Potential.role.immigrants.new.economy

Potential Role of Immigrants in the New Economy LPI-IPPSR Legislative Seminar Series Immigration and Out-Migration Legislative Luncheon

Soji Adelaja, Ph.D. John A. Hannah Distinguished Professor in Land Policy Director, Land Policy Institute Michigan State University

May 13, 2008

New Ongoing New Economy Projects at LPI • New Economy growth accounting. • Michigan’s Critical Assets. • Sustainable asset based economic development. – Talent attraction strategies. – Green infrastructure strategies. – Place-making strategies for Cities & communities. – Immigration-based infrastructure for economic development.

• Agricultural viability policies. Land Policy Educators

• Educational programs related to the above throughout the state (PZC, CPP, LPEs & LEP).

Presentation Outline Findings thus far on Immigration

• Salient features of American immigrants: – Immigration policy, Labor Force participation, and community impacts. – Immigrants and the New Economy: • Immigrants as knowledge workers and entrepreneurs. • Immigrant preference location and mobility.

• Current Status of Michigan on Immigration. • Immigrant solution to the current economic climate in MI. • New Economy Paradigm -- Placemaking for immigrants. • Case Studies of progressive places. • EB-1 Visa: Investor Green Card • What can Michigan do? • Office of New Americans. • Conclusion.

American Immigration Policy • Historically: (progressive, encourage diversity). • Immigration Act of 1965:(also progressive). Immigrants welcome based on 4 main criteria: –

(1) Family ties (for family reunification), (2) Refugee status, (3) Employment and (4) Investment. 1

• Immigration Policy in 1990s: – – –

Quota for immigrants admitted based upon skill level (H1 Visa) raised from 54,000/year to 140,000/year in 1990.1 Still 90% of immigrants that were allowed in came based upon having family ties or were refugees. 1 EB-5 visas allow immigrant investors to receive a green card for making qualified investments.

• American Competitiveness in the 21st Century Act of 2000. – – –

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Increased the H-1B visas to 195,000/year. 1 Universities and research centers were exempt from ceiling. 1 However, large backlog in the system stopping those who could potentially contribute to the U.S. economy (estimated at nearly 1,000,000 people/year). 2

Today: – – – –

Many foreign students studying here struggle to stay and work after they graduate. This is a brain drain of sorts. Post 911 laws signaled investor refocus in riskier emerging economies. Immigrant investors are finding more welcoming business and social climates.

1 Martin,

Susan and Lindsay Lowell, Competing for Skills: US Immigration Policy Since 1990, Institute for Study of International Migration. 2004. 2 Wadhwa, Vivek and AnnaLee Saxenian, America’s New Immigrant Entrepreneurs Part I, UC Berkeley School of Information, Duke School of Engineering and the Kauffman Foundation. 2007.

Immigrants & the Labor Force Most do not compete for Americans’ jobs?

• Immigrants make up to 14% of the labor force. 1 • Since 1990, the portion of the labor force made up of immigrants has grown by 5%. • Between 1990 & 2000, immigrants made up 38% of the growth in the labor force. 2 • Majority work in very high skilled and low skilled jobs while Americans tend to be employed in jobs that are middle wage/skilled jobs. • It is predicted that in the next 20 years, the majority of the growth in the labor force will come from immigrants.3 1

Migration Policy Institute, Foreign Born in the U.S. Labor Force: Numbers and Trends, January 2004. US Bureau of Labor Statistics, 2006. 3 Peri, Giovvani Ph.D., Immigrants, Skills and Wages: Measuring the Economic Gains from Immigration, Immigration Policy Center, 2006. 2

Immigrants Help Revitalize Communities •

Immigrants are often the only ones willing to invest in struggling communities: In many places, immigrants have come in after Americans have left and revitalized parts of dying cities.1 From 1990 to 2000, 92 counties across the nation would have seen net population loss, had it not been for immigration. 2

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1 2

Vogel, Stephen, Immigration and the Shrinking City, 2005. Lichter, Daniel T. and Kenneth M. Johnson, “Emerging Rural Settlement Patterns and Geographic Redistribution of America’s New Immigrant”, Rural Sociology. 2006.)

