Reconsidering Immigrant Entrepreneurship —
An Examination of Self-Employment Among Natives and the Foreign-Born
by Steven A. Camarota
January 2000, ISBN 1-881290-05-0

Full- and Part-Time Self-Employment Income

Unfortunately, there is no way to measure directly the total revenue of immigrant and native businesses. The CPS does, however, ask respondents how much self-employment income (revenue minus expenses) they earned in the previous year. Thus, it is possible to determine how much money immigrant and native entrepreneurs are generating for themselves. Income is important because it is one way to measure the size and success of a business.

Full-Time Self-Employment Income

The fifth column in Table 1 shows the average full-time self-employment income of immigrants and natives. While natives are slightly more likely to be self-employed, immigrants who are self-employed have slightly higher incomes. In 1997, the annual income of self-employed natives was $18,447, compared to $20,710 for immigrants. The self-employment income figures suggest that immigrant entrepreneurs are slightly more successful than native entrepreneurs, at least in terms of generating income for themselves. However, this difference is not large enough to be statistically significant.¹³ Moreover, self-employment is certainly no guarantee of success for either group. Forty-two percent of natives and 40 percent of immigrant entrepreneurs either lose money or only break even. An additional 18 percent of self-employed natives and 16 percent of self-employed immigrants reported that their self-employment income was less than $10,000 a year. Clearly, self-employment provides only a modest income for natives and immigrants alike. It should be noted, however, that it is common for self-employed persons to deduct as many expenses as possible in order to reduce their tax liability. This may explain the seemingly low self-employment income for both groups.

Part-Time Self-Employment Income

Part-time self-employment income is reported in the sixth column of Table 1.¹⁴ As is the case with full-time income figures, immigrants have somewhat higher part-time self-employment income. In 1998, the average part-time self-employment income for natives was $6,718, compared to $8,423 for immigrants. This is not a statically significant difference. Perhaps more important than statistical significance, the average part-time self-employment income figures show that both groups make less than $8,500 annually. It is clear that being self-employed on a part-time basis generates very modest incomes for the relatively few workers (immigrant and native) who are able to operate a business in addition to holding down another job.

Self-Employment Income by Year of Entry

The lower portion of Table 1 shows the average self-employment income for immigrants based on when they entered the country.¹⁵ The year of entry data indicate that while the income of immigrant entrepreneurs grows over time, the increase is not dramatic. The income of self-employed immigrants who arrived in the 1990s ($18,627) is equal to 90 percent of the average self-employment income for immigrants overall. Thus immigrants are more likely to become entrepreneurs over time, but the income of those who are self-employed does not change very much with duration of stay in the United States.