A project of the Partnership for a New American Economy
California, the country’s largest state by population, has long been a magnet for immigrants from all over the world. Beginning with the Gold Rush in the mid-19th century, California’s population surged as immigrants from countries as varied as China, Germany, and Mexico began migrating to California with hopes of securing a better life for themselves and their families. Today, foreign-born residents comprise a very large percentage of the state’s population—and continue to be a fundamental component of the state’s economy. According to the American Community Survey, more than 27 percent of the state’s population in 2013 was foreign-born, a larger portion than in any other state. And though California did not see a rapid growth in its immigrant population from 2000 to 2013, it still is home to far more immigrants in real terms than anywhere else in the country: currently more than 10 million people living in California were born abroad, or 2.5 times more foreign-born residents than live in New York, the state with the second-largest immigrant population in the nation.
Size of foreign-born population (2013)
Percent of state’s population that is immigrant
Growth in foreign-born population 2000-2013
Top countries of origin
Immigrants in California have contributed dramatically to California’s economic success, whether new to the US or descended from immigrants who settled in California long ago. In the 2010 US Census, more than half of California’s population identified as Latino or Asian. In recent years new immigrants have been found to contribute from a quarter to a third of the economic output of some of major cities like Los Angeles, San Francisco, and San Diego.
The economic impact of immigrants to California is clear in other areas as well: the state’s long-established tech industry has mobilized to push for a start-up visa, a special visa category that would give immigrant entrepreneurs a way to stay in the country as citizens. California’s economy would also benefit substantially from passage of the DREAM Act. A study by the Partnership for a New American Economy and the Center for American Progress estimated that the 550,000 people that would be affected by the DREAM Act in California could add almost $98 billion to the state’s economy and create more than 384,000 jobs in the next 20 years if the DREAM Act is passed.
DREAMers in the state
Economic impact of passing the DREAM act
Number of jobs created by DREAM act by 2030
California is also known to many outsiders as a crucial hub of American scientific advancement, thanks to its preeminent state university system, which includes schools like University of California- Berkeley, ranked consistently by US News and World Report among the top five graduate-level engineering programs in the country. Between 2008 and 2018, STEM fields are projected to play a key role in US economic growth, adding jobs 73 percent faster than the rest of the economy. For California, fixing the US immigration system to make it easier for students trained in America to remain in the country after graduation will be critical: in 2013 over two in five students earning Masters or PhD degrees in STEM from the state’s research-intensive universities were foreign-born..
Share of STEM graduates at state's most research-intensive schools who are foreign-born (2009)
Share of Engineering PhDs who were temporary residents (2006-2010)
Foreign-born STEM students and graduates in California are also driving economic growth that creates jobs for American workers. A recent study by the Partnership for a New American Economy and the American Enterprise Institute found that for every 100 foreign-born graduates of a US Master’s or PhD program who stays in the United States working in a STEM field, 262 jobs are created for Americans. This translates into a large employment boost for California, a state where, in 2010, more than one in three STEM workers with an advanced degree was foreign-born. By 2020, California will need to fill 967,510 new STEM jobs and immigrants will play a key role in occupying these positions and continuing to promote economic growth.
Percent of Advanced Degree Holding Workers, Across All Disciplines, Who are Foreign-Born (2000)
Percent of Advanced Degree Holding Workers, Across All Disciplines, Who are Foreign-Born (2010)
California’s immigrants also contribute to the state’s economic growth and competitiveness by earning patents on cutting-edge research and products. In 2011, the University of California System earned almost 370 patents, more than any other university or university system in the country. More than 76 percent of those patents had at least one foreign-born inventor. These patents are licensed to existing companies or used as foundations for new companies, creating American jobs and revenue along the way.
When discussing California’s immigrant population it is important to discuss the significant financial impact of its Hispanic population. California has the largest Hispanic population in the country with 38.4 percent, or about 14.5 million Hispanics. The Partnership for a New American Economy published a study about the contributions of Hispanics to America’s spending power and tax revenues. The study’s findings show that Hispanics account for $161.0 billion of California’s spending power, 20.6 percent for the entire state. Foreign-born Hispanics account for $81.6 billion of that spending power, which is 10.5 percent of the whole state.
