Entrepreneurship and Innovation in Welcoming Cities

In the face of America’s changing demographics, future prosperity depends in part upon the ability of local communities to attract and retain a diverse population with diverse sets of skills. In the native-born population, there are fewer births and more retirements. That demographic fact has been compounded by the decline of large manufacturing companies that metropolitan areas relied upon in the past to grow their populations and economies. Increasingly, cities and regions looking to stem population decline and stimulate economic growth are seeking to attract immigrants and encourage immigrant entrepreneurship. Immigrants play an outsize role in establishing “main street” businesses (retail, accommodation and food services, and neighborhood services), which are important for generating neighborhood-level economic growth and revitalization. This propensity to start businesses that revitalize neighborhoods makes immigrants attractive to city leaders." This report focuses on the efforts of three cities to promote immigrant entrepreneurship as part of a broader initiative to create a more welcoming environment for immigrants. Each of the cities—Chicago, Illinois; Dayton, Ohio; and Nashville, Tennessee—is distinct in its history and geography of immigrant settlement and receptivity. Chicago is a continuous immigrant gateway with a large, diverse immigrant population. Dayton’s foreign-born population is small, but rapidly growing. Nashville has undergone rapid population and economic growth in recent decades and is a new immigrant gateway city.

Chicago has long benefited from immigrant-owned businesses. Yet city leaders are striving to do more to promote immigrant entrepreneurship. The city’s New Americans Plan, drafted in 2012 with the input of a diverse 50-member working group, explicitly acknowledges that the city has recently lagged in economic growth and aims to reverse that trend by lowering barriers to entry for immigrant-owned businesses. The New Americans Plan contains several economic initiatives.

In 2010, at a time when other parts of the country were passing initiatives hostile to immigrants (Arizona’s S.B. 1070, signed into law that year, being the most prominent example), leaders in Dayton, Ohio, were determined to take a different course. The city implemented a welcoming initiative that connected community groups and others working on aspects of immigrant integration independently of each other. The city is promoting immigrant entrepreneurship by reaching out to immigrant communities to make sure potential business owners know about the services that are available to help entrepreneurs capitalize on their business ideas. Welcome Dayton is thinking beyond the city itself, encouraging surrounding jurisdictions in the metropolitan area to adopt welcoming policies as well.

Nashville, the birthplace of the Welcoming America idea, has a history of nonprofit leadership on integration initiatives, including the promotion of immigrant entrepreneurship. The city’s brush with a referendum to make English the official language of the city galvanized local leaders, and the city now has its own office dedicated to immigrant integration, with one of its goals being to help immigrants access economic and educational opportunities.

A city can’t do much about federal immigration laws and policies, or do anything about the official immigration status of members of its community. But a city can help by cultivating a welcoming environment for all members of the community, including immigrants and refugees. The welcoming initiatives of the three cities spotlighted here are part of a growing movement of cities and counties that are trying to make their communities more welcoming to immigrants. Welcoming Cities and Counties provides local governments with opportunities to connect and learn from each other’s best practices that improve the quality of life and economic potential of immigrants and all others in the community.

This private effort partially fills a gap in U.S. immigration policy: the lack of federal attention to immigrant integration. The Spring 2015 launch of the White House Task Force on New Americans, and its September 2015 launch of the Building Welcoming Communities Campaign, signals a change in direction on that front. Potentially, the task force can act at a national level the way a city’s welcoming initiative acts at a local level, by coordinating federal agencies and by making connections between welcoming initiatives spread across the country. Among the recommendations of the task force are to promote immigrant entrepreneurship and small business development.

Understanding what works, and sharing knowledge about effective initiatives to encourage entrepreneurship, will become increasingly important as immigrant entrepreneurs, business owners, and workers become more crucial to local economies across the United States.

Why are local communities exploring strategies to encourage immigrant entrepreneurship?

For communities seeking to boost their economies and create a more welcoming environment for immigrants, entrepreneurship is an integral and perhaps even a critical entry point. It brings together existing tools, immediate desires and needs, and tangible payoffs. Immigrants tend to be entrepreneurs at higher rates than suggested by their percentage of the population. Immigrant “main street” small businesses are important for generating neighborhood-level economic growth and revitalization. The tangible benefits resulting from this economic growth and revitalization can pave the way for broader community support for the welcoming initiative and a more comprehensive approach to the integration which the initiative hopes to accomplish.

