Business and Industry Association’s President and CEO, Chris DiPentima, about what policy makers can learn from Connecticut’s journey from the wealthiest state in the nation, to one with more than a decade of negative job growth.

New Study Shows Significant Wealth Migration from Massachusetts to Florida, New Hampshire

Over the last 25 years, Massachusetts has consistently lost taxable income, especially to Florida and New Hampshire, via out-migration of the wealthy, according to a new Pioneer Institute study. In “Do The Wealthy Migrate Away From High-Tax States? A Comparison of Adjusted Gross Income Changes in Massachusetts and Florida,” Pioneer Institute Research Director Greg Sullivan and Research Assistant Andrew Mikula draw on IRS data showing aggregate migration flows by amount of adjusted gross income (AGI). The data show a persistent trend of wealth leaving high-tax states for low-tax ones, especially in the Sun Belt.

Intrepid Restauranteurs Endure: Passion for Community, Patrons, and Staff Mean Failure is Not on the Menu

0 Comments
/
Host Joe Selvaggi talks with Massachusetts Restaurant Association President and CEO Bob Luz about the devastating effects of the pandemic and lockdowns on restaurants.  They discuss the industry's creative strategy for survival, plans for reaching beyond the crisis, and the many positive improvements for this vital sector that employs 10% of the workforce in the commonwealth.