ST. PAUL — Fewer first-generation immigrants in Minnesota own or have started their own businesses than those living in other states, according to a new report from the Minnesota Chamber of Commerce.
Limited access to start-up capital, a younger median age and, paradoxically, a high level of education may help to explain that recent trend. Just 3.7% of the state's immigrant population was estimated to be self-employed in 2019, according to data cited in the report, lower than what has been observed in neighboring states and at the national level.
"Entrepreneurial immigrants play an increasingly important role in the economy," the chamber said in the report, released Tuesday, March 23, noting that they employ many tens of thousands of residents. "Yet despite these positive numbers, Minnesota’s immigrant entrepreneurship rate lags the rest of the country."
At nearly 10% of the state's population, according to the American Immigration Council, an advocacy group, immigrants make up a sizeable and growing portion of Minnesota's workforce. They may come to play an even more important role in its economy as residents born in Minnesota age out of the labor market or decamp for other states.
Citing U.S. Census Bureau data, the report, which looked several ways in which immigrants contribute to the state, notes that a higher percentage of Minnesota's immigrant population is of working age compared to the native-born population. Eighty-one percent of the state's immigrants are between 18 and 64 years of age, while only 60% of people born in Minnesota fall into that range.
The median age of foreign-born is also six years younger than that of the U.S. immigrant population, something the report said might contribute to their relatively lower levels of entrepreneurship.
"It takes time for immigrants to accumulate capital and develop the business knowledge necessary to start a business," the report said.
In comparison, the immigrant populations of Wisconsin, Michigan and Illinois all have higher median ages and report slightly higher levels of self-employment. Nationally, immigrant self-employment measures at approximately 7.7%
Previously low levels of unemployment and the shortage of workers observed in Minnesota may also be a factor. It might be that immigrants in the state need not strike out on their own to support themselves and their families if they have little trouble finding work, according to the report.
How the number of jobs erased by the coronavirus pandemic affects that assumption isn't immediately clear. The report looks at the years before the event.
Immigrant entrepreneurship also appears to be affected by the level of one's education. Immigrants without college degrees or other academic qualifications are more likely to form their own businesses, particularly in the fields of construction, landscaping and food service, and more immigrants in Minnesota have them than do those in neighboring states or in the country as a whole, according to the report.
Interviews conducted for the report suggest that it can be difficult for immigrants to navigate the process of financing a new business as well, many of whom said they were unaware of the resources available to them and lacked credit histories.
Abdirizak Mahboub, who was born in Somalia, told the report's authors it was at first a "challenge" for him to finance the shopping center he owns in Willmar, Minn.
"I happened to get connected to a small bank in Willmar and I happened to know the owner," he is quoted as saying in the report.