David Dyssegaard Kallick of the Fiscal Policy Institute recently examined this concept of “main street” businesses and their relationship with local economic growth. Kallick defines “main street” businesses as those falling into three sectors: retail, accommodation and food services, and neighborhood services. While immigrants made up 13 percent of the country’s total population, 16 percent of the labor force, and 18 percent of business owners overall in 2013, immigrants were 28 percent of “main street” business owners nationally. They were even more over-represented in particular types of businesses: they were 61 percent of gas station owners, 58 percent of dry cleaner owners, 45 percent of nail salon owners, 38 percent of restaurant owners, and 32 percent of both jewelry and clothing store owners. In some metropolitan areas, immigrants represented over half of all main street business owners: 64 percent in the Los Angeles metro area, 61 percent in metro San Jose, 56 percent in the Washington, DC, metro area, and 54 percent in the Miami metro area.

The contributions immigrants make to their cities through “main street” business ownership can be maximized when local efforts work to support them. In some cities, like Philadelphia, Minneapolis, and St. Paul, immigrants were a driving force in neighborhood-level revitalization, and programs in those cities aimed to bolster immigrant business development. Along the way, such efforts also help U.S.-born business owners. Kallick found that “what’s good for immigrants is also good for the rest of the population.”

Building on the “main street” business concept, University of North Carolina researchers Johanna Claire Schuch and Qingfang Wang explore immigrant small business contributions to community development in Charlotte, North Carolina. Their study finds that “immigrant businesses have transformed deteriorating and abandoned street fronts into vibrant and well-frequented urban environments conducive for further development.” Immigrant business corridors can act as centers for social, cultural, and economic activities.

Table 1. Impact of Immigrants on “Main Street” Business and Population Growth in 2013

Source: Fiscal Policy Institute analysis of American Community Survey 2013 5-year data. David Dyssegaard Kallick, Bringing Vitality to Main Street: How Immigrant Small Businesses Help Local Economies Grow (New York, NY: Americas Society/Council of the Americas, 2015). Detailed data for the Dayton metropolitan statistical area were unavailable.

Chicago, Dayton, and Nashville: Demographic Background

Chicago, Dayton, and Nashville represent a diversity of geography, history, and demographic, economic, and population change. Figure 1 illustrates the foreign-born proportion of each city’s total population in 2000 and 2013, compared to the country as a whole. Figure 2 illustrates the percent change of the native- and foreign-born populations from 2000 to 2013 in each city. Figure 3 compares the municipality’s foreign-born population with its corresponding metropolitan statistical area’s foreign-born population in 2000 and 2013.

Figure 1. Foreign-Born Percent of Total Population in Case Study Cities Compared with the U.S. Total in 2000 and 2013

Source: American Immigration Council analysis of data from the U.S. Bureau of the Census, 2000 Decennial Census, 2013 American Community Survey 1-year estimates.

Figure 2. Percent Change from 2000 to 2013 for Native- and Foreign-Born Population Case Study Cities Compared with the U.S. Total

Source: American Immigration Council analysis of data from the U.S. Bureau of the Census, 2000 Decennial Census, 2013 American Community Survey 1-year estimates.

Figure 3. Municipal Foreign-Born Population as Percent of Metropolitan Statistical Area (MSA) (Foreign-Born Population in 2000 and 2013)

Source: American Immigration Council analysis of data from the U.S. Bureau of the Census, 2000 Decennial Census, 2013 American Community Survey 1-year estimates.

Chicago is a continuous immigrant gateway with a large, diverse immigrant population from many different origins and experiences. In 2013, 27 percent of business owners in the Chicago metropolitan area were foreign-born, as were 38 percent of “main street” business owners. The percentage of Dayton’s population that is foreign-born is small but rapidly growing—partially offsetting its native-born population decline. Nashville is a new immigrant gateway in a new immigrant destination state in the Sunbelt South. It has undergone rapid population and economic growth in recent decades, as people from around the United States and from many other countries have been moving to the Nashville area. In 2013, 9.5 percent of business owners in the Nashville-Davidson-Murfreesboro-Franklin metropolitan area were foreign-born, as were 29 percent of “main street” business owners.

