Overpaid and Over Here?: The Importance of Immigrants to NYC’s Economy
Immigration is a controversial issue. There’s no getting around the fact that politicians, as well as day-to-day New Yorkers, have been and continue to be deeply divided on the future of immigration laws. Does immigration mean taking work away from U.S. citizens, and the demise of American culture? Or is it the great building block of the economy, a multi-cultural blessing that’s as much as part of U.S. history as the Statue of Liberty herself?
The U.S. economy, and especially New York City’s economy, have historically relied on internationals who made the U.S. their home and brought to it their creativity, their skills, their willingness to work, and their ingenuity and entrepreneurship. This remains true today. Immigrants make up 36 percent of the population of New York City, but they account for almost half of all small-business owners here. In essential but more physical economic areas – laundry services, taxi and limousine services, grocery stores, beauty salons, and day care businesses, that percentage shoots up to between 70 and 90 percent of workers.(Immigrant Small Businesses in New York City, Fiscal Policy Institute, Oct. 3, 2011.)
The Partnership for a New American Economy, of which NYC Mayor Michael Bloomberg is a co-chair, has published reports demonstrating the crucial impact of immigrants in even the most sophisticated and influential of NYC companies: Forty percent of Fortune 500 companies were founded by immigrants or the children of immigrants, and together the companies employ more than 10 million people worldwide and generate annual revenue of $4.2 trillion. Bloomberg himself has repeatedly and vocally pushed for more welcoming immigration laws at a federal level, while also encouraging a state-led approach, reducing bureaucracy and hurdles to those wanting to come to the U.S. to work.In a recent speech, Mayor Bloomberg made his opinion clear:
We will not remain a global superpower if we continue to close our doors to people who want to come here to work hard, start businesses, and pursue the American dream. […] The American dream cannot survive if we keep telling the dreamers to go elsewhere. It’s what I call national suicide – and that’s not hyperbole.
The historically open shores and economy of the U.S. have become tougher and tougher for internationals to break into in spite of the economically positive impact of immigrants. These tough laws could be hurting our economy both now and in the future. Bloomberg adds, “Today, we may have turned away the next Albert Einstein or Sergey Brin. Tomorrow, we may turn away the next Levi Strauss or Jerry Yang.”Far from being dramatic rhetoric, statements such as Bloomberg’s are perfectly justified. Immigrants account for 12 percent of all Americans, but 26 percent of America’s Nobel Prize recipients and 24 percent of its patent applicants according to the American Economic Journal: Macroeconomics.
Federal or State Issue?
In the eyes of some, the issue of future immigration reform has also become one of federal vs. state rule. While Bloomberg is a vocal supporter of streamlined federal legislation and more reasonable immigration, he has also raised the possibility of individual states being given control over their own immigration laws – or, further, having a compulsory requirement to take in international workers. The reasoning? The economic results of increased immigration are clear:
[Immigrants’] presence in venture-capital backed companies is immense as well, with nearly half of the top venture-backed companies in the U.S. counting at least one immigrant as a founder, and three out of four claiming at least one core foreign-born team member such as a CEO, CTO, or VP of Engineering. One in four publicly-traded venture-backed companies was founded by immigrants as well. In the critical fields of engineering and technology, immigrant-founded companies produced $52 billion in sales and employed 450,000 workers in 2006. And some of the most innovative and successful companies in every era — from P&G in 1837, Pfizer in 1849, and US Steel in 1901, to Intel, Brightstar, Ebay, and Google today — were started by immigrants.(The Partnership for a New American Economy, Not Coming to America: Why the US is Falling Behind in the Global Race for Talent, May 2012)
With such striking historic and economic support for immigration’s positive impact, it’s unsurprising that Bloomberg sees the issue as one essential to the city’s future. Practical responses, he argues, must include increased H1-B visas (non-immigrant working visas) and a streamlined process for gaining U.S. citizenship – currently a long process involving investment and costs which many can’t afford.At a federal level, the reelection of President Obama may have a direct impact of the status of immigration in the U.S. With the proposed “immigrant amnesty,” some young illegal immigrants may avoid deportation. In a speech last June, Obama pointed out that “It makes no sense to expel talented young people who for all intents and purposes are Americans.” Under the measures, immigrants who were brought to the U.S. before they were 16, and have lived here for five consecutive years, would be free from any fear of deportation for at least two years under a “deferred action,” aimed to free up resources. Again, Obama makes clear the relationship between young, driven internationals and financial success: “This is a temporary stop gap measure that lets us focus our resources wisely while giving a degree of relief and hope to talented, driven, patriotic young people. It is the right thing to do.”Addressing the issue of potential U.S. immigration reform just last week, Chris Farrel of Businessweek came to a simple conclusion:
Let’s state the obvious: A rapid transformation of illegal immigrants into legal immigrants isn’t in the cards. Amnesty—let alone citizenship—is an anathema to large parts of the electorate. Too bad, since the scholarly evidence is compelling that immigrants—documented or not, legal or illegal—are a boon to the net economy.
A study commissioned by the Partnership for New York City and Partnership for a New American Economy recently highlighted the direct impact the U.S. immigration law can have on economic stimulus and growth. While the laws "have failed to keep pace with the country's economic needs," young entrepreneurs are either being kept out of the U.S. or are simply electing to invest elsewhere.The impact of specific U.S. policies can also be found by simply comparing U.S. and Canadian immigrants’ qualifications over the last 20 years. The same study found that in 1991, about 18 percent of both Canada's and the United States’ immigrants were considered "highly skilled." Since that time, Canada’s more liberal immigration stance has seen the percentage of highly skilled immigrants rise to 67%. The U.S. rate? A decrease of 5 percent.Turning back to New York City itself, the positive effect of immigrants on the city’s economy goes far beyond taxis and food stands: Immigrant entrepreneurs are also prominent in certain higher earning small businesses, comprising roughly 40 percent of the city’s computer system design, architectural, engineering, and real estate firms.What do these figures all mean, then? That the importance of immigration and international workers to NYC’s economy continues to be felt, and that any long term policy aimed at encouraging stability and growth in NYC – especially post-Sandy – must consider immigration to be a central issue.New York City has become the international city, and with that, can now enjoy all the benefits that come from having a dynamic, thriving and outward-looking economic environment.