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Immigrant Entrepreneurs Invigorate California’s Economy

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Immigrants take big risks coming to California. When they get here, many decide to take another risk: launching their own company.

Speaker 1: 00:00 Immigrants take big risks coming to California and once here, many take another risk starting a business. California immigrants are actually more likely to become entrepreneurs than people born here as part of our California dream collaboration. Kate PCCs, David Wagner went to the heart of Las Thai community to see how immigrant entrepreneur entrepreneurs shape our economy.

Speaker 2: 00:26 I remember in Cerebra de sets up her booth at the East Hollywood farmer's market. She takes up a sign with the name. She chose to describe her food. So Zap, it's a stamp. It's, I mean delicious. So delicious. Her Dad helps out. He grinds fresh ingredients for a spicy and sweet

Speaker 3: 00:45 Papaya Salad. Hi. Yeah, I'm doing a hand high. You had been hired hair, much like harm. It's like ma'am, it's like layer.

Speaker 2: 00:51 She makes Thai food the way she learned from her mom and dad growing up in northeastern Thailand. La Has the largest Thai population outside of Thailand, so she's betting a lot of people here crave the real thing and she has big plans for so zap, she's going to move into a food hall opening up soon, called the Thai town marketplace.

Speaker 3: 01:09 Michael, they happy. My quad heat's about to dawn under [inaudible].

Speaker 2: 01:13 She's happier working for herself. Since coming to la, she's had a lot of different jobs. She's been an Uber driver. She's been a server in a restaurant. She says that that wasn't what she wanted to do, but it's where she discovered a valuable skill.

Speaker 3: 01:30 [inaudible]

Speaker 2: 01:30 the restaurant didn't have dessert, so she started making mango sticky rice. It was a hit. She branched out and sold her food at a local Thai temple. So Zap is her first attempt at starting her own business.

Speaker 3: 01:42 Hi. Yeah. Yeah. Mac [inaudible].

Speaker 2: 01:45 Oh, hey Bob. It's hard, tiring work, but she loves it and hopes the risk pays off. Back in Thailand, Sri Rodo had a successful career in the makeup industry. Her plan was to be a makeup artist for film and TV, but she couldn't get her foot in the door. Harvard Business School Professor Bill Curtis says that's a pretty common story for immigrants who become their own boss. He says a lack of good job opportunities can push immigrants into entrepreneurship and so in those settings they may find starting their own company to be the most attractive IV option, but it's not a fallback for everyone. Many come to California with a specific business plan in mind. Yeah, especially if you are launching a scalable national and internationally focused business. About half of California's fortune 500 companies were started by immigrants or the children of immigrants. They are really the engines for our local economy. Linda Lopez heads, the La Mayor's Office of immigrant affairs. She says it's not just big companies. Immigrants also own many of Ellie's small businesses or businesses generate about 3.5 billion or 45.6% of all the self employed income in the city. Immigrant entrepreneurs are creating jobs and paying taxes across California. Immigrants create about 40% of all new businesses in California making it one of the

Speaker 4: 03:00 top states for immigrant entree

Speaker 2: 03:02 partnership. Wanna put me open that chancy march. RL with the Thai community development center doesn't want those opportunities to disappear. That's why she's so excited to see the Thai town market place. Food Hall finally under construction. So SAP will have that stall. She has an ideal star because it's going to be fronting the sidewalk. The Thai town marketplace has been mark Tarell's passion project for years. Rents for commercial space have gone up. She sees low income entrepreneurs struggling to get bank loans. She wants this food haul to give today's immigrants their shot at opening a small business. Otherwise you end up just seeing a community of chain stores that have no history in the community. And so that's what we're trying to prevent by Bob McKee back at the East Hollywood farmers market. High River in three. Rudolph sees a big future for so app goodnight does never. Yeah, I talk. Huh? I didn't get her. She says if she can save enough, she wants to open up more than one. So up. Thank you.

Speaker 4: 04:03 Joining me is KPCC is David Wagner and David, welcome to the program. Good to be here, Maureen. So why does California have so many immigrant entrepreneurs? Yeah. The simple answer to that question is just that we have a lot more immigrants than the rest of the country. You know, statewide, about a quarter of people in California are foreign born here in la. It's higher with immigrants representing about a third of the population. Um, but then if you look at who's starting new businesses in California, immigrants make up an even bigger part of the puzzle. About 42% of new businesses in California these days are founded by immigrants nationwide. It's only about 25%. So right there you can see that California really does rely on immigrants for new business creation. And even though it's less than other states, do other states have a lot of immigrants starting businesses?

