Who’s creating jobs now? Stall in U.S. Immigrant Entrepreneurship

Contributed by Jacqueline Lentini McCullough

According to a study released last month by the Ewing Marion Kauffman Foundation, the U.S. is experiencing a steady decline in the percentage of immigrant founded start-ups. Nationwide, the percentage of immigrant founded start-ups declined from 25.3 to 24.3 percent since 2005. In Silicon Valley, the situation is even more pronounced with the percentage of immigrant start-ups declining from 52.4 to 43.9 percent since 2005. If immigrants cannot successfully be employed by the companies they create, the incentive to keep the company located within the U.S. diminishes.

According to the Kauffman Foundation’s research findings, a byzantine immigration system and unfriendly environment in the U.S. is at fault and creates a “reverse brain drain” in the U.S. The research findings were conducted by Vivek Wadhwa, an Indian immigrant and academic researcher who recently released a book on the subject entitled, “The Immigrant Exodus: Why America is Losing the Global Race to Capture Entrepreneurial Talent.” According to Mr. Wadhwa’s book, the U.S. is experiencing an unprecedented halt in high-growth start-ups founded by immigrants. Without  immigration policy changes addressing the issue of limited green cards for skilled foreign nationals, the U.S. will continue to lose key job creators.  Mr. Wadhwa has launched a website funded by the Kauffman Foundation, http://www.immigrantexodus.com, as a resource for journalists and immigrant entrepreneurs.

Indian foreign nationals in the U.S. currently comprise the highest number of U.S. businesses founded by immigrants within the last six years at 33.2 percent.  Indians created more engineering and technology firms than immigrants from the next nine immigrant-founder countries combined. The remaining countries include the following: China (8.1%), the United Kingdom (6.3%), Canada (4.2%), Germany (3.9%), Israel (3.5%), Russia (2.4%), Korea (2.2%), Australia (2.0%), and the Netherlands (2.0%). Immigrant founders are most likely to start companies in the innovation/manufacturing related services, and software industries, employing approximately 560,000 U.S. workers. These industries combined generated an estimated $63 billion in sales from 2006 to 2012, emphasizing the importance of high-skilled immigrants to U.S. economic expansion.

Not surprisingly, while the U.S. is experiencing immigrant start-up stagnation, India and China are seeing the rates of start-up companies increasing.