Social Capital, Remittances, and Immigrant Entrepreneurship in Chinese and Mexican Immigrant Groups

By: Amanda Mai Yang

At the core of immigrant experience lie economic concerns necessary for the purchasing of commodities needed for survival. Many studies have illustrated the advantages and disadvantages of a formal, codified legal immigration policy to encourage the success of immigrants by monitoring the flow and type of immigrant admitted to the U.S. (that is, national origin, professional skills or refugee status); however, it is important to note the informal factors, aspects outside the formal legal system, that motivate and inspire immigrants to migrate to the United States. In this paper, I analyze the immigrant experience from an economic perspective, examining the intricacies that arise from the interconnectedness in the acquisition of work immediately after immigration to the United States, transmission of remittances, increase in immigrant-owned business firms in the United States. These situations may be used as evidence to outline a common experience among the American immigrants who, despite their country of origin, can relate to the experiences immigrants from other countries have experience generation after generation.Informal relationships encompass the economic interactions immigrants maintain with those in their neighborhood communities and should not be dismissed in the study of the benefits and disadvantages of immigration.

This essay examines three informal experiences, that is experiences and interactions that occur outside of the realms of state institutions, which immigrants must encounter when first entering the United States. First, I will assess the factors that contribute to the attainment of jobs. Once capital is earned, an investigation into the practice that many immigrants perform regularly: remittance transmission. By sending money to native countries, immigrants assist in elevating the standard of living of their homeland, while acquiring skills in the US. These skills could potentially become useful to native country if immigrants choose to migrate back to original country. Finally, I will observe the propensities of immigrant entrepreneurs within the United States economy, as business ownership often becomes an ultimate goal for many immigrants, since it produces high levels of upward social mobility. Through the detailed investigation of two of the largest immigrant groups in the United States, Mexican and Chinese, it will become apparent as to whether the immigrant experience can be generalized, based on the idea that these groups come to the United States with different levels of educational attainment and skill level.

Discussion on Terminology

Ralph Waldo Emerson describes a culture as, “a man[‘s] a range of affinities through which he can modulate the violence of any master-tones that have a droning preponderance in his scale, and succor him against himself.” Certainly immigration has contributed greatly to the American culture in helping creating an identity for this plural nation. A culture encompasses the various perceptions, practices and attitudes of a distinctly bound territorially, ethnically, religiously and economically group. Daily interactions which produce traditions eventually create societal norms. For the purposes of this paper, shared culture is defined as fundamental relationships between immigrants who maintain familial ties or share countries of origin. It incorporates an individual’s religious affiliation, proficiency in languages, and the maintenance of relationships with family in the United States and in their native country. It is important to understand that a shared culture can be denoted from the fact that

The Department of Homeland Security reported that in 2007, 1,052,415 immigrants were legally admitted to the United States. Of these immigrants, the Census reported that 148,640 traveled from Mexico (14.1% of total), while 76,655 (7.3% of total) migrants are of Chinese origin.1 Additionally, we take note of the number of undocumented Chinese and Mexican immigrants represent. The Department of Homeland Security reports that in 2006, approximately 6,570,000 undocumented immigrants came from Mexico and 190,000 came from China.2 Unauthorized immigrants represent a sizeable portion of their immigrant cohorts. Due to their linguistic weaknesses, low levels of educational attainment and lack of legal status in the United States, undocumented immigrants are forced to work within their ethnic enclave. Illegal immigration contributes to the disparity of wages, as undocumented immigrants are have no choice but to accept lower wage jobs and work in poorer working conditions. Sum, Harrington, and Khatiwada (2006) report that between 2000 and 2005, “it appears that employers are substituting new immigrant workers for young native born workers. The estimated sizes of these displacement effects were frequently quite large.”3 Camarota (2006) found that in the U.S. “between March of 2000 and 2005 the number of adult immigrants (legal and illegal) with only a high school degree or less in the labor force increased by 1.6 million.”4 These studies illustrate the consequences of an increase in a less educated work force within the ethnic economies and the fears that arise out of this situation for the uneducated sectors of the American public.

Many documented and undocumented immigrants live within close proximity to certain popular ports of entry. These areas are home to traditional clothing stores, restaurants and grocery stories that reflect the culture of their native country. Neighborhoods, like these, with highly populated areas of Mexican and Chinese immigrants create an opportunity for an ethnic economy to emerge. Ethnic economies provide immigrants with a network of businesses that cater to specific immigrant groups.

Immigrant entrepreneurs benefit from those new legal permanent residents and temporary visitors who enter to this country, as they require little pay, create a stable, renewable labor force and often have low skill levels. These niche economies serve as a foundational component of the immigrant experience. By giving immigrants work experience that further contribute to the high social mobility, immigrants experience through the work experience gained in their first American jobs. Important experience learned in American jobs include an increased proficiency of second language, gaining a better understanding of American business practices and increasing social network which translate into recommendations for a higher-paying job. Ultimately, each of these instances assist in the establishment of credibility in the United States.

