Immigrants Key to Economy's Revival

In Washington on Sunday, the tens of thousands of demonstrators demanding immigration reform looked like the opening round of the last thing the country needs now: another big debate on a divisive issue.

Yet Congress seems ready to take on immigration, which has been dividing Americans since the republic was founded.

But identifying immigrants as a “them,” as both their advocates and nativists do, misses the point. Immigrants — and their children — are the people who will help define the future “us.” They are also critical to the revival of the U.S. economy.

This is particularly true on the entrepreneurial frontier.

Overall, some of the country’s highest rates of entrepreneurship are found among immigrants from the Middle East, Cuba, South Korea and countries of the former Soviet Union. These recent arrivals regularly build new businesses — from street-level bodegas to the most sophisticated technology firms.

Immigrants started one-quarter of all venture-backed public companies between 1990 and 2005. In addition, large U.S. firms are increasingly led by executives with roots in foreign countries, including 14 CEOs of the 2007 Fortune 100.

Nowhere is this contribution more critical than in our major cities, many of which would be economically destitute without these immigrant communities.

In Los Angeles County, for example, the self-employment rate among immigrants is more than 10 percent — almost twice that for the native-born. Nationwide, according to the last economic census, the number of all Latino establishments increased by nearly three times the national average, while those owned by all Asians expanded by two times.

Immigrant contributions extend across a range of activities, from retail and food to culture. Asian immigrants, like the Italians and Jews before them, have concentrated in specific niche markets and then expanded beyond historic ghettos.

Asian Indians, who began emigrating in large numbers starting in the 1970s, specialized in hotels and motels across the country. South Koreans opened greengroceries in New York and Los Angeles. Vietnamese became known for nail parlors, and Cambodians for doughnut stores. Overall, Asian enterprises expanded at roughly twice the national average in the first years of the new century.

Perhaps most remarkable has been the movement of Asian immigrants into technology. In California, they account for a majority of such firms. Regions at the center of the high-tech economy — including Silicon Valley, Orange County and parts of suburban Seattle — are now heavily Asian-American. Although most of these new companies are small, some have grown sizable. The founders of Sun Microsystems, Yahoo, AST Research and Solectron are all of Asian descent — and are largely immigrants.

This immigrant experience, says John Tu, president and co-founder of Kingston Technologies, the world’s largest independent producer of computer memory, has forced them to think differently.

“The key thing is,” Tu said, “being an immigrant makes you flexible. ... IBM, Apple and Compaq were inflexible. They told the memory customers: Take it or leave it. We thought about the customer and the relationship with the employees. I guess we didn’t know any better.”

Yet the immigrant contribution goes beyond high-tech. In the years ahead, these new Americans, nonwhites and the “blended” population could reshape the national marketplace. Taken together, purchases by Asians, African-Americans and Native Americans, according to the Selig Center for Economic Growth at the University of Georgia, have exploded, growing far more rapidly than the national average.

Combined with Latinos, these minorities could account for more than $2.5 trillion by 2010 — nearly one in every $4 of U.S. consumer spending.

Perhaps nothing better illustrates these changes — and immigrants’ effect on daily life — than the shifts in that most basic of industries: food.
In the old paradigm, ethnic groups such as Italians might cook traditional foods, like pizza, for their compatriots. Then, in a generation or two, they would reach out to the mainstream population. Meanwhile, immigrants, and particularly their children, acclimated to “American fare” like McDonald’s.

But today, the shift from ethnic niche to mainstream is rapid. In Houston, once dominated by Southern cuisine, nearly one in three restaurants — overwhelmingly small, family-run businesses — serves Mexican or Asian cuisine. They account for more establishments than all the hamburger, barbecue and Italian restaurants put together.

Nationwide, while pizza, hamburger and other traditional fast-food restaurants have stagnated, new chains selling quick, inexpensive Asian or Mexican food have flourished. Consider the successful Panda Express, started and owned by immigrants.

By embracing, and being embraced by, immigrants, America can continue to build on its diversity. This allows the nation to retain its youthfulness, tap the global market and provide critical new spurs to innovation.

America increasingly resembles Walt Whitman’s description, “not merely a nation, but a teeming Nation of nations.” The mid-21st-century United States can reflect that description — and aspiration — to our substantial long-term benefit.

This article first appeared at Politico.

Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in Febuary, 2010.

Photo by SEIU International