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Your Next Boss Could Be an Undocumented Immigrant; Growing Number of Business Founders Lack Legal Status
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By CalMatters
Published 4 years ago on
April 20, 2020

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At Immigrants Rising, the Bay-Area nonprofit where I’m director of Research and Entrepreneurship, the early-stage entrepreneurs we support resemble a lot of other ambitious, millennial CEOs.

One of our Mexican founders built a digital platform teaching teenagers virtual reality. A Colombian founder is building an app for hiring coders. And a Kenyan founder has an e-commerce site. Yet these founders are unique for a significant reason: they’re all undocumented.

Analysis 

Iliana G. Perez
Special to CalMatters

Undocumented entrepreneurs are a growing demographic. In 2016, there were 770,000 in America. Today, there’s more than 815,000, according to research from the bipartisan nonprofit New American Economy. This growth reflects the increasing economic clout that undocumented immigrants in America hold nationwide.

According to NAE, there are now 1.5 million Latino-immigrant business owners in the U.S., a net increase of 100,000 in the last two years. Today they employ more than a million people. This means that immigrants — many of whom are undocumented — now write paychecks for an increasing number of Americans.

Undocumented millennials, like our grantees, are driving this trend. For my doctoral work, I analyzed 2015 American Community Survey census data and found nearly a third — approximately 200,565 — of Latino millennial entrepreneurs are undocumented. Their annual business income is $1,300-$1,500 higher on average than naturalized immigrants and American-born millennials.

All of This Makes Entrepreneurship a More Lucrative Option for an Undocumented Person

As it turns out, entrepreneurship is one of the main ways that undocumented immigrants can thrive in America’s workforce. The federal government doesn’t require undocumented immigrants to have work authorization or a social security number in order to be an independent contractor or start a business. Anyone, regardless of immigration status, can get an Individual Tax ID Number to open bank accounts, build credit, incorporate as a business, provide employee benefits and pay taxes.

All of this makes entrepreneurship a more lucrative option for an undocumented person. They can charge higher hourly rates or have large business contracts, compared to working under the table for cash or using fake documentation. All told, undocumented entrepreneurs earned $15.2 billion in business income in 2016. Even more remarkable, in 20 states, they have higher rates of entrepreneurship than naturalized immigrants and native-born Americans.

All this speaks to the perseverance of undocumented Millennials, who face practical challenges like a lack of credit scores or rejection by banks when seeking access to loans. Investors can be reticent to offer support due to the risk of deportation.

That’s why we need more incubation programs and small business support for undocumented founders. At Immigrants Rising, through our Entrepreneurship Fund, we provide funding to undocumented entrepreneurs who are promoting social change. Since 2016, we have invested more than $400,000 in 13 companies. Our Kickstarter Grants are opportune for individuals who may have to pivot to do virtual consulting work or kickstart a new business, as a result of the current crisis.

We Can’t Expect Undocumented Immigrants to Wait for Policy Changes

An estimated 100,000 undocumented high school students graduate each year and try entering the American workforce without work authorization. Most live in California and will enter the agriculture sector or become ground maintenance professionals, jobs that help the economy but come with long hours and low pay. Yet with the right support, entrepreneurship can be a great alternative.

I myself was an undocumented contractor before I received DACA protections in 2013, one of nearly 300,000 California Dreamers who made a combined $6 billion in income in 2017, held $5 billion in spending power and paid $1 billion in taxes, according to NAE.

Yes, we want comprehensive immigration reform, including a pathway to citizenship for DACA recipients who may lose their work authorization. But we can’t expect undocumented immigrants, especially those without DACA protections, to wait for these policy changes. We need to support all undocumented immigrants, including entrepreneurs and health care providers, who are contributing to the economy and are at the frontlines of the COVID-19 crisis. Doing so is a proven win, both for undocumented immigrants and for us all.

About the Author 

Iliana G. Perez is the director of Research and Entrepreneurship at Immigrants Rising in San Francisco, iliana@immigrantsrising.org. Perez wrote this commentary for CalMatters, a public interest journalism venture committed to explaining how California’s Capitol works and why it matters.

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