Self- -Employed Immigrants Employed Immigrants Self Wing Young - - PowerPoint PPT Presentation

Self Self-

• Employed Immigrants

Employed Immigrants

Wing Young Hurie

Maude Toussaint Maude Toussaint-

• Comeau

Comeau

Federal Reserve Bank of Chicago Federal Reserve Bank of Chicago

The views expressed are the author’s and do not necessarily refl The views expressed are the author’s and do not necessarily reflect the views of the Federal Reserve Bank of ect the views of the Federal Reserve Bank of Chicago or the Board of Governors of the Federal Reserve System. Chicago or the Board of Governors of the Federal Reserve System. The author thanks Robin Newberger for providing valuable researc The author thanks Robin Newberger for providing valuable research assistance h assistance

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Motivation Motivation

• Immigrant businesses are an important contributor to:

Immigrant businesses are an important contributor to:

• the socioeconomic mobility of immigrants and their

the socioeconomic mobility of immigrants and their integration in the mainstream economy. integration in the mainstream economy.

• the revitalization and economic development of

the revitalization and economic development of many urban neighborhoods and communities. many urban neighborhoods and communities.

• economic growth in the U.S., as they account for

economic growth in the U.S., as they account for much of the growth of the minority small business much of the growth of the minority small business sector. sector.

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Presentation Outline Presentation Outline

• Size and growth of minority/ethnic/immigrant

Size and growth of minority/ethnic/immigrant businesses in the U.S. businesses in the U.S.

• Challenges for immigrant self

Challenges for immigrant self-

• employment.

employment.

• Socioconomic

Socioconomic characteristics/factors affecting the self characteristics/factors affecting the self-

• employment decision of immigrants.

employment decision of immigrants.

• Conclusions and policy implications.

Conclusions and policy implications.

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Number of Businesses Number of Businesses by Race/Ethnicity and Minority Status, 1997 by Race/Ethnicity and Minority Status, 1997

Number Percent Total U.S. firms 20,821,934 100.0 5.7 4.3 4.0 85.4 14.6 Hispanic-owned 1,199,896 Asian-owned 912,959 Black-owned 823,499 Nonminority-owned 17,782,901 Minority-owned 3,039,033

Source: U.S. Census Bureau, Survey of Minority-Owned Business Enterprises (SMOBE), 1997.

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Immigrant Proportion of the Self Immigrant Proportion of the Self-

• Employed and Total Population

Employed and Total Population by Race/Ethnicity, 1999 by Race/Ethnicity, 1999 Percent

10.0 5.8 8.8 11.8 54.5 66.8 79.4 89.4 10 20 30 40 50 60 70 80 90 White Black Hispanic Asian foreign born % of respective population foreign-born % of respective self-employed population

Source: The percent of the foreign-born population is based on data from U.S. Census Bureau, Profile of General Demographic Characteristics, 2000. Author’s calculation of the percentage of self-employed foreign-born population is based on U.S. Census Bureau, Public Use Micro Statistics (PUMS), 2000.

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Estimated Number of Immigrant Businesses Estimated Number of Immigrant Businesses by Race/Ethnicity by Race/Ethnicity

Number % of all firms % of minority firms Estimated Hispanic immigrant-

• wned

801,531 3.8 3.9 0.5 4.9 13.2 26.4 Estimated Asian immigrant-

• wned

816,185 26.9 Estimated Black immigrant-

• wned

97,173 3.2 Estimated nonminority immigrant-owned 1,031,408 33.9 Estimated total immigrant-

• wned

2,746,297 90.4

Source: Author’s calculation based on SMOBE, 1997, and PUMS, 2000. Recall total U.S. firms = 20,821, 934 and total minority firms = 3,039,033.

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Growth of Minority Growth of Minority-

• Owned Businesses, 1982

Owned Businesses, 1982-

• 1997

1997

200000 400000 600000 800000 1000000 1200000 1982 1987 1992 1997 Year

Number of Firms

Hispanic- Owned Asian- Owned Black- Owned

Source: SMOBE, 1982, 1987, 1992, 1997.

