Kauffman-funded researchers found that immigrants started new companies or became self-employed at nearly twice the rate of native-born Americans, creating an average of 520 businesses a month per 100,000 people last year. A growing immigrant population and the high likelihood of immigrants becoming entrepreneurs contributed to a rising share of new immigrant entrepreneurs: 28.5 percent of all new entrepreneurs are immigrants in the 2015 Index, compared to 13.3 percent in the 1997 Index.
All racial and ethnic groups – particularly Latinos – experienced increases in the rate of new entrepreneurs between the 2014 Index and the 2015 Index. The Latino share of all new entrepreneurs rose from 10.0 percent in 1996 to 22.1 percent in 2014. The Asian share also rose substantially during this period. The share of white entrepreneurs declined over the past 18 years, and the black share increased slightly.
The increase in startups could reflect greater opportunities for Hispanic entrepreneurs as well as the possible struggle for them to find salaried employment because of language barriers and other obstacles, said Alberto Dávila, chairman of the economics and finance department at the University of Texas-Pan American in Edinburg, Texas.
He added that immigrant Latino entrepreneurs often start “small mom and pop shops” rather than the fast-growing firms that account for a disproportionate share of U.S. job growth. “If you dig into the numbers, it’s really Mexican self-employment that is carrying this growth” in Latino business-creation, he said, citing data from the census and the Bureau of Labor Statistics.
The number of high-skilled immigrant business owners has risen in recent years as more immigrants with advanced degrees have opted to start their own firms, added Magnus Lofstrom, a senior research fellow at the nonpartisan Public Policy Institute of California in San Francisco.
Yet, he said, many self-employed immigrants have a high-school education, or less, and their ventures may be less likely to result in high earnings.
In 31 of the 50 largest U.S. metro areas, immigrants accounted for all of the net growth in owners of “Main Street” businesses such as restaurants, retailers, dry-cleaning services and beauty salons from 2010 to 2013.
Businesses started by immigrants and Latinos helped drive a total increase in new business creation in the U.S. compared to previous years. Over the past two decades, the Startup Activity Index generally has risen or fallen in tandem with the business cycle – up in the 1990s expansionary period and falling with the Great Recession. The entrepreneurial activity increase in the 2015 Index represents the largest year-over-year increase in the last two decades, giving rise to hope for a revival of entrepreneurship.
Most new entrepreneurs – 63.2 percent – were men. The 36.8 percent of females who became entrepreneurs in the 2015 Index is close to the two-decade low of 36.3 percent in the 2008 Kauffman Index. The rate of new entrepreneurs grew for all age groups except those aged 45 to 54, which experienced no change in the 2015 Index.