Immigrants & the New Economy American Community Survey and Census of Population

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Immigrants are becoming more diverse: – –

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Immigrants have higher educational attainment: – –

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Historically a majority of immigrants came from Eastern Europe. 1 In the last half century, immigrants are younger, come from Asia, Africa, Western Europe and South America. 2 10% immigrants have a master’s, professional or doctorate degree (9.5% for others). 1 25% have a bachelor’s degree (20% for non immigrants). 1

Immigrants do not reduce job opportunities for less educated nonimmigrants (Andrew Sum – Changing Work Force): – The number of natives with less than a high school degree is not correlated to the wages of native workers.2

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Immigrants are more likely to start their own business:3 – – – –

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According to the Kauffman Foundation, their entrepreneurship rate was about 33% higher than the native rate.4 Many employers fail to recognize the skills they possess, leaving them with few desirable options but starting their own business. 4 High % of immigrants have highly specialized degrees and skill sets. 4 Overall, immigrants have a lower unemployment rate than the native born population. 4

United States Census Bureau, American Community Survey, 2003. Files, John, Immigrants are Younger and More Diverse, The New York Times, June 10 2005. 3 Sum, Andrew. The Changing Workforce: Immigrants and the New Economy in Massachusetts, 2005. 4 Logan, John R., America’s Newcomers. Lewis Mumford Center for Comparative Urban and Regional Research, 2003. 2

Immigrants & the New Economy •

Immigrants are key players in IT: – According to a number of ongoing studies from Duke University, 52.4 % of all engineering and tech. companies established between 1995 & 2005 in Silicon Valley, CA had at least one immigrant key founder.1

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Immigrants are more likely than native born Americans to be knowledge-based workers. – In 2003, 30% of those working in the science, technology or engineering fields with Ph.D.s are immigrants.

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Knowledge immigrant workers seek out other immigrants. – Immigrants that start companies in the engineering and technology fields cluster in places with other companies founded by immigrants of the same ethnicity.2

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Immigrants bring in foreign investment: – Many immigrants who start their own business receive help from foreign investors.3 1

UC Berkley School of Information, Duke School of Engineering and The Kauffman Foundation, Education, Entrepreneurship and Immigration Part II, 2007. 2 Wadhwa, Vivek and AnnaLee Saxenian, America’s New Immigrant Entrepreneurs Part I, UC Berkeley School of Information, Duke School of Engineering, and the Kauffman Foundation, 2007. 3 Tseng, Yen-Fen, “Beyond “Little Taipei”: The Development of Taiwanese Immigrant Business in Los Angeles”, International Migration Review, 1995.

Immigrant Migration Trends •

A majority of immigrants, when they first arrive, settle in 6 key states: –

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Florida, California, New Jersey, Texas, New York, Illinois.

They tend to settle in places with already established immigrant communities. On arrival, most chose to locate close to family and usually within a community with a large population of people from their native country. They tend to eventually settle in places that are at least 30% foreign born.1 Parts of the nation with the lowest number of immigrants include the Midwest, with the exception of Chicago, and the Mississippi Valley. Those immigrants with a higher education and per capita income are the most mobile. 2

Logan, John R., America’s Newcomers, Lewis Mumford Center for Comparative Urban and Regional Research, 2003. 2 Gurak, Douglas T. and Mary M. Kritz, “The Interstate Migration of U.S. immigrants: Individual and Contextual Determinants”, Social Forces, 2000.

Michigan Not at Forefront of Attracting Foreign Born People1 • 5.6% of people living in Michigan are foreign born compared to the national average of 12.5%. • Michigan ranks 27th in the country for % foreign born. • 37,500,000 immigrants currently living in the United States: – 600,000 of them live in Michigan.

• Michigan known for high concentration of Arab Americans. 1

United States Census, Bureau American Community Survey, 2006.

New Americans: A Solution to Michigan’s Population Problem?

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A reason to look at Immigrants is that MI’s population is falling. Young & talented are especially leaving MI. Only MI and RI lost population in 2006. In-state migration data suggests a long-term flight from economic hardship. No economic growth w/o population growth. For the last decade, almost all population growth in MI came from immigration. Michigan has a number of immigrant communities, with a majority of them located in and around the Detroit Metro Area.

New Economy Paradigm Old Economy Low Cost Location

Companies & Employers

Manufacturing Population Growth Jobs

Prosperity

Old Economy

•Old Industrial Complexes are people magnets. •Strategies focused on attracting industry. •Strategies focused on cheap land, willing workers, raw materials, low taxes, etc.

New Economy Amenities QOL

Talented Knowledge Workers

Knowledge Jobs

Population Growth

Prosperity

New Economy

What amenities are relevant for immigrants?

•Great places are talent magnets. •Talented create jobs. •Strategies focused on attracting talented people. •Strategies focused on attractive tolerant places with great social, natural, entrepreneurial, creative and intellectual capital.

“Placemaking for Immigrants” • Placemaking is the use of strategic assets, talent attractors and sustainable growth levers to create attractive and sustainable high energy, high amenity, high-impact, high income communities that can succeed in the New Economy. Adelaja 2008 – Does Michigan want immigrant-based economic development ? – If so, do we have the assets to create a destinationpoint for immigrants? – Are talented immigrants as fungible as other knowledge workers? – What amenities are of importance to talented immigrants? – Can we rebrand and reimage MI (developing a welcoming persona) as a welcoming place? – What are some of the key strategies of this approach.