Chicago: Capitalizing on the Potential of Immigrant Entrepreneurs

Chicago, Illinois, is one of the quintessential immigrant cities in the United States, with a long and continuous history of receiving diverse immigrant populations. Just as Chicago’s Maxwell Street was a hub of Eastern European immigrant activity in the late 19th and early 20th centuries, Chicago’s “Little Village” is a hub of Mexican immigrant economic activity today. Little Village, focusing on the 26th Street commercial corridor in the neighborhood of South Lawndale, is a thriving business area in Chicago’s West Side. The neighborhood has over a thousand businesses offering an array of goods and services. Little Village is also home to the largest Mexican community in the Midwest.

“Little Village residents and business owners are amply recognized for their entrepreneurial spirit, strong work ethic, and commitment to family and community,” the Little Village Chamber of Commerce notes. “Businesses in Little Village create jobs for thousands of residents.” The majority of businesses along 26th Street are immigrant-owned. This area of the city has been the second largest contributor to city business tax revenues after the Magnificent Mile business corridor along Michigan Avenue in downtown Chicago, illustrating the local economic importance not only of immigrant-owned small businesses, but also of the small business community in general.

While Chicago historically has had a thriving immigrant business community, in 2011 city leaders recognized the city could do a better job encouraging immigrant entrepreneurship. They set about creating a New Americans Plan for immigrant integration that drew on the existent ecosystem of neighborhood-based community organizations, like the Little Village Chamber of Commerce, for input. The Chicago New Americans Plan emerged from a 50-member working group composed of individuals from across the city and across different community sectors. Regarding the region’s economy, the plan notes, “over the last decade, Chicago has experienced below average growth in gross regional product, annual average wage, and population size. We can reverse this trend by lowering barriers to entry and growth for immigrant-owned businesses. By proactively spurring immigrant entrepreneurship, Chicago will ensure that it is fully capitalizing on the potential of immigrant entrepreneurs.”

The Plan is comprehensive, focusing on broad and specific aspects of immigrant and refugee integration. It recognizes the importance of economic growth to a successful integration plan, and includes several economic initiatives. To spur further immigrant business growth, the plan includes initiatives to bring services to the affected individuals, and to lower barriers to entry for small businesses.

For instance, there is a Restaurant Startup Guide and program, made accessible to immigrant entrepreneurs, which “streamlined the process of opening up a business in Chicago. The program simplifies the application process and ensures restaurants undergo the necessary zoning and location reviews up front, minimizing the risk that owners will need to make expensive course corrections.” The guide is provided in multiple languages, to “remove one of the biggest barriers immigrants face when opening a business: language access.”

The Office of New Americans also created a New Americans Small Business Series to foster small business growth in immigrant communities throughout Chicago by “creating temporary one-stop-shops in community settings.” At these centers, immigrants can find critical information related to starting a business, including how to “navigate the licensing process, comply with tax laws, interact with chambers of commerce, and access capital.” The City has held neighborhood-based and population-specific entrepreneurship expos for Hispanic, Polish, and African American communities. Jamie Di Paulo, Executive Director of the Little Village Chamber of Commerce, noted that the City is making business formation easier by reducing licensing requirements. “So, a business only needs one license now, and can go through a one-stop-shop to open a business.”

A similar concept, the Small Business Center on the Road, conducted a series of five expos through the spring, summer, and fall of 2015 in neighborhoods throughout Chicago. The expos provide opportunities for entrepreneurs to “consult, network, and gather information from more than 40 government and non-profit agencies including the City of Chicago Department of Buildings, IRS, and U.S. Small Business Administration.” Entrepreneurs can talk to experts and agency representatives to obtain information about licensing, taxes, finance, and business planning.

In developing and implementing its initiatives, the city built relationships with external partners and across city departments and agencies. According to Adolfo Hernandez, with the City of Chicago, building these relationships early on is important so that changes implemented at the very beginning are as easy as possible, but also so that you can “then do things that are a little bit more intensive, a little bit more demanding.”