Ethnic enclaves, also known as ethnic economies, are defined by Pedace (2008) as the “social ties created by similarities in culture and language generate networks that create optimal employment matches for immigrants and protect them from difficult adjustment periods”5.

1 Jefferys, Kelly and Randall Monger. U.S. Legal Permanent Residents: 2007. Annual Report: Office of Homeland Security. http://www.dhs.gov/xlibrary/assets/statistics/publications/LPR_FR_2007.pdf 2 Hoefer, Michael, Nancy Rytina, Christopher Campbell. Estimates of the Unauthorized Immigrant Population Residing in the United States: January 2006. Population Estimates: Department of Homeland Security. http://www.dhs.gov/xlibrary/assets/statistics/publications/ill_pe_2006.pdf 3 Sum, Andrew, Paul Harrington and Ishwar Khatiwada. The Impact of New Immigrants on Young Native-Born Workers, 2000-2005. Center for Immigration Studies (September 2006) http://www.cis.org/articles/2006/back806.html 4 Camarota, Steven. Dropping Out: Immigrant Entry and Native Exit from the Labor Market, 2000-2005. Center for Immigration Studies: Backgrounder (March 2006) http://www.cis.org/articles/2006/back206.html

Large cities like New York, Los Angeles, Chicago, and San Francisco possess neighborhoods like a Chinatown, a Little Italy and a Greektown. Each of these culturally, and often linguistically and religiously, bound centers provide immigrants with a large social network upon arrival to the United States. These enclaves are usually in large metropolitan areas near ports of entry. As the figures from the Department of Homeland Security indicate above, the total numbers of immigrants largely reside in about ten states.

High concentrations of immigrants in these large metropolitan centers facilitates the establishment of ethnic enclaves. A study by M. Evans (1989) concludes that immigrant groups which are larger have a higher tendency to own a business. Subsequently, the immigrant groups which are linguistically bound have a higher success rate for immigrant entrepreneurs.

Just as immigrants rely on ethnic enclaves to provide them with resources to gain their first jobs, immigrant entrepreneurs conversely rely on their ethnic ties to gain laborers. Sanders (2002) illustrates that immigrant business owners act as liaisons between ethnic and multiethnic markets. Ultimately, the laborers are granted better working conditions and better hours in the multiethnic economy, and it becomes a goal to leave the ethnic labor market once familiarity with language and culture are established. 6 The larger economy, that is a culturally pluralistic economic

5 Pedace, Roberto. A Warm Embrace or the Cold Shoulder: Wage and Employment Outcomes in Ethnic Enclaves. Center for Economic Studies. Working Paper.(April, 2008).6 Sanders, Jimy, Victor Nee and Scott Sernau. Asian Immigrants’ Reliance on Social Ties in a Multiethnic Labor Market. Social Forces, Volume 1, No. 1 (September, 2002) http://www.jstor.org.ezproxy1.lib.depaul.edu/stable/pdfplus/3086535.pdf

system, represents the multi-ethnic economy. Multi-ethnic workers generally benefit from implemented formal, legal guidelines that regulate working conditions, minimum wage and standards for workers.

Immigrant entrepreneurs are a cohort of foreign-born entrepreneurs, who often cater to the needs of those from their country of origin. They can be members of either the ethnic economy or the multi-ethnic economy; however, this paper will focus on the relationship of immigrant entrepreneurs and their employment practices and industrial specialization to determine if immigrants in the United States generally migrate to certain industries.

A study by Jennifer M Sequeria and Rasheed A Abdul (2006) that analyzed whether weak and strong social ties affect the relationship between immigrant entrepreneurs and immigrant communities. They found that immigrant entrepreneurs within ethnic enclaves and economies serve as both an advantage and a disadvantage to immigrant entrepreneurs. They often call for cohesion that is business-owners will experience losses to save the community as a whole.7 Conversely, they can exploit their population by failing to provide them with tools necessary to future success. Familiarity with a culture and language grants immigrants the prospect of being adapting to a bicultural experience. The result is their ability to communicate in several languages through experiential learning. This experience allows them to become a more marketable asset for many multiethnic firms looking to market products to a largely ethnic community.

Social capital represents the benefits of engaging civically into your communal environment (work, neighborhood, church, gym). It describes the actions individuals take to engage in activities that benefit others through networking. Social capital encourages and fosters the creation of a sense of community, unity and identity among a social network. This paper will demonstrate that social capital has a central role in job acquisition among distinct immigrant groups: Chinese and Mexican. Their cultural experiences qualify them for a particular membership within an economy that offers them opportunity to obtain work.

