Photo by moooster/Flickr (Creative Commons)
Over the next several decades, what will be the color of money in Los Angeles? A new report from the California Community Foundation points to what some might find an unexpected driver of wealth in the region: entrepreneurial immigrants.
Along with entrepreneurship, immigration is expected to be one of the two most likely factors shaping the creation of wealth in the region in the coming 50 years, according to the report. An excerpt:
Los Angeles’ entrepreneurial community is diverse, with more women- and minority-owned businesses than any other county in the nation, according to the Federal Reserve.
There is a strong connection between entrepreneurial activity and immigration. Immigrants were, for example, more than twice as likely in 2010 to start businesses each month than were native-born U.S. residents.
Titled “The Future of Philanthropy in Los Angeles: A Wealth of Opportunity,” the report presents a picture of the wealth that is due to change hands in the next five decades as older residents die off, some of whom will leave money to nonprofits. According to the report, Los Angeles County is poised to experience unprecedented growth in its wealth – and thus, potential philanthropy – between now and 2060. It is also expected to have far and away the most money changing hands between generations during this time, more than in any other U.S. city.
This is partly due to a large degree of entrepreneurship in Los Angeles, which ranked last year as having the higest level of entrepreneurship among the 15th largest cities in the nation.
What do immigrants have to do with it? A bit more from the report:
According to the transfer of wealth in L.A. County study by RUPRI, Los Angeles will likely continue to experience two types of major international immigration. The first is entry level workers. Typically, these households require two or three generations before there is a significant accumulation of assets.
The second type is the immigration of higher net worth and higher educated households. Because L.A. is a gateway and safe harbor for dislocated persons and families, it will likely see high levels of immigration from this second group. Like retirees moving to warmer climates, these households come into the community with significant wealth, thereby establishing a quicker opportunity for giving back.
Between first-generation immigrants and their entrepreneurial offspring (some of whom take over family businesses, as we’ll be discussing in a panel at KPCC next week), it adds up to a good amount of entrepreneurial activity. According to the Kauffman Index of Entrepreneurial Activity, a national study that contains data on the growth of immigrant entrepreneurship, the percentage of new entrepreneurs who are immigrants more than doubled between 1996 and 2010, making up close to a third (29 percent) of all new entrepreneurs. The study also notes that the entrepreneurship rate among immigrants is more than double that of native-born Americans.
