How Much do ‘Immigrant Entrepreneurs’ Really Contribute to the U.S. Economy

A recently released report by the Fiscal Policy Institute “Immigrant Small Business Owners: A Significant and Growing Part of the Economy,” portrayed immigrant entrepreneurs as vital to a healthy U.S. Economy, noting that “…immigrants [make]up one in six of all small business owners…” According to the report, these small businesses, defined as having less than 100 employees, account for the employment of 4.7 million people.

A closer look at the study, however, raises questions about the importance to the economy of those small businesses headed by immigrants. The report noted that a large share of them are restaurants (37 percent of all restaurants), grocery stores (49 percent of all grocery store owners), and laundry and dry cleaners (54 percent of all such enterprises). The report notes that more than 40 percent of them have no employees other than the owner and a majority of the owners do not have a college degree.

This closer look at the data suggests that a large share of these small businesses are simply mom and pop ethnic enterprises catering to their co-ethnics tastes in food and consumable goods. It is understandable and laudable that these immigrants have found the means to support themselves, but it is not clear that these enterprises are an important contribution to the U.S. economy. It is also worth noting that in Arizona, where the illegal alien population precipitously dropped with the enactment of tough measures to discourage illegal immigration, many of these small business owners complained that they were in financial difficulty because they had lost much of their customer base.