In devising a new business licensing policy, the city adhered to the principle that its new policies must not only be beneficial for immigrants, but for anyone trying to start or sustain a business. The city restructured its business licensing process, reducing the different types of license categories from 117 to 49 and reducing licensing fees. According to Hernandez, “this isn’t thought of as an immigrant-focused initiative, because it’s improving the quality of the process for everyone across the board in the city.” When looking at the types of services provided to different communities and populations, the city strives to ensure services are provided equitably. “We don’t want to pit people against each other for resources.”

Dayton: Reaching Out to Reduce Barriers

In the introduction to the 2011 Welcome Dayton plan, the authors assert that “Communities across America are at a crossroad: to welcome and integrate new residents and help them on a path to citizenship, or to allow old stereotypes, fears and misconceptions to hinder future success.” Politicians in Arizona and Alabama, catering to those old stereotypes and fears, had recently passed harshly punitive immigration laws. Dayton, Ohio, with a small but rapidly growing foreign-born population, began to chart a more welcoming path.

Local leaders in Dayton set out to engage the community in a welcoming plan, to ensure it was community-led and to get buy-in from as many sectors of the community as possible. With the city’s Human Relations Council (HRC) serving as host, local leaders invited the community to have a conversation. Invitations went out far and wide to community members as individuals, not as representatives of their respective organizations. More than 100 people showed up.

Dayton elected leaders and government officials recognized the importance of offering early support for people working for positive change on immigration. That early public support helped to create a safe political space for other city officials and city departments to speak about and implement actions on immigrant and refugee integration and to engage the broader community.

In Dayton, many community organizations were already doing work around aspects of immigrant and refugee integration, depending on an organization’s particular focus and geographic scope. But there was nothing tying such efforts together and organizations were not really talking to one another. As Dayton City Manager Tim Riordan noted, there are “good, hearty people” in every community working in all sectors to strengthen their communities. When those people connect together, great things can happen. The city’s welcoming initiative helped make those connections.

A welcoming initiative does not necessarily need a lot of new public resources. It is more important to have strong leadership and support from different sectors of the community and to leverage the resources, expertise, and experience that already exist in the city and among the full spectrum of community organizations. By serving as a central point of contact and a proactive connector, a city’s welcoming initiative can make connections among the various community organizations, city and other government offices, private entities, and community foundations that are already the experts on various issues. The resulting partnerships can more efficiently lead and encourage the implementation of different components of a city’s welcoming plan.

In Dayton, individuals interviewed for this paper often discussed barriers immigrants and refugees face when starting a business. In many cases, immigrants and refugees may know a craft or trade very well, but do not know about the processes for starting a business, the regulations involved, the permitting process, the local ordinances that may affect a particular type of business, how to register the business, getting contracts, and the resources available to small businesses. They may also lack a credit history, hindering their ability to access capital. These barriers are compounded by language and cultural differences.

The Small Business Development Center (SBDC), part of the federal Small Business Administration, functions to help immigrants and others overcome barriers to starting a business. The SBDC will meet with individuals one-on-one to help them navigate the business formation process to capitalize on their ideas and develop them into successful businesses. But there is work to be done to ensure that immigrants and others who might be helped by the SBDC find out about its services, as Melissa Bertolo, director of Welcome Dayton discovered.

There was conversation about the resources that are offered through [the Minority Business Assistance Center and SBDC]. And [there was a] man [who] had been in Dayton for maybe thirty years or so and owned a business for more than twenty. And he says, “you know, for as long as I’ve been here, and for as many businesses as I’ve owned, I’ve never known about either of these offices.” And I think that speaks to a couple of different things. One is the isolation that can often happen with immigrant communities. … [T]hey often turn to each other for loans and for assistance with developing their businesses. … And so we’re continuing to do outreach to the immigrant and refugee communities so that they understand what resources are there….

The SBDC also now works to create bridges with key people from each community who can then go and spread the information in their own community. It is helpful when information can be transmitted by familiar voices within a community.

Another goal of the Welcome Dayton plan is to “identify and support a strategic neighborhood business district as a center for immigrant businesses desiring to co-locate in a commercial or industrial node.” The plan also aspires to “help ease the burdens/reduce the barriers for anyone who wants to open new businesses in the city serving whomever or wherever.” Regarding access to capital, the Welcome Dayton committee has a group focused on small businesses and economic development that, among other things, is concerned with ensuring that people have access to small loans, primarily less than $50,000.