California also relies on Hispanics to contribute in federal, state, and local taxes and to its Social Security and Medicare funds. Hispanics in California paid $51.5 billion in taxes in 2013, contributing $26.4 billion to Social Security and $6.2 billion to the Medicare trust fund. These financial contributions are important to California’s economy and further demonstrate the value of California’s immigrant community.
Share of University of California System patents with at least one foreign-born inventor (2011)
Share of those inventors who were students, postdoctoral fellows, or researchers, groups with no clear path to stay in America after graduation
UC System licensing/royalty revenue from patents (2011)
Immigration Reform = Economic Growth in California
Reforming our immigration system will generate millions of dollars and thousands of jobs across California. In the Los Angeles, San Francisco, Oakland, San Jose and San Diego metropolitan areas alone, 2007 and 2008 H-1B visa denials cost U.S.-born tech workers as many as 28,234 additional jobs and as much as $274,7755,000 in missed wages by 2010. According to Regional Economic Models, Inc. (REMI), undocumented immigrants who enroll in a legal path to citizenship will generate more than 121,000 jobs and more than $9.9 billion for the state by 2020. Expanding the number of both high-skilled (H-1B) visas will also have positive economic effects. REMI estimates that expansion of the H-1B program would result in more than 38,000 jobs and add more than $2.5 billion to Gross State Product by 2014. The new H-1B visas awarded to California between 2010 and 2013 will translate into 117,209 new jobs for U.S.-born workers in the state by 2020.
In California, creating a path to citizenship and expanding the high-skilled visa program would add a total of more than $6.4 billion to Gross State Product in 2014.
Immigrants are helping to grow housing wealth in some key California counties, as well. Between 2000 and 2010, more than 92,000 immigrants arrived in San Diego County, the area that includes the city of San Diego. By moving into neighborhoods formerly in decline, these immigrants played a role adding to the housing wealth of the neighborhood’s residents. That influx of immigrants added $10,654 to the value of the average home in the county, or nearly $11.6 billion to housing wealth there overall.
Immigrant entrepreneurs in California have made an enormous impact in recent years, especially as the state has struggled, along with the rest of the US, to drive new business and create American jobs. In California, as in many other places around the country, immigrants have led new business growth: currently, immigrants in California own almost 37 percent of businesses in the state, representing a larger share of business owners than they do anywhere else in the country. During the Great Recession from 2007 to 2011, immigrants in California founded almost 45 percent of new businesses in the state, meaning roughly seven percent of all new businesses started in the entire United States each month during that period were started by California’s immigrants.
13 California-based Fortune 500 firms—including eBay, Yahoo!, and the semiconductor firm Qualcomm—were all founded or co-founded by immigrants. And another 12 Fortune 500 firms based in the state have at least one founder who was the child of an immigrant, including major employers like the The Walt Disney Company, Oracle, and Mattel. Together these 25 companies employ almost 900,000 people today, and bring in more than half a trillion dollars in revenue—a figure larger than the gross domestic product of Norway, Argentina, or South Africa.
California is also a hotbed for startup activity, an economic sector renowned for the contributions of immigrants. One study by researchers at Duke University and University of California-Berkeley found that between 1995 and 2005 more than 52 percent of startups in California’s Silicon Valley had at least one immigrant founder. Many of those companies—like Facebook, and Tesla Motors—went on to become major American success stories. But with the US lacking any sort of dedicated visa for entrepreneurs, many in California’s tech community worry it has become too difficult and discouraging for today’s immigrant entrepreneurs to stay—especially when other countries like Singapore, the United Kingdom, and Canada are more welcoming to them. When the Duke and Berkeley researchers updated their study recently, they found that between 2005 and 2012, fewer than 44 percent of new Silicon Valley startups had immigrant founders, a drop of almost a sixth.
Immigration policy has been harmful to California’s economy in recent years. From 2000 to 2010, a period when a flood of tourists from Brazil, China, and India boosted international travel spending globally, California saw its market share of the international tourism market decline. This drop cost the state an estimated 419,000 potential visitors, as well as almost $1.7 billion in spending and more than 12,700 jobs over that period. Industry experts have blamed the lengthy delays and expenses involved in obtaining a US tourist visa as a major source of such declines nationwide.