Basic Premise • Talented people want to live in places that are diverse, tolerant, and unique. – – –

Immigrants can enhance a community’s diversity, depending on state and culture. The presence of immigrants often projects an image of tolerance. Immigrants tend to live in ethnic communities with unique ethnic restaurants, shops, and services.

• Some of the most highly educated people in the country are immigrants and make up a significant portion of the creative class. • Fields most popular among immigrants are those in the knowledge based industries like technology which are some of the fastest growing fields. • Immigrants in these field are not only highly skilled, but also have established connections to the global economy. • For this reason they have the great potential to contribute to economic development.1 1 Wadhwa, Vivek and AnnaLee Saxenian, America’s New Immigrant Entrepreneurs Part I, UC Berkeley School of Information, Duke School of Engineering and the Kauffman Foundation. 2007.

Case Studies What Others are Doing

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Tennessee (Immigrants will come):1 – First state to allow documented and undocumented immigrants to acquire a driver’s license. – The state’s foreign born population grew by about 169% between 1990 & 2000. Illinois (High Net Worth Immigrants will Move): – Developed and passed the New American’s Executive order in 2005. – It established the Office of New Americans Policy in the Governor’s Office. – Early evidence suggests that this is increasingly becoming effective in making Illinois a stronger destination point for high net worth immigrants.

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Minneapolis (Entrepreneurs will always seek out opportunities): – Leveraged immigrants in its revitalization efforts. – Focused on the individual and on the unique needs of immigrant entrepreneurs. – Also celebrates their cultural diversity. – Many services created to help immigrant entrepreneurs are offered in a variety of languages and a small business finance tool that reflects finance tools from the immigrant’s country of origin.

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Others: – Philadelphia, Atlanta, Boston, Rhode Island. 1

www.carnige.org/reporter/11/newimmigrants/

Massachusetts 3 step process when creating immigration policy1 •

Public Discussion of Needs (Thorny Issue): –

Key questions include: • • • • •

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Develop and Implement a Plan to Increase Contributions to the Labor Market: – –

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Focus on raising of the skill level of immigrants that are already here and can not fully contribute to the economy because of lack of English skills and/or training. Also focus efforts on immigrant families in poverty.

Aim to address issues faced by children of immigrants: – – – –

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How many immigrants are already here. How many immigrants to attract. Which immigrants to attract. Where will they live. How can we develop better understanding of state’s current immigrant population.

Many immigrant children are struggling with issues like poverty, english proficiency and educational attainment. By focusing on education the state is investing in its human capital and the future generation. Assess how the educational system serves immigrant children. Determine if there is a need for other programs that specifically target children of immigrants.

Sum, Andrew. The Changing Workforce: Immigrants and the New Economy in Massachusetts, 2005.

EB-1 Visa: Investor Green Card • To be eligible, a foreign investor must: – Demonstrate that a "qualified investment" is about to be made, is being made or will be made. – Create an original business or expand an existing one and subsequently restructure it to expand by140%. – Business must create 10 or more jobs.

• Required capital is $1 million or $500,000 in a distressed area like Michigan. • Few places have a structured program to shepherd and nurture investors through the process.

What can Michigan Communities do to Attract & Keep Immigrants? •

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Target attraction efforts to foreign investors: – Create an Office of New Americans to focus on recruiting high net worth foreigners. – Leverage contacts of international students at MSU and other universities. – Seek their help in identifying and nurturing “qualified Investors from their home countries. – Create database of businesses needing investment and those for sale. – Connects Michigan businesses to foreign investors. – Shepherd qualified investors through the process. Target foreign students at Michigan universities for retention. – Connect them to local employers. – Encourage them to use the investor pathway. Create support system for immigrant entrepreneurs. – Allow for entrepreneurs to gain access to capital, business incubators, and other services. Support community centers that reach out to immigrants – Support ESL classes. – connects local immigrant business groups. Develop website that connects immigrants to information on employment, healthcare, local and state laws. – Provide informational documents in a variety of languages. – Reach out to local employers to inform them about the benefits immigrants . Develop local policies that support immigrants and are immigrant friendly – Policies can be developed that allow for immigrants to obtain identification.

Office of New Americans in Lansing Area?

Conclusion: • Immigrants could play a key role in revitalizing Michigan’s economy. • Michigan could leverage its existing immigrant communities in order to attract more highly talented immigrants. • EB-5 Visa promising. • Ongoing study at LPI continues.