Immigrant Entrepreneurs Less Benefit than They're Cracked Up to Be

by Steve Sailer

The Center for Immigration Studies’ Steven A. Camarota and Mark Krikorian summarize their recent study “Reconsidering Immigrant Entrepreneurship: An Examination of Self-Employment Among Natives and Foreign-Born”, this way:

"Between 1960 and 1997, the self-employment rate of immigrants fell from 13.8 percent to 11.3 percent, while the self-employment rate for natives increased from 9.6 to 11.8 percent. The difference is now statistically insignificant; by 1997, therefore, the presence of immigrants had no effect on the overall level of entrepreneurship in the U.S."

I'd like to add a few points.

A. The bizarre fact that employers can count immigrants toward the fulfillment of their affirmative action quotas has tended to depress immigrant entrepreneurship over the last 30 years. If you just arrived from Guatelombia and find that, say, Texaco is desperate to hire more Hispanics to get the EEOC off its neck, why not take a nice secure job with them rather than risk starting your own auto body shop?

B. The quality of immigrants has regressed toward the mean significantly in the last couple of decades. When the immigration floodgates were opened in 1968, those foreigners who initially rushed to America tended to be courageous and enterprising enough to dare to be the first person from their extended family to move to America. Nowadays, most immigrants are coming because they've got a bunch of relatives in America upon whom they can rely on for work.

C. While immigrant entrepreneurs do indeed create jobs, they don't create many jobs for American citizens. Instead, they tend to employ mostly family members and other immigrants. The reasons for this are many, such as:

1. Their business operate more smoothly when the employees speak the same language as the owner/manager.

2. Most immigrants come from what Francis Fukuyama calls "low-trust" cultures like Latin America, the Philippines, China, and the Middle East. In those countries, you can't count upon the legal system for justice, so you must depend on your relatives. They bring this clannish mindset with them.

3. Our family-reunification immigration policy provides them with lots of relatives who need jobs.

4. They often come from patriarchal cultures where the oldest male is expected to force younger relatives to do his bidding through threats of ostracism -- this management tool doesn't work terribly well upon native-born employees. 

5. Immigrant entrepreneurs are not infected by political correctness, so they feel no guilt over holding caustic stereotypes of Americans, especially African-Americans, who they tend to see as shiftless, ignorant pilferers, and thus won't give black job applicants the time of day. For example, one of the main causes of the LA riot of 1992 was native blacks' resentment of the palpable contempt that Korean shopkeepers express toward their African-American customers.

6. Immigrants who operate business in black neighborhoods are terrified that if they hire local blacks, these homeboys will transmit their underclass attitudes, or worse, to their own children. One of the greatest fears of many an immigrant entrepreneur is that his daughter will present him with a grandson named Deion Washington Jr., who was conceived during a storage room dalliance with delivery boy Deion Washington Sr.

For all these reasons, a huge fraction of the jobs created by immigrant entrepreneurs tend to go to other immigrants, not to American citizens.

D. The main benefit that American citizens get from immigrant entrepreneurs is in better quality and cheaper prices. In certain industries like the restaurant business, the advantages that high immigration brings affluent native-born whites with sophisticated palates are spectacular. However, immigrant entrepreneurship reduces American entrepreneurship by foreclosing opportunities. For example, if there weren't hundreds of Korean liquor-store owners in South Central LA, there would still be hundreds of black liquor-store owners in South Central LA. The history is that most of the liquor stores in South Central were owned by Jews up until the Watts Riot of 1965. After that most of the Jews sold out to local blacks. But after liquor prices in California were decontrolled in 1978, owning a liquor store became a hard, competitive business, and most of the black proprietors sold out to members of the surging Korean immigrant community. If, however, there weren't a lot of harder-working immigrants to either compete with or sell out to, the blacks would presumably have stayed in business. They would have offered higher prices, shorter hours, and their stores wouldn't be as tidy. And thus ghetto blacks would probably drink less. But more blacks would be small businessmen, and in general that would be a plus for America.

E. Nonetheless, there are outside America's borders quite a number of outstanding entrepreneurs who would definitely be a net boost for current American citizens if they immigrated. Unfortunately, our present family-reunification-driven immigration policy does a bad job of admitting them, preferring instead to choose immigrants on the grounds of nepotism. Any kind of more rational and meritocratic system, such as Canada's, would be a significant improvement over what we've got.