While Dayton continues to develop and implement its welcoming policies, key stakeholders involved with Welcome Dayton, as well as with other community organizations, recognize that it is not enough simply for the City of Dayton to be welcoming. The Dayton metropolitan area is the fourth largest in Ohio after Cincinnati, Cleveland, and Columbus, consisting of three counties (Greene, Miami, and Montgomery Counties) in the Miami Valley region of Southwest Ohio and many individual suburban municipalities like Kettering, Beavercreek, Huber Heights, and Fairborn. Ultimately, the broader region must embrace “welcoming” because all municipalities within the metropolitan area are joined economically, socially, and culturally. Welcome Dayton is encouraging other municipalities and counties in the region to adopt similar welcoming policies, as well as encouraging local governments to adopt more immigrant-friendly policies generally.

Nashville: Nonprofit Leadership on Immigrant Integration

Nashville, like many southern cities and metro areas, is considered a new immigrant destination, and particularly a “pre-emerging” immigrant gateway, with a high foreign-born growth rate in recent decades. The recent increase in the migration of immigrants and refugees to Nashville has occurred at a time when the city is at its most vibrant.

Nashville was already on a welcoming path when, in 2009, Nashville voters considered a measure that would make English the only language used in Nashville’s official Metro Government business. Voters handily rejected the measure.  This outcome may have been a surprise at the time, given that many more anti-immigrant measures were afoot elsewhere around the country. In Nashville, however, community-based organizations like the Tennessee Immigrant and Refugee Rights Coalition (TIRRC) and Conexión Américas had already been cultivating a more welcoming climate among Nashville’s receiving community. In fact, TIRRC is where Welcoming Tennessee, and subsequently Welcoming America, got its start. Welcoming Tennessee is a collaboration of multiple sectors—including business, law enforcement, community and faith—working to continue strengthening Tennessee as a welcoming state to newcomers by increasing understanding of how “new Tennesseans” share values, contribute to the economy, enhance combined culture, and strengthen communities.

In Nashville, it is the community-based organizations that have led the way in promoting immigrant entrepreneurship. A number of those organizations (including TIRRC and Welcoming Tennessee) are located in Casa Azafrán, on Nolensville Road. Casa Azafrán, according to former Nashville Mayor Karl Dean, is “an important cultural and economic hub” and is “a good model for how a community-led center can help revitalize a surrounding neighborhood, increase collaboration among nonprofits around a common goal, and provide much-needed services for those in our city.”

Conexión Américas, also located in Casa Azafrán, was founded in 2002 to assist Latino families in realizing their aspirations for social and economic advancement by promoting their integration into all aspects of life in Middle Tennessee. The organization focuses on three inter-dependent areas of integration: social, economic, and civic. This approach also is premised on the idea that true integration of immigrant families is achieved when the process is understood as a two-way learning experience that engages both the newcomers and the host community in reciprocal understanding.

Negocio Próspero (Prosperous Business) is one of Conexión Américas’ programs focusing on entrepreneurship and nurturing small businesses. Negocio Próspero facilitates introductory business courses in Spanish that provide aspiring business owners and micro-entrepreneurs useful tools and skills to launch, or improve the management and profitability of their business. Classes focus on financial education, accounting and taxes, licensing permits, insurance, contracts, and other legal information. Conexión Américas saw 70 entrepreneurs go through the Negocio Próspero program in 2014, which resulted in four new or expanded businesses.

Conexión Américas also encourages new food businesses through its Mesa Komal Community Commercial Kitchen. Mesa Komal provides a space for entrepreneurs who own or want to start their own food business. In 2014, the kitchen provided a space from which 14 food entrepreneurs have launched or expanded businesses.

While Nashville nonprofits have been in the forefront of encouraging immigrant entrepreneurs, the city has recently created an office to focus on new Americans. The 2009 English Only referendum marked a turning point. It galvanized leaders and organizations from across community sectors to encourage the referendum’s ultimate defeat. Nashville Mayor Karl Dean remarked, “the defeat of English-only, I think, was a big moment in the city’s history. It was another example of Nashvillians tending to move in a direction that is positive, a direction that is future-oriented and in a direction that’s inclusive.”