California, a state that generates almost $31.8 billion a year in agriculture, forestry, and fishing revenues, has also finding the agricultural labor it needs. A survey of growers in the San Joaquin, Salinas, Sacramento, Santa Barbara, and Imperial valleys in early 2012 found worker shortages at vegetable farms between 10 and 15 percent. One early 2012 survey of growers across the state found that there was a 30 percent shortage of workers needed for tree thinning, a critical step in preparing for fruit tree harvests.
Our inefficient visa system also denies California the agricultural labor necessary to keep up with growing demand for produce, forcing a shift to imported fruits and vegetables. Between 1998 and 2012, the share of garlic imported from abroad increased from 31 percent to 56 percent. Over the same period, the share of avocadoes imported from Mexico increased from under 5 percent, to almost half. The 41,000 acres used for cultivating garlic in 1999 had been downsized to just 25,000 by 2012.
The US Department of Agriculture estimates that each one on-farm job supports more more than three additional jobs in the broader economy, often in better-paying industries like manufacturing, packaging, and transportation. Despite this benefit, the US currently lacks a temporary visa for farm workers that is easy—and financially feasible—for many small and medium-sized farms.
Obtaining the H-2B visa, a temporary work permit often used to recruit seasonal staff for places like amusement parks, hotels, or landscaping services, is similarly complex, and could be costing California jobs. One study by the Partnership for a New American Economy and the American Enterprise Institute found that for every one H-2B visa worker, 4.64 jobs are created or preserved for American born workers. In California, the 2,411 H-2B visas authorized for California employers in fiscal year 2013 supported over 11,000 jobs—a number that likely would have been even greater with a less cumbersome visa process. Employers typically spend $2,500 for each H-2B visa they sponsor, apply to multiple federal agencies in the process, and wait eight weeks for an answer.
California H-2B Visas (FY 2013)
California may also need to recruit immigrants to address a coming shortage of medical professionals. The University of California has predicted the state could be short as many as 17,000 doctors by 2015. And by 2030, the federal government has estimated California could be short more than 193,100 registered nurses. Immigrants are already playing a major role filling some such labor gaps: in 2010, almost one in four physicians in the state were graduates of foreign medical schools, who tend to be overwhelmingly immigrant.
Doctor Shortage by 2015
Share of physicians who graduated from foreign medical schools, 2012
Shota Atsumi, a chemical and biomolecular engineer, came to the United States in 2002 after being frustrated by the hierarchical academic culture in his native Japan. “It’s very difficult there for a young scientist to have any real independence there,” he explains, “and it’s not an easy place to take risks.” Arriving at the University of California-Los Angeles as a postdoctoral researcher in 2006, Atsumi and his mentor, Prof. James C. Liao, began exploring entirely new ways to generate environmentally-friendly fuel. Atsumi remembers the difficulties they encountered during their first year in the laboratory. “I was at that lab working even on Thanksgiving Day,” Atsumi says, “because we so very much wanted a good result!”
After a year of hard work, Atsumi and Liao developed a way to make a petroleum replacement called isobutanol from E. coli bacteria. That fuel can serve as a substitute for petroleum, or be added to traditional fuels to cut down on harmful carbon emissions. Their invention has since been licensed to the Colorado renewable energy startup Gevo, which plans to open the world’s first commercial-grade isobutanol plant later this year. This facility, to be located in Minnesota, will employ 28 people, and it already has a purchase order from the US Air Force as well as an agreement to provide renewable bottles to The Coca-Cola Company. Atsumi has since become a professor at University of California-Davis, a position that allowed him to obtain his green card with the school’s help and sponsorship of his application.
Additionally, the company that bought Atsumi’s technology, Gevo, has its own ties to immigrants in academia. One of Gevo’s original founders was Peter Meinhold, a German immigrant who helped discover a cost-effective way to make renewable fuels while earning his PhD at Caltech. Officials at that university cite his startup as one of their great success stories of the last ten years.
Immigrants are helping to grow the US economy everywhere, not just in the places—like our biggest cities—that we expect. They are helping to fill labor shortages on America’s farms, starting businesses that employ US workers, and developing the cutting-edge products that make America the world’s preeminent innovation hub.
Click on a state to learn more about the contributions immigrants are making to the local economy.