To gain a deeper understanding of social capital, it is necessary to review the recent works that have been published. Social capital is defined by Pieterse (2003) as “the capacity of individuals to gain access to scarce resources by virtue of their membership of social networks or institutions”.8 Through the lens of immigration entrepreneurship, we can deduce that ethnicity, or national origin, becomes a source of social capital within the framework of the United States economy. As Jochen Schumann (2004) concludes a country’s human capital reflects the actual capital within a state infrastructure. Social, political and cultural competences allow a migrant to be more flexible and accepting of diversity, making them increasingly more successful in the host country.9 This portion of the essay will describe factors that produce social capital that include religion, language and other factors.

Cohesion and unity of ethnic groups akin to their own cultural customs through means of social capital provide some understanding into sense of community immigrant groups share with their family and other members of their immigrant community. One example is the seemingly altruistic transmission of earnings from a highly developed country, where the wages were earned, to a less developed country to support family members. This is a practice known as remittances. Remittances greatly contribute to the development and stability of developing nations despite

7 Sequeria, Jennifer M and Rasheed, A Abdul. Start-Up and Growth of Immigrant Small Businesses: the Impact of Social and Human Capital. Journal of Developmental Entrepreneurship. Norfolk: December 2006. Volume 11, Issue 4; pg 357-376. http://proquest.umi.com.ezproxy1.lib.depaul.edu/pqdweb?index=6&sid=2&srchmode=1&vinst=PROD&fmt=6&startpage=-1&clientid=31663&vname=PQD&RQT=309&did=1200061881&scaling=FULL&ts=1206115043&vtype=PQD&rqt=309&TS=1206115053&clientId=31663 8 Pieterse, Jan Nederveen. Social capital and migration. SAGE Publications, Volume 3, Number 1 (2003).9 Schumann, Jochen. Migration in the Context of Countries’ Human Capital and Social Capital. Jahrbuch fur Wirstschaftswissenschafen; 2004 55, 1; ABI/INFORM Global, pg 33-53

global economic conditions. The process of sending remittances to native country is an informal procedure.

Many Mexican and Chinese immigrants leave their country to make financial contributions to their families in Mexico and China. Remittances, also known as Fei Ch’ien (China) and las remesas (Mexico), from the United State have global economic implications. Through the transfer of funds from host country to native country, immigrants provide a steady flow of financial capital (in this case, the United States to Mexico or China). As Kapur (2004) describes “immigrants rather than the governments become the biggest provider of foreign aid”10, in that remittances have become the most stable means of transnational financial capital exchange. This essay will illustrate how motivations driven by social capital encourage the sharing of financial capital.

The World Bank reports that China received $25.7 billion in remittances, followed by Mexico which received a close $25.0 billion from the United States11. In total, the United States sent close to $240 billion in 2007 alone. These figures solely recognize the formal transactions of remittances. As Maimbo (2004) describes, the informal mechanisms migrants use to transmit these funds provide migrants with a reliable and efficient apparatus to transfer money, often in areas that lack the infrastructure to maintain banking institutions. This essay will further elaborate on the informal procedures Mexican and Chinese immigrants use to transmit funds earned in the United States.

By examining two of the largest immigrant groups in the United States, we will determine if the immigrant experience is universally challenging or if each group endures unique experiences with distinctive challenges. It is additionally important to highlight the lack of research on the transmission of remittances through informal means. Governmental agencies like Homeland Security, The Department of State and the Central Intelligence Agency have recognized this as a problem. Current restrictions are placed on sending of formal remittances as a preventative measure. Still many fear that informal transmissions will allow and support money launderers and the flow of terrorism money to go unmonitored.American Immigration History: post-WWII through post-Sept 11

The first hundred years of American history welcomed immigrants to the American shores to help build infrastructures like roads and railroads. Since then, United States immigrant policy has become increasingly restrictive. During the 1960s, the United States immigration policy shifted from a national origins based admission policy, which heavily excluded Asian migration, and moved towards a preference system based on familial ties and skill levels which would benefit the United States. For the first time in decades, Chinese immigrants were granted the ability to gain admission to the U.S. by adhering to the same qualitative characteristics as all other ethnic groups.

