The Effects of Immigration Laws on US Businesses

 | 

Nationalist policies are making life tough on would-be US immigrants. Yet settlers often offer more than they take. Scott McCulloch reports.

What have immigrants ever done for us? Plenty.  

Yet nationalist policies have gained strength around the globe. And they’ve come at the expense of immigrants, who are often the target of misinformed dogmatists.  

Emboldened legislators in Europe, weary from the region’s protracted migrant crisis, are increasingly strident on border controls. 

Brexit, and all its hubris, is being driven by British nationalism.  

Then there’s US President Donald Trump’s wall. 

ACongress and Trump continue to clash over the Mexico border barrier and restrictive immigration policiesa multi-trillion-dollar issue is being overlooked. 

According to the US National Immigration Forum, immigrant-owned businesses employ more than 19 million people and generate $4.8 trillion in revenue.  

They also play a major role in rejuvenating regions that have seen economic decline. 

Yet immigration policy does not sufficiently address the contributions immigrants make to the nation’s entrepreneurial ecosystem, says Stuart Anderson, executive director of the National Foundation for American Policy.  

The main problem, Anderson says, is that there is no visa status for immigrant entrepreneurs.

There are visas for family and employment, such as the HB-1, but none for someone who wants to start a business.

What effect will these policies have? Probably more harm than good. 

Research bears this out. Immigration generally improves the government’s fiscal situation, according to a University of Pennsylvania economic impact brief 

Many immigrants pay more in taxes over a lifetime than they consume in government servicesthe brief concludes.  

Documented or undocumented, immigrants are net positive contributors to the federal budget. 

A similar report from the National Academies of Sciences, Engineering and Medicine found immigration “had an overall positive impact on long-term US economic growth. 

First-generation immigrants cost the government more than native-born Americans, according to the report, about $1,600 per person per year 

But second-generation immigrants are “among the strongest fiscal and economic contributors in the US,” the report adds 

They contribute $1,700 per person per year. Native-born Americans, including third generation immigrants, contribute $1,300 per year. 

Legal immigrants represent about 14-15% of the US workforce.  

They are at the vanguard of innovation, accounting for a disproportionately high share of patent filings, science graduates, and senior positions at top venture capital-funded firms.  

A recent study of businesses with fewer than 100 employees by the Fiscal Policy Institutes Immigration Research Center found that while immigrants make up 13% of the US population, they make up 18% of small business owners. 

Countries shutting the door on legal migration are shooting themselves in the foot says William Kerr, an immigration expert at Harvard Business School. 

Kerr has researched the economic effects of global migration of workers for more than a decade. He began with a study of the H-1B visa program, which enables US employers to hire highly skilled foreign workers for three years. 

His team’s early findingsin 2001, found that the number of inventions by foreign ethnicities, Indians and Chinese in particular, was closely tied to H-1B admission levels. 

Kerr’s team came out with an overall conclusion that suggested US innovation increases with letting in more immigrant scientists and engineers. 

The study found little impact, positive or negative, on American Anglo-Saxon workers. 

Fast forward to present day and Kerr’s research shows that immigrants contribute to the innovation of large companies, accounting for about 25% of US patent filings. 

It’s nigh impossible to find research that suggests immigration is bad for developed economies.  

There are negatives:

Native-born residents of states with large concentrations of less-educated immigrants may face larger tax burdens, as these immigrants pay less in taxes and are more likely to send children to public schools.

(According to University of Pennsylvania’s economic impact brief)

So where to family enterprises fit in? Family businesses generate 64% of GDP and employ 62% of the workforce, according to Family Enterprise USA, an advocacy group.  

And family firms account for whopping 82 million jobs.  

Chances are a significant number of immigrants had a hand in the hefty $5.9 trillion family firms bring to the US economy.

Related Links:

Young successors studying overseas 

How women can pass on the values in a family business

Start Your Free Learning Journey

Explore Content