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:

Erick Widman, Esq.: Immigrants Can Ease Worker Shortage

The immigration system in the United States is complex, to say the least. Visa categories for nearly every letter of the alphabet, exemptions, restrictions, rule changes with every new federal administration. We need more workers, innovators and entrepreneurs in an increasingly competitive world and amid an historic worker shortage and cash-strapped social safety systems due to a greying workforce. Does the United States’ immigration system work in its favor?

Gov. Healey’s Tax Plan: Not Enough on Competitiveness

0 Comments
/
In an effort to deliver "an affordable, equitable and competitive tax structure for Massachusetts," Governor Maura Healey on Feb. 28 unveiled her tax package. While her proposal makes significant strides in addressing affordability and indirectly improves equity, it does little to address the issues of competitiveness.

The Debate Over Rent Control Re-Emerges Amid Housing Crisis

0 Comments
/
There is a housing crisis in the Bay State, a fact unlikely to…

Eight Billion Minds: Unsustainable Population Bomb or Infinite Resource?

Hubwonk host Joe Selvaggi talks with Cato Scholar and author Marian Tupy about his new book, Superabundance: The Story of Population Growth, Innovation, and Human Flourishing on an Infinitely Bountiful Planet, focusing on the contrast in policy perspectives between those who see humans consumers of finite resources and those who recognize the unlimited potential of human ingenuity.

MBTA Safety Overhaul: Retooling Teams For Trustworthy Transit

0 Comments
/
This week on Hubwonk, host Joe Selvaggi talks with transit advocate and expert Chris Dempsey about ways in which structural change in the MBTA's safety oversight can be reformed to improve performance, engender greater trust amongst the region’s riders, and reduce transportation congestion in our growing economy.

Julianne Zimmerman on the Inventive Legacies of Immigrants

This week on JobMakers, host Denzil Mohammed talks with Julianne Zimmerman, managing director at Reinventure Capital, lecturer on Social Entrepreneurship at Tufts University (and named to Forbes' 2022 "50 Over 50" list). Julianne sees first-hand how immigrants collaborate with the U.S.-born to create meaningful inventions that solve real problems - but how rhetoric, policy, and an outdated system can shut them out.

Joséphine Erni on Bringing Swiss Innovation to the U.S. Market

This week on JobMakers, host Denzil Mohammed talks with Joséphine Erni, Innovation Lead at Swissnex in Boston and New York, and immigrant from Switzerland. She explains how building collaborations between the highly entrepreneurial Swiss and the world’s biggest market, the U.S., gives rise to incredible innovations that benefit the world.

Josh Bedi on How Immigrants Boost Native Entrepreneurship

This week on JobMakers, host Denzil Mohammed talks with Dr. Joshua Bedi, child of an immigrant and postdoctoral researcher in entrepreneurship in the Department of Strategy and Innovation at Copenhagen Business School in Denmark. He is the son of an immigrant who relocated from India to Jackson, Mississippi, and started a business. It was a simple neighborhood gas station, but also a symbol of what hardworking immigrants can do to boost innovation and business generation in host countries, as you’ll learn in this week’s JobMakers podcast.

Pioneer Institute Statement on Question 1

Yesterday, voters came closer than many expected to rejecting the largest tax increase in Massachusetts history, even though opponents were dramatically outspent by the unions that bankrolled the amendment to the state Constitution. 

Steve Tobocman and Mamba Hamissi on How Refugees Are Revitalizing Detroit

This week on JobMakers, host Denzil Mohammed talks with Steve Tobocman, head of the economic development nonprofit Global Detroit, and one of the thousands of refugee business owners he’s assisted, Mamba Hamissi, Burundi native and co-founder of Baobab Fare, an East African restaurant.