Current immigration policy is largely based on a Congressional legislature passed during the 1990s passed by the Clinton Administration. The Immigration Reform and Control Act (IRA) in conjunction with the amendments made to the Immigration Nationality Act of the 1960s, radically altered immigration in terms of the type of immigrants who gained access to visas and permanent residents. The nine categories given preference to the applicants include

10 Kapur, Devesh. Remittances: The New Development Mantra. United Nations Conference on Trade and Development. G-24 Discussion Paper Series. No. 29, April 2004. http://www.unctad.org/en/docs/gdsmdpbg2420045_en.pdf

11 Ratha, Dipip, Sanket Mohapatra, K.M. Vijayalakshmi, Zhimei Xu. Remittance Trends 2007. Migration and Development Brief 3. World Bank (November 28, 2007) http://siteresources.worldbank.org/EXTDECPROSPECTS/Resources/476882-1157133580628/BriefingNote3.pdf

family sponsored preferences, employment based preferences, refugee and asylum status, and a diversity clause for countries which do not send large numbers of permanent residents.12 Family visas represent the greatest amount of visas granted to LPRs. In 2007, they represented 65.5 percent of the visas distributed. 13

The second largest groups of permanent visas granted were employment based visas. For the most part, this essay is concerned with those permanent (those seeking naturalization and citizenship) and non-immigrant employment visas (those seeking admission for the purposes of temporary employment). This includes those with which expire upon termination of employment or at a certain date to be renewed. In 2006, of the 33,667,328 people granted temporary I-9 visas, 6,146,122, or 18.3 percent were from Mexico; only 1.8 percent (596,156) non-immigrant visas were granted to Chinese nationals.14 Among these temporary workers are special classifications of immigrants, who are highly skilled and educated. Each year, 65,000 H1-B non-immigrant visas are granted to those with bachelor’s degrees and higher.15 The majority of these visas are given to immigrants from China and India, who enter fields of computer science and information technology.16 Current immigration structure caters to high-skilled immigrants, resulting in the tendency for unskilled laborers to be undocumented.

Legal permanent resident status (LPR), that is the process of naturalization and eventual U.S. citizenship, requires the compliance with U.S. policies and a long bureaucratic process, which ends in a citizenship test. Over half of those granted LPR status in 2007 (59.0 percent) simply applied for the adjustment of citizenship status, while the remaining 41.0 percent constituted new arrivals.17

Further contributing to the immigrant flow into the United States is the undocumented population, which represents The Department of Homeland Security reports that in 2006, approximately 6,570,000 undocumented immigrants came from Mexico and 190,000 came from China.18 Most of these undocumented immigrants reside in metropolitan areas already densely populated with immigrant communities from their native countries. California, New York, Texas, Florida, New Jersey and Illinois possess 74% of the entrants who immigrated in 2003.19 These areas provide networks of people who speak familiar languages and may assist in the job finding process.

After gaining insights into the current immigration policy in the United States and general characteristics about the immigrant population, I now turn to two of the three largest immigrant groups in America. By examining their occupational predispositions and industry specializations, it will be possible to draw paralleling and contrasting elements the two cohorts exhibit.Chinese Immigration

In 2007, 76,655 Chinese legal permanent residents were allowed admission to the United Sates, representing just above 7 percent of all immigrants who gained legal permanent status according to the Department

12 Visa and Educational Resources. United States Citizenship and Immigration Services. http://www.uscis.gov/portal/site/uscis/menuitem.eb1d4c2a3e5b9ac89243c6a7543f6d1a/?vgnextoid=ea408875d714d010VgnVCM10000048f3d6a1RCRD&vgnextchannel=ea408875d714d010VgnVCM10000048f3d6a1RCRD 13 See Footnote 1114 “Temporary Admissions of Non-Immigrants to the United States: 2006” Annual Flow Report. U.S. Department of Homeland Security, Office of Immigration Statistics, Policy Directorate (July 2007) http://www.dhs.gov/xlibrary/assets/statistics/publications/NI_FR_2006_508_final.pdf 15 H1-B Visas. U.S. Department of Homeland Security. http://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f35e66f614176543f6d1a/?vgnextoid=ee38ec897643f010VgnVCM1000000ecd190aRCRD&vgnextchannel=4b18dc4d88889010VgnVCM10000045f3d6a1RCRD 16 17 Jefferys, Kelly and Randall Monger, “Special Report: U.S. Legal Permanent Residents: 2007.” Office of Immigration Statistics, Policy Directorate. (March 2008) http://www.dhs.gov/xlibrary/assets/statistics/publications/LPR_FR_2007.pdf18 Hoefer, Michael, Nancy Rytina, Christopher Campbell. Estimates of the Unauthorized Immigrant Population Residing in the United States: January 2006. Population Estimates: Department of Homeland Security. http://www.dhs.gov/xlibrary/assets/statistics/publications/ill_pe_2006.pdf 19 “Immigrants Admitted by State and Leading Country of Birth” U.S. Census http://www.census.gov/compendia/statab/2006/tables/06s0010.xls

of Homeland Security20. This data illustrates the change in the United States immigration policy within the several centuries. At the turn of the 19th Century, Chinese immigrants faced labor discrimination on several levels.

The Chinese first came to America en masse after the authorization of the Burlingame Treaty in 1867.21 For the first time, the United States and China acknowledged friendly relations. The Treaty held that nationals could take “mutual advantage of free migration and emigration…the purposes of curiosity, of