How Immigrant Entrepreneurs are Driving Growth in Greater Philadelphia

Last month, the Fiscal Policy Institute and Americas Society/Council of the Americas released a new report on the impact that immigrant entrepreneurs – particularly, “Main Street” business owners – have on local economies. The report cites Philadelphia, along with Minneapolis-St. Paul and Nashville, as successful examples of how support systems for immigrant entrepreneurs can help foster overall economic growth.

Greater Philadelphia as a Reemerging Immigrant Gateway

New research sheds light on the crucial role that immigrant entrepreneurs have played – and continue to play –  in boosting local economies and revitalizing struggling urban communities. Over the last two decades, as many U.S. cities have begun to emerge from their mid-century malaise, immigrants – especially immigrant entrepreneurs – have played a decisive role in offsetting and reversing population declines and reviving neighborhoods that had fallen into disrepair.

Following this trend, Greater Philadelphia has resurfaced as a destination of choice for immigrants and refugees from across the globe. Today, immigrants comprise 10% of the region's population - just below the national average.

In addition to offsetting a drop in the U.S.-born city population, Philadelphia’s immigrants have contributed significantly to the growth of Main Street businesses – such as neighborhood services, accommodation and food services, and retail – over the last decade. While Main Street businesses typically operate with a thin profit margin, these firms employ local residents, expand consumer and tax bases, and help to make neighborhoods and commercial corridors safer and more attractive places to work and live. Immigrants currently make up 28% of Greater Philadelphia’s Main Street business owners and generate annual earnings of roughly $295 million.

Between 2000 and 2013, newcomer entrepreneurs from such countries as India, Korea, Greece, China, Vietnam, Ukraine, Italy, Pakistan, Mexico and Iran were responsible for a staggering 96% of Main Street business ownership growth in the region. Nationally, as immigration has increased, so too has immigrant business ownership (with immigrants 10-15% more likely than their U.S.-born peers to own a business) – helping to explain why increases in immigration have resulted in only modest-to-negligible displacement of U.S.-born workers.

Despite the vital role that immigrants play in community revitalization, they are often overlooked or underutilized in regional economic development strategies. In Philadelphia, however, a rich network of cross-sector support services specifically designed to address the challenges facing immigrants and entrepreneurs has helped the Philadelphia metro generate a healthy business environment for both foreign- and U.S.-born business owners.

The City Planning Commission has identified 265 commercial corridors in Philadelphia. The FPI and AS/COA report spotlighted three of these corridors – the 9th Street Italian Market, El Centro de Oro, and 52nd Street – as helpful case studies for highlighting the role that immigration has played in revitalizing urban communities.

Reviving Commercial Corridors

When Italian and Irish business owners began retiring in the 1980s and 1990s, the vitality of the 9th Street Market began to wane. Over the last twenty years, an influx of Mexican, Vietnamese, Cambodian, Indonesian and Bhutanese entrepreneurs has revived the area, infusing it with a new, multicultural flavor.

In recognition of the Italian Market’s success, Philadelphia leaders have adopted a similar approach in other neighborhoods, including El Centro de Oro – a largely Latino immigrant community located along the 5th Street commercial corridor. Organizations like Taller Puertorriqueño are working to combat crime, violence and prejudice and catalyze community change through exposure to cultural and artistic opportunities.

The Hispanic Association of Contractors & Enterprises (HACE) has helped local residents and businesses navigate housing and zoning regulations, strengthen relationships with local law enforcement, and access small business loans. Above all, these organizations are working to build community-level trust by facilitating relationships and connecting people to the services and resources available to them.

In West Philadelphia, the 52nd Street corridor has benefited from an influx of immigrants, though it has also struggled with racial tensions between African American residents and immigrant newcomers as well as economic tensions between business owners and street vendors. In an effort to mitigate these tensions, a variety of stakeholders – including the city government, the Enterprise Center Community Development Corporation, the 52nd Street Business Association, the Philadelphia Local Initiatives Support Corporation, the Philadelphia Vendors Association and the Welcoming Center for New Pennsylvanians – have worked together to provide support to both immigrant and U.S.-born entrepreneurs, thereby building a reserve of community-wide trust and social capital. In addition, community development financial institutions (CDFIs) like Finanta are playing an integral role in immigrant small business development by providing start-up capital and business services to entrepreneurs – many of whom would not otherwise qualify for or seek out a traditional business loan.

At a citywide level, the Mayor's Office of Immigrant and Multicultural Affairs (Philly MOIMA) “set[s] the tone for the city’s relationship to immigrant communities” and works with internal agencies to incorporate cultural competencies into the daily workings of city government.

The Road Ahead

Looking forward, the recent influx of immigrant entrepreneurs to Philadelphia could be a building block for meaningful economic development in the city and across the region. The opportunity for growth is borne out in the data: according to the Kaufman Foundation, Greater Philadelphia currently has the fewest entrepreneurs per 100,000 residents of the country’s ten largest metros.  

Capitalizing on this opportunity will require the preservation and enhancement of support systems and services for new Philadelphians. Immigrant entrepreneurs face a number of significant obstacles, including linguistic and cultural barriers, a lack of credit history, and limited familiarity with the American banking system. The combination of these factors leads most immigrants to rely on savings, family loans or credit cards – rather than formal lending institutions – when starting a new business.

The collective effort of Philadelphia’s local city government, nonprofits, CDCs and business associations in supporting immigrant Main Street business owners has already begun to boost immigrant-owned businesses and revive communities. The challenge moving forward will be bringing the work that is currently happening in individual neighborhoods and commercial corridors to a city- and region-wide scale, especially as Philadelphia’s immigrant community continues to grow.  As Philadelphia faces its upcoming mayoral election, it will be critical to ensure that a commitment to integrating newcomers and supporting their ability to start and grow businesses is carried into the new administration.