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More Naturalized Citizens Are Starting Small Businesses

image for Ambrophoto/Shutterstock
Ambrophoto/Shutterstock
  • The number of naturalized citizens who became incorporated business owners increased by 70.5% between 2000 and 2017.
  • The top industry for both U.S.-born and naturalized citizens' incorporated businesses was construction.
  • Four of the top five metropolitan areas with the largest proportion of businesses owned by naturalized citizens are in California.

Immigration in America has been a hot-button issue for decades, but under President Donald Trump's administration, the issue has reached a fever pitch. While most proponents of stricter immigration policies believe restrictions will save American jobs, a recent survey by FundRocket found that immigrants who become naturalized citizens are major drivers of the country's small business community.

According to the study, which drew on data from the U.S. Census Bureau's American Community Survey, naturalized citizens are not only twice as likely to start incorporated businesses as U.S.-born citizens, the industries and cities that they operate in are thriving.

"Naturalized citizens founded many of the nation's most powerful businesses: Google, Yahoo, and eBay owe their existence to entrepreneurs born abroad," researchers wrote in their study. "Still, more titans of industry hail from families from other countries: Steve Jobs' and Jeff Bezos' fathers came from Syria and Cuba, respectively."

Nearly half of Forbes' Fortune 100 companies last year were founded by immigrants. Furthermore, researchers estimated that more than 1 in 10 American businesses are owned and operated by newcomers to the country.

There are more than 30 million small businesses in the U.S., which account for nearly 60 million jobs, or around 48% of the American workforce. With those numbers in mind, the 12.5% of incorporated businesses owned by naturalized citizens accounts for roughly 7.5 million jobs.

Though the number of businesses owned by naturalized citizens makes up a relatively small percentage of the overall workforce – compared to the 80% owned by native-born citizens – researchers found that the number of incorporated businesses owned by immigrants skyrocketed by 70.5% between 2000 and 2017.

Researchers also found that naturalized citizens were twice as likely to work for their own businesses than native-born residents. According to the data, 3.8% of naturalized citizens worked for themselves, compared with 1.9% of American-born residents. The trend continued in unincorporated business, as 5.3% of immigrants worked for themselves in that area compared with 3.4% of native-born Americans.

Overall, 53.6% of naturalized citizens held wage-based or salaried positions, compared with 42.7% of U.S.-born citizens. The data also shows that 43.3% of native-born workers reported being unemployed, while 28.2% of naturalized citizens polled said they were out of work.

While those unemployment numbers differ from those in the Department of Labor's Bureau of Labor Statistics, which shows native and non-native workers experiencing a much smaller gap in their respective unemployment rates, researchers said they think the discrepancy relates to the "rates of attrition" from the workforce.

"In some cases, naturalized citizens who came to America later in life are not eligible for benefits such as Social Security, meaning they can't comfortably retire like their native-born peers," they wrote.

Through its research, FundRocket identified the industries that benefited the most from immigrant participation. What researchers found was that construction (10%), food services (7.4%) and real estate (5.2%) had the largest percentages of naturalized business owners.

From 2000 to 2017, some industries experienced exponential growth thanks to the influx of naturalized citizen ownership. During that span, child day care grew more than 17 times larger, despite an ongoing shortage of child care programs in the U.S. Other sectors that grew substantially during that time were crop production (by 15.5 times) and individual and family services (by 6.9 times).

In comparison, native-born business owners helped other industries boom during that time. The number of museums, art galleries, historical sites and other institutions grew 15.8 times larger. Beverage manufacturing (11.9 times) and electronic component and product manufacturing (8.1 times) also saw major increases.

Researchers also found that certain ancestries had larger percentages of small business owners. Asian Indians made up the largest group, owning 8.7% of small businesses owned by naturalized citizens, while Mexicans (6.9%) and Chinese (6.4%) rounded out the top of the list.

Further data shows that 25% of naturalized citizens hailing from Kuwait were business owners, with most of their holdings in real estate. Similarly, 23.6% of naturalized Polynesian Americans own businesses, their industry of choice being professional, scientific and technical services. Nearly 20% of naturalized Israeli Americans are small business owners, and most of their businesses are in the construction industry.

"Sanctuary cities" have cropped up in recent years to stymie U.S. Immigration and Customs Enforcement agents' detention of undocumented immigrants. As a result, large populations of naturalized citizens also dwell in those locations.

Researchers found that many sanctuary cities are metropolitan areas with large percentages of businesses owned by naturalized citizens. The biggest concentration, according to the study, was in El Centro, California, with 50.4% of the incorporated businesses there owned by immigrants. Mexican Americans made up the majority there.

Of the top 15 metropolitan areas researched, eight are located in California and only three are located in a non-coastal state (Texas). Other locales with large percentages of businesses owned by naturalized citizens include Los Angeles; Washington, D.C.; and Newark, New Jersey. Researchers also revealed that 1 in 5 business owners in Florida are naturalized citizens, while California had the largest percentage of incorporated businesses owned by naturalized citizens with 23.8%.

Andrew Martins

Andrew Martins is an award-winning journalist with a Bachelor of Arts in journalism from Ramapo College of New Jersey. Before joining Business.com and Business News Daily, he wrote for a regional publication and served as the managing editor for six weekly papers that spanned four counties. Currently, he is responsible for reviewing tax software and online fax services. He is a New Jersey native and a first-generation Portuguese American, and he has a penchant for the nerdy.