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June 14, 2012

Immigrants and Small Business Ownership

A Groundbreaking Study Shows the Critical Role They Play

We all know that small businesses are important to our economy. Small businesses employ 30% of all private sector employees nationwide. A new, groundbreaking report highlights the important role immigrants play in this critical sector nationally and even right here in Virginia.

Using previously unpublished Census data about business ownership, the Fiscal Policy Institute (FPI) in New York found that more than 1 in 6 small business owners – or 18 percent – in the U.S. is an immigrant. Interestingly, immigrants are only 13 percent of the overall population and 16 percent of the labor force, according to the American Community Survey from 2010.

That means that not only do immigrants account for a substantial share of small business ownership, but that the share of immigrant small business owners is larger than the immigrant share of the population.

That is a big change in the small business landscape compared to 20 years ago when immigrants made up just 12 percent of small business owners.

On top of that, immigrants drove a substantial portion of overall growth of small businesses. Between 1990 and 2010, immigrants accounted for  30 percent of the overall growth in the number of small businesses in this country.

While the research reveals that immigrant businesses tend to be smaller in both the income of owners and the number of employees, immigrant small business owners nevertheless contribute mightily: generating $419 billion (15 percent) of the total earned income of all small business owners between 2006 and 2010.

In Virginia, the story is similar to what the report reveals on a national level:

  • 17 percent, or nearly 1 in 6, small business owners in Virginia is an immigrant. Much like the national picture, the share of immigrant small business owners is larger than the immigrant share of Virginia’s population (10 percent) and larger than the immigrant share of the labor force (14 percent).
  • Virginia’s immigrant small business owners generated $1.6 billion between 2006 and 2010, which is 15% of total small business earnings.
  • Immigrant small business owners grew from 9 percent of total small businesses to 19 percent between 1990 and 2010.

Similar to what the national report found, the data shows that immigrant small business owners in Virginia are spread throughout our economy.  They are as likely to be found on Main Street as in a technical office park: 53 percent of Restaurant owners, 43 percent of Grocery store owners,  and 40 percent of Child day care providers in Virginia are immigrants.

Small business is important to our national and state economies. As this report shows, immigrants play a key role in driving the growth of small businesses nationally and in Virginia. Policymakers at the national, state and local levels should keep these facts close at hand as they wrestle over our immigration policies and the important role immigrants play not only in our national identity, but in the health of our national and state economies.

The Commonwealth Institute

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