In the same year (2009), the Mayor’s Office created the Mayor’s New Americans Advisory Council to help establish a link between Nashville’s immigrant and refugee communities and Nashville’s Metro Government. Since then, the city’s effort to welcome new Americans has evolved. Building on the ongoing work of leaders and organizations from across the community, the Nashville Mayor’s Office of New Americans (MONA) launched in September 2014. The Office includes among its goals: “Giving New Americans the tools they need to access economic and educational opportunities—to the benefit of all Nashvillians.”

Promoting Immigrant Entrepreneurship: Some Observations from the Case Study Cities

There must be a sense of community ownership in a city’s welcoming initiative

Individuals interviewed for this paper had recommendations for other cities and metropolitan regions considering immigrant-friendly and welcoming city actions. In particular, most interviewees were insistent that any effort must be community-driven, not government-driven. There must be a community sense of ownership. The community must have a voice at the table to express what they want and what they need. Chicago’s New Americans Plan, for example, was the product of a 50-member working group, composed of members of diverse communities.

Government entities can serve to bring together community actors that may have been working independently

A city’s welcoming program can act as broker and bridge-builder across all sectors of a city or region, helping to leverage knowledge, expertise, resources, capacities, and partnerships at multiple scales, building partnerships across all sectors of a community. Dayton’s welcoming initiative, for example, helped tie together immigrant integration initiatives conducted by groups working independently of each other. A welcoming program can serve as an entity to create networks to let people know what resources are available. It may not be the government agency that implements a welcoming initiative, but a collaboration among many community organizations. In that case, a welcoming city initiative can be structured in a way to act as facilitator or convener.

Even in places already benefiting from immigrant entrepreneurs, cities can find ways to boost entrepreneurship

While a city might already have a vibrant immigrant business community, it is often the case that more can be done to maximize the immigrant population’s entrepreneurial potential. Chicago has been a traditional gateway city for immigrants and has long benefited from immigrant entrepreneurs moving to that city. However, in its New Americans Plan, the city explicitly acknowledged its recent below-average growth, and set about to reverse the trend by “lowering barriers to entry and growth for immigrant-owned businesses.” Dayton had two government agencies to help small businesses start up. When city officials realized that immigrant entrepreneurs were unaware of the assistance to be gained from these agencies, the city made a concerted effort to reach out to immigrant communities.

Public support for welcoming initiatives from local elected and government officials is very important

Another lesson from these case studies is that public support from local leadership can play a very important role in building a welcoming initiative. For example, at a time when other areas of the country were becoming increasingly hostile to immigrants, the public support of Dayton elected and government officials gave a green light for city departments and non-government organizations to move forward together to create welcoming policies. In Nashville, an English Only ballot measure galvanized local leaders who encouraged voters to reject it. Subsequently, the city government has been strengthening its commitment to immigrant integration, culminating in the establishment of the Mayor’s Office for New Americans in 2014.

Initiatives to boost entrepreneurship and business ownership should benefit the whole community, not just immigrants

Welcoming initiatives should benefit all members of the community—particularly including traditionally vulnerable and historically marginalized populations. Chicago’s restaurant startup program, by streamlining the process of opening up a business, helps not only immigrant entrepreneurs. All entrepreneurs benefit when barriers to entry are lowered.

Promoting Immigrant Entrepreneurship: Studying What Works

While the case study cities have a history of benefiting from immigrant entrepreneurs, their welcoming initiatives have been formally launched only recently. Going forward, researchers and observers must assess the impact and effectiveness of initiatives like those described here. As significant immigrant populations spread out from traditional immigrant gateway cities, and as immigrant entrepreneurs, business owners, and workers become more crucial to the economy, knowing what works, and sharing that information, will be of tremendous benefit to the hundreds of communities across the U.S. who will be grappling with how best to receive their newcomers and tap in to their entrepreneurial spirit.

Acknowledgement

In the three cities where I conducted qualitative interviews, I am most appreciative of individuals’ willingness to take the time to talk with me and discuss their experiences and perspectives. In total, 67 interviews of at least one hour each were completed either in-person or via telephone. Interview participants included researchers, national practitioners, local practitioners, state and local government officials, business owners, community organization leaders, and other individuals from across the many sectors of a community who were either directly or indirectly involved with one of the three case study cities’ welcoming and integration initiatives.