Tuesday, February 26, 2019

Immigrants, Economic Growth, and Job Creation

Forty-four million plus immigrants constitute over 14% of the U.S. population, the highest share since 14.8% in 1890 and 14.7% in 1910  The current percentage is triple that of the low of 4.7% in 1970.  Every year a million immigrants obtain lawful resident status in the U.S.  Half of all children born in the U.S. are offspring of immigrants.

Among the strongest argument for immigrants is that their entrepreneurship contributes to economic growth and job creation.

On December 4, 2017, the Center for American Entrepreneurship released a study showing that 43% (216) of all companies in the 2017 Fortune 500 were founded or co-founded by an immigrant or the child of an immigrant.  Of the Top 35 companies, the share is 57%.  The 216 firms produced $5.3 trillion in global revenue and employed 12.1 million persons worldwide.

Of the 216, 45 are high-tech, 37 wholesale/retail, 26 finance/insurance, 23 industrials, and so on.  They are spread throughout 37 states, with New York, Chicago, San Jose, Houston, and Dallas metropolitan areas each hosting 8.

Which immigrants contribute the most to growth and job creation?

Of 96 Fortune 500 companies founded or co-founded by immigrants, 73 came from Europe (Western and Eastern Europe), 11 from Canada, 6 from Asia, 2 from Latin America, 2 from Africa (one by 2 East Indians from Kenya and the other by Elon Musk from South Africa), and 1 from Australia.

Of 120 Fortune 500 companies founded or co-founded by a child of immigrants, 108 came from Europe, 9 from Canada, 2 from the Middle East, and 1 from Latin America (Cuba).

Summing up Fortune 500 companies, 93.5% of their founders were immigrants or children of immigrants from Europe and Canada (202 of 216).  Only 6.5% (14 of 216) were from countries outside Europe or Canada.   If the U.S. wants to attract entrepreneurial minded immigrants, it should focus on Europe and Canada.

Below is a list of top immigrants by name, the company with $2 billion or more in revenue they founded or co-founded, and their country of origin.

Steve Jobs, Apple (265.6 billion, 2018), Armenia/Syria
Jeff Bezos, Amazon ($232.9 billion, 2018), Cuba
Sergey Brin, Google ($120 billion est. 2018), Soviet Union
Andrew Grove, Intel ($73.2 billion, 2018), Hungary
Charles Pfizer, Pfizer ($50 billion, 2018 est.), Germany
Nigel Morris, Capital One (32.4 billion, 2018), England
Elon Musk, Tesla/SpaceX ($21.5 billion, 2018), South Africa and Canada
Maxwell Kohl, Kohl’s ($19.1 billion, 2018), Poland
Pierre Omidyar, eBay ($11 billion, 2018), France (of two Iranian parents)
Marcelo Claure, Brightstar ($10 billion, 2018), Colombia
Jorge Mas Canosa, Church & Tower, becoming Mastec Corporation ($6.9 billion, 2018), Cuba
James L. Kraft, Kraft Foods ($6.7 billion, 2016), Canada (8)
Andrew and Peggy Chern, Panda Express ($3.1 billion, 2017) Myanmar (Burma) (9)
Hamdi Ulukaya, Chobani Yogurt ($2 billion, 2016), Turkey (10)

Hispanic/Latino immigrants are starting small businesses faster than the general startup population, but many of these are founded to supply goods and services to the growing Hispanic/Latino population in the U.S.  Few firms founded by Hispanics/Latinos immigrants have achieved membership among the Fortune 500.

For those who want to explore the origins of recent company founders, 315 IPOs took place in the 9 years 2010-2018.  From the names of companies, one can identify the country of origin, the size of the IPO, the initial company valuation, and the current market valuation.  In 2018, none of the 48 IPOs was founded by a Hispanic/Latino.  I have not searched the other 271 IPOs that came to market during 2010-17, but it is likely that only a few was founded by Hispanics/Latinos in the U.S.  Latino/Hispanic founders of IPOs typically originated in Brazil or Spanish-speaking countries in Latin America. 

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