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Challenges to Immigrant Challenges to Immigrant-

• Owned Businesses

Owned Businesses

• Some immigrant groups, as is the case for

Some immigrant groups, as is the case for minorities, are underrepresented in the minorities, are underrepresented in the small business sector. small business sector.

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Business Representation Business Representation by Ethnic/Racial Immigrant Status by Ethnic/Racial Immigrant Status

Population per business

• wner

Immigrant population per immigrant business owner Immigrants

• 12.5

11.0 17.8 12.6 27.6 12.9 U.S.-born

• White

8.8 Hispanic 16.0 Asian 10.9 Black 19.5

Source: Author’s calculations based on PUMS, 2000.

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Challenges to Immigrant Self Challenges to Immigrant Self-

• Employment

Employment

• Immigrants have more limited relationships with

Immigrants have more limited relationships with financial markets. financial markets.

• They tend to be more likely to lack capital and

They tend to be more likely to lack capital and sufficient credit history to borrow from banks and sufficient credit history to borrow from banks and financial institutions (Bates, 1996). financial institutions (Bates, 1996).

• The majority of some immigrant groups (i.e., Hmong

The majority of some immigrant groups (i.e., Hmong in MNP/St. Paul; Mexicans in Little Village, in MNP/St. Paul; Mexicans in Little Village, Chicago) leverage heavily on personal savings and do Chicago) leverage heavily on personal savings and do not even apply for a loan to start their business not even apply for a loan to start their business (Federal Reserve Bank of Chicago Neighborhood (Federal Reserve Bank of Chicago Neighborhood Surveys). Surveys).

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Relationship with Banks Relationship with Banks

Immigrant business owners U.S.-born business

• wners

18% 82%

32% 68%

Banked Unbanked

Source: Survey of Income Program and Participation (SIPP), 1996 Panel, Wave 12 (Aug. 99-Feb. 2000).

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Relationship with Banks Relationship with Banks Mexican and Asian Mexican and Asian

Mexican-born business

• wners

48% 52% 32% 68%

Asian-born business

• wners

Banked Unbanked

Source: SIPP (Aug. 99-Feb. 2000).

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Characteristics of Immigrants Characteristics of Immigrants

• Language Proficiency

Language Proficiency

• Years Since Migration

Years Since Migration

• Ethnic Concentration

Ethnic Concentration

• Gender

Gender

• Country/Region of Origin

Country/Region of Origin

• Educational Attainment

Educational Attainment

Self Self-

• Employment Rates

Employment Rates by Immigrant Status and Gender by Immigrant Status and Gender

10.5 6.1 10.3 7.7 2 4 6 8 10 12 U.S.-Born Male U.S.-Born Female Immigrant Male Immigrant Female

Source: 2000 PUMS. The population is defined as 18 to 64, with positive earnings, in labor force, residing in metropolitan areas.

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Self Self-

• Employment Rates

Employment Rates by Selected Region/Region of Origin by Selected Region/Region of Origin

Source: 2000 PUMS. The population is defined as males, 18 to 64, with positive earnings, in labor force, residing in metropolitan areas.

14.8 8.0 16.4 10.5

2 4 6 8 10 12 14 16 18 20

percent U . S

• b
• r

n I m m i g r a n t s M e x i c

• S

. a n d C . A m e r i c a S . E . A s i a N . E . A s i a I n d i a / P a k i s t a n M i d d l e E a s t / E g y p t E u r

• p

e C a r i b b e a n C u b a A f r i c a 19.4 11.7 12.4 7.9 9.0 6.9 10.3 10.5

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Assimilation and Propensity for Self Assimilation and Propensity for Self-

• Employment

Employment

2 4 6 8 10 12 14 16 18 20 After 1995 1990- 1994 1985- 1989 1980- 1984 1975- 1979 1970- 1974 1965- 1969 1960- 1959 Before 1950 year of arrival self-employment rate

Source: 2000 PUMS. The population defined as males, 18 to 64, with positive earnings, in labor force, residing in metropolitan areas.