Speaker 4: 04:52 Yeah, I mean California isn't alone in this. So you can look at other states with large immigrant populations like New York and New Jersey, they have pretty similarly high rates of immigrant entrepreneurship, which makes sense. You know, they are also a place where a lot of people are moving to from around the world, but California does consistently ranked near the top of this list. It's just behind or just about tied with those other states. So our economy really does stand out from the rest of the country for just how much we count on new immigrants to start new businesses. Now you told us about the owner of, so zap food market and other Thai eateries opening up in la, but what other kinds of businesses do, immigrant entrepreneurs tend to open immigrants start a lot of different kinds of small businesses, especially those kinds of businesses that you see in almost every neighborhood in uh, cities throughout California. So one study up here in La found that immigrants were running nearly two thirds of what they called main street businesses. That includes things like restaurants, nail salons, dry cleaners, gas stations. You know, those businesses that you interact with a on a day to day basis in California, more often than not, they're being run by immigrants.

Speaker 1: 06:02 And where did they get the capital to open their businesses? That's okay.

Speaker 4: 06:06 Big Struggle for a lot of immigrants who want to start their own business. You know, some are able to tap into those more traditional small business loans from, uh, from typical banks. Um, many are shut out of that though. Maybe there is the language barriers. Maybe they don't have, uh, a lot of credit history. Maybe there's just a cultural bias against lending to entrepreneurs like that. Um, so some of them are turning to more informal lending networks among their family members, among their communities. Um, others turned to nonprofits like the one that we heard from in this story, the Thai community development center. You know, nonprofits that really want to help out low income entrepreneurs in a, just starting out their first business.

Speaker 1: 06:48 And you described, um, many of these businesses being fallback positions for immigrants who can't move forward in their chosen career. Why is it so hard for their skills and credentials to transfer to the u s

Speaker 4: 07:03 yeah, experts described it to me kind of like this. There's two different ways as they see it that immigrants become entrepreneurs in California. Some get pulled into it, others get pushed into it. So for the ones who are pulled into it and you know, they may have a great idea for a tech startup or an entertainment company in their home country and they think to themselves, you know, I really should launch this in California where all these tech and entertainment and other kinds of companies are clustered. So, you know, for those immigrants who are able to make that move, California can really pull people in, others get pushed into it when they kind of come here and they find that they're not able to continue in the same kind of professional career that they had back home. You know, maybe they were doctors, maybe they had some other kind of career. Um, and they hope to keep doing that once they got here in California. But when they got here, you know, no one recognizes the university they went to. Maybe they'd have to earn new credentials in this country, which can be difficult when you have a language barrier in place. So those kinds of people, instead of getting a low paid service job, many decide they'd rather take the risk and start their own company.

Speaker 1: 08:09 And the immigrants who get pulled into it, as you say, do they tend to open more IRA? No. High Tech, high end businesses.

Speaker 4: 08:17 Yeah. In California, that is a pretty common story among tech entrepreneurs. One recent study found that close to half of the fortune 500 companies headquartered in California have at least one founder who's either an immigrant or the child of immigrants. Um, and when you think about tech companies, uh, you can point to one big example in San Diego, Qualcomm, it was actually co founded by Andrew Viterbi who was actually born in Italy. This is true of a lot of California tech companies. You can look at Google, you can look at companies like Tesla and many others.

Speaker 1: 08:50 When the woman you profile says running a business like hers is hard work. What is she talking about? I mean, how much time and effort does it take? Yeah,

Speaker 4: 08:59 yeah. I mean, becoming your own boss is a real lifestyle change for immigrants who want to start their own company. Uh, the woman I talked to [inaudible], she used to have pretty stable jobs. You know, she used to be a server in a restaurant. She used to know her schedule. Uh, it was pretty clear when she was on and off the job. Now she's really hustling. She's out there selling her food at farmer's markets. She's at a local Thai temple every week, uh, trying to get her product out there and her business known, uh, she's getting ready to launch this food style. She's devoting a lot more time and taking a lot more personal risk to launch her company. Um, and immigrant entrepreneurs often have this kind of scrappy approach to starting a business. Research has found that on average they tend to hire fewer people than native born business owners. So many times they really do have to put in more of the work by themselves.

Speaker 1: 09:49 Dave, and what got you interested in this story?

Speaker 4: 09:52 Well, the, this is part of a series that we're doing a in the statewide California dream collaboration, looking at different cultural communities that really defined California. So for me as a business reporter, immigrant entrepreneurs just really made the most sense to spotlight. They're such a big part of our state's economy. On every level, you know, you see them running great restaurants and small businesses in different ethnic enclaves throughout the state. Um, and they've started some of our biggest employers here in California. So I really wanted to find out what is it about immigrants that makes them more likely to start a business than people born here? And how are they going about starting those businesses today?

Speaker 1: 10:32 And I've been speaking with KPCC is David Wagner. David, thank you very much. Thank you.

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Maureen Cavanaugh and Jade Hindmon host KPBS Midday Edition, a daily radio news magazine keeping San Diego in the know on everything from politics to the arts.