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Immigrant Entrepreneurship Has Stagnated For First Time In Decades, Says New Study

Immigrant entrepreneurs have always had a significant impact on U.S. culture and economy, and that continues to be true today. Immigrants started 28% of all new U.S. businesses in 2011, despite accounting for just 12.9% of the U.S. population, according to “Open For Business: How Immigrants Are Driving Small Business Creation In The United States”, a report published in August by The Partnership for a New American Economy.
Our own ranking of America’s wealthiest makes the point as well: 29 members of The Forbes 400 (full list below) are immigrants including four new entrants. Pakistan-born Shahid Khan, for instance, came to the U.S. at age 16, with $500 that his father had scrimped together, to study engineering. He is now CEO of auto parts manufacturer Flex-N-Gate and the new owner of the Jacksonville, Jaguars. “You can do anything you want to do (in America),” Khan told Forbes earlier this year. “You have to work hard, you have to create your own luck, and you have to have some luck also. But here, it’s possible.”
But the American Dream isn’t what it used to be for non-natives, say other billionaires. “The U.S. used to be the best place for new business,” says 5-Hour Energy creator Manoj Bhargava, who moved to the U.S. from India, “Now it has competition and, in fact, some places are now better. The most dangerous issue is the perception, true or not, that we are getting worse.”
Canadian-born Jeff Skoll, who was the first president of Ebay and has since produced such films as An Inconvient Truth, had even more critical remarks:

My opinion is that the US has gone out of its way to make legal immigration for highly qualified professionals more and more difficult. Foreign born entrepreneurs, technologists, graduates of US universities and academics are being denied work in the US in ever increasing numbers. While we may retain the motto of “give us your tired, your huddled and hungry”, in reality the US has become a fortress denying the dreams and aspirations of a generation of immigrants who would only make US society stronger, safer and more productive. It is to our detriment to continue these blatantly self destructive practices.
A new report by the Kauffman Foundation backs his claim that things are going the wrong direction, and that immigrant entrepreneurship, in tech and engineering fields, has stalled for the first time in decades and is “on the verge of decline.” The study, released today, shows that the proportion of high tech immigrant-founded companies slipped from 25.3% to 24.3% nationwide. In Silicon Valley, the drop was more dramatic; the percent of companies with at least one immigrant founder fell from 52.4% to 43.9%. An earlier Kauffman report released in March showed that the immigrant rate of entrepreneurial activity decreased from 0.62 percent in 2010 to 0.55 percent in 2011(though still up from .35 percent in 2005) while the native born rate declined at a much slower rate.
“We know anecdotally that there is some reverse brain drain due to great opportunity in India and China,”says Dane Stangler, Director of Research and Policy at Kauffman, “The number one reason is economy opportunity but there is also plenty of evidence that our system has become more unwieldy, unwelcoming, more burdensome for immigrant entrepreneurs to navigate.” Stangler specifically cites the Entrepreneurs Visa’s thresholds including having had to have already attraced significant investment.
Anna Lee Saxenian, dean of the University of California, Berkeley, School of Information, who has been studying immigrant entrepreneurs for more than two decades and also worked on the report, doesn’t see a flight so much as a plateauing, due in part to 9/11 and tougher immigration policy. “The U.S. used to be THE only place for technology entrepreneurs, now there are many places. I think our immigration policy is unnecessarily restrictive for highly skilled immigrants who almost always add value and possibly new jobs to the economy,” says Saxenian,
One of the country’s most successful immigrants, News Corp’s Rupert Murdoch, echoed her concerns. Co-chair of Partnership for a New American Economy, a nonpartisan group advocating for immigration reform, along with Mike Bloomberg and others, Murdoch blames Washington for not doing more in this area. “America is a great nation built on the hard work and ingenuity of immigrants,” said Murdoch (who came to the U.S. in the 1970s) in August ahead of an immigration panel discussion with Bloomberg, “Unfortunately, Washington has failed to enact immigration policies that acknowledge the role of immigrants in our economic successes, or consistently support the employment needs of America’s businesses.”
Since then, the Senate and House have introduced four bills to give green cards to foreign students earning advanced degrees in science, technology, engineering and math (STEM), a move commended by the Partnership, which, if eventually passed, could help start to slow the reversal.
For more on the topic, read the book on which the study is based, The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent, or the website, Immigrantexodus.com.

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