16

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Average Years Since Migration Average Years Since Migration by Self by Self-

• Employment Status and Region/Country of Origin

Employment Status and Region/Country of Origin

5 10 15 20 25 30

I m m i g r a n t s M e x i c

• C

. a n d S . A m e r i c a S . E . A s i a N . E . A s i a I n d i a / P a k i s t a n M . E a s t / E g y p t E u r

• p

e C a r i b b e a n C u b a A f r i c a

Waged Employed Self Employed

Source: PUMS, 2000. The population is defined as males 18 to 64, with positive earnings, in labor force, residing in metropolitan areas.

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Average Years of Schooling Average Years of Schooling by Self by Self-

• Employment Status and Region/Country of Origin

Employment Status and Region/Country of Origin

2 4 6 8 10 12 14 16 18 U.S.-born Immigrants Mexico

• C. and S. America

S.E. Asia N.E. Asia India/Pakistan

• M. East/Egypt

Europe Caribbean Cuba Africa

Waged Employed Self Employed

Source: 2000 PUMS. The population here is defined as 18 to 64 males, with positive earnings, in labor force, residing in metropolitan areas.

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Proportion of Immigrants with Limited English Proficiency Proportion of Immigrants with Limited English Proficiency by Self by Self-

• Employment Status and Region/Country of Origin

Employment Status and Region/Country of Origin

10 20 30 40 50 60 I m m i g r a n t s M e x i c

• C

. a n d S . A m e r i c a S . E . A s i a N . E . A s i a I n d i a / P a k i s t a n M i d d l e E a s t / E g y p t E u r

• p

e C a r i b b e a n C u b a A f r i c a

Waged Employed Self Employed

Source: 2000 PUMS. The population here is defined as 18 to 64 males, with positive earnings, in labor force, residing in metropolitan areas.

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Average Percent of Co Average Percent of Co-

• Ethnic in Metropolitan Areas

Ethnic in Metropolitan Areas by Self by Self-

• Employment Status and Region/Country of Origin

Employment Status and Region/Country of Origin

2 4 6 8 10 12 14 16 percent

Immigrants Mexico

• C. and S. America

S.E. Asia N.E. Asia India/Pakistan

• M. East/Egypt

Europe Caribbean Cuba Africa Waged Employed Self Employed

Source: PUMS, 2000

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Conclusions/Implications Conclusions/Implications

• Immigrants play an important role in the

Immigrants play an important role in the creation of small businesses in the U.S. creation of small businesses in the U.S.

• Implications:

Implications:

• Promote/continue initiatives that

Promote/continue initiatives that effectively encourage the development and effectively encourage the development and growth of small businesses, particularly growth of small businesses, particularly targeted to underrepresented groups targeted to underrepresented groups (minorities, Hispanic and Black (minorities, Hispanic and Black immigrants). immigrants).

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Conclusions/Implications Conclusions/Implications

• Language (potentially cultural) barriers

Language (potentially cultural) barriers may hinder the ability of some among may hinder the ability of some among immigrant groups to go into businesses. immigrant groups to go into businesses.

• Implications:

Implications:

• Promote/continue initiatives in

Promote/continue initiatives in educational/entrepreneurial trainings. educational/entrepreneurial trainings.

• Design creative marketing strategies to

Design creative marketing strategies to reach immigrant markets. reach immigrant markets.

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Conclusions/Implications Conclusions/Implications

• Ethnic concentration increases self

Ethnic concentration increases self-

• employment opportunities for immigrants.

employment opportunities for immigrants.

• Implications:

Implications:

• Promote/continue initiatives to encourage

Promote/continue initiatives to encourage growth of ethnic business enclaves. growth of ethnic business enclaves.

• Promote affordable housing in

Promote affordable housing in neighborhoods adjacent to concentrations neighborhoods adjacent to concentrations

• f ethnic businesses.
• f ethnic businesses.

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Conclusions/Implications Conclusions/Implications

• Conclusive national data is still needed to

Conclusive national data is still needed to assess the assess the variation variation in business financing in business financing behavior behavior of immigrants, and gain a broader

• f immigrants, and gain a broader

knowledge about issues of access to knowledge about issues of access to financing faced by immigrants. financing faced by immigrants.