Why Immigrants Matter

One of the most consistent similarities between regions, like Silicon Valley, of the 20th and 21st Centuries that have catalyzed the nation’s economic growth is the large presence of immigrants. Immigrants were at the source of early 20th Century midwestern industrial innovation in cities like Detroit that propelled America’s industrial growth, and they are a significant part of the regions that serve as economic catalysts in today’s world. In 1900, 33.8% of the metropolitan Detroit region was foreign born. Today, Silicon Valley is 36% foreign born (almost three times the national average).

Over the last half-decade, a movement of local immigrant-welcoming and immigrant-focused economic development initiatives has been created and is beginning to define the national character around immigration. Included in this movement are well over a dozen local immigrant economic development initiatives that have developed organically and independently to capitalize on the talent, entrepreneurial spirit, and determination that immigrants bring to a metropolitan region.

It has been said that the act of immigrating is entrepreneurial. And America’s immigrants have a long and deep history of entrepreneurship. In 2011 alone, 28 percent of the small business start-ups in the U.S. were launched by immigrants. While nationally, the Kauffman Foundations and U.S. Small Business Administration have found that immigrants start businesses at twice the rate of native born Americans, from 1996-2007 Michigan’s immigrants started businesses at three times the rate of the native-born Michiganders.

These are not just small businesses. According to the Partnership for a New American Economy, “New Americans” (defined as immigrants to the U.S. and their children) were responsible for more than 40 percent of the 2010 Fortune 500 companies, employing more than 10 million people worldwide. Collectively, these companies boast revenues of $4.2 trillion – a figure greater than the GDP of every country in the world except the U.S., China, and Japan.

In addition to being at the helm of some of the world’s largest companies, immigrants have been at the source of America’s global predominance in high-tech and venture capital. According to research at Duke University and UC-Berkeley, immigrants founded or co-founded 25 percent of all the high-tech firms launched in America between 1995-2005, including 52 percent of Silicon Valley’s high-tech firms, as well as 32.8 percent of Michigan’s high-tech firms during that period. Michigan actually ranked third highest in the nation in this statistic, after only California and New Jersey and the findings suggest that foreign-born Michiganders are approximately six times as likely to create a high-tech firm as native-born Michiganders.

Immigrants are not just important to the high-tech economy, but to both the export and manufacturing economies, critical pieces of Metro Detroit’s future growth. Immigrant-owned businesses comprise 50.5 percent of all the “high export” firms in the U.S. (firms whose exports comprise more than half of their annual sales) and 35.1 percent of the firms whose exports comprise 20-49 percent of total sales. The Partnership for a New American Economy has linked immigration growth to the creation and retention of manufacturing jobs, specifically pinning the retention of some 20,000 manufacturing jobs in Michigan due to the growth in immigration in the state between 2000 and 2010.

Michigan, like many Midwestern states, retains a fairly well-educated immigrant population. Michigan immigrants are 1.5 times as likely to posses a four-year college degree (37 percent vs. 23.7 percent) as native born Michigan residents. Immigrant talent is especially prevalent in the science, technology, engineering, and mathematics (STEM) fields. Approximately one-fourth of the members of the National Academy of Sciences are foreign-born. In 2009, eight of the nine Nobel Prize winners in science were Americans, and five of those eight Americans were foreign-born. In fact, foreign-born Americans won more Nobel Prizes in science in 2009 than all the other nations of the world combined. Similarly, in 2013, six of the eight Nobel Prize winners in science were Americans, and four of those six Americans were foreign-born, making foreign-born Americans winners of more prizes than all the other nations of the world combined.

International students and immigrants are estimated to comprise:

  • 50 percent of all new U.S. Ph.D.s in engineering;
  • 45 percent of all new U.S. Ph.D.s in life sciences, physical sciences, and computer sciences;
  • 40 percent of all new U.S. master degrees in computer sciences, physical sciences, and engineering; and
  • 25 percent of all practicing physicians.

Finally, it is not simply the STEM talent that is attracting the interest of economic development practitioners in immigrants as valuable contributors to local job creation, economic growth, and regional prosperity. Nationally, while 65 percent of the native-born population is between the ages of 15-64 (working-age), 84 percent of the new immigrants who entered between 2000 and 2010 were in this age demographic. In Michigan, 64.4 percent of immigrants are working age compared to 50 percent of the native born population, an incredibly important statistic in a rapidly aging state and the only state to have lost population between the 2000 and 2010 Census.