It’s often said that immigrants make an economy more dynamic. New research proves it, and comes at a time when the U.S. economy has experienced a significant shortfall in immigration due to government policies. It also comes as policymakers around the world search for ways to make their economies grow faster and become more dynamic.
“Immigrants boost economic growth, employment growth and economic dynamism through their contributions to the workforce, entrepreneurial activities and purchases of goods and services,” according to Madeline Zavodny, an economics professor at the University of North Florida, in a National Foundation for American Policy study. “The analysis finds that immigrants may slow the offshoring of manufacturing activity by U.S. businesses, indicating the importance of immigration to increasing U.S. domestic manufacturing production.”
To conduct the research, Zavodny combined data from the American Community Survey with the U.S. Census Bureau’s Business Dynamics Statistics program for nearly 250 metro areas. “Metro areas with a higher share of immigrants have more dynamic economies and experience faster growth in the number of jobs created and new business establishments,” she found. “During 2010 to 2019, foreign-born workers accounted for up to one-quarter of employment growth and up to three-quarters of the growth in business establishments in the 248 metro areas examined.” (Emphasis added.)
Provo-Orem in Utah was the second-fastest growing metro area for employment growth and the fastest growing for business establishment growth between 2010 and 2019, according to the research. Derek Miller, president and CEO of the Salt Lake Chamber, said, “Utah is a place where the American Dream is still alive, and that the state should strive to be a place where people can come to achieve the American Dream.” Miller helped lead the effort for the Utah Compact, formed in 2020, and made up of “state leaders, private leaders, religious groups and law enforcement,” who “outlined a set of immigration principles” to help promote a more positive tone over immigration policy.
Utah Gov. Spencer Cox, a Republican, reported that the number of immigrants in Utah increased 64% between 2000 and 2019, according to KSL.com. “We know new Americans play a vital role in the state fastest-growing economy and most in-demand fields,” he said.
Zavodny found immigrants start more businesses than the U.S.-born and supply needed workers. “Greater availability of workers because of immigration is likely to stimulate business entry and expansion,” writes Zavodny. “Workers with the skills most in demand are particularly important. Similarly, an increase in the number of consumers due to immigration is likely to stimulate business entry and expansion.”
The research concluded that foreign-born workers are crucial to the business dynamics of the construction industry, while college-educated immigrants are “particularly important” in the information industry, which includes software services.
Across 248 metro areas: a 1 percentage point higher share of working-age foreign born in the population in 2010 is associated with a 0.58 percentage point higher growth rate in the number of business establishments and a 0.7 percentage point higher employment growth rate. A 1 percentage point higher share of working-age foreign born in the population in 2010 who are college graduates is associated with a 1.64 percentage point higher growth rate in the number of business establishments and a 2.1 percentage point higher job growth rate, according to the research.
“Business dynamism has been declining in the United States since the 1980s,” according to Zavodny. “Immigrants promote economic growth by moving to areas where businesses are forming or expanding and need more workers. As workers, consumers and entrepreneurs, immigrants promote business dynamism by adding their skills to the labor force, serving as a new group of customers and starting up new businesses. Immigrants enable the U.S. economy to add more businesses and jobs and help it to grow continuously and change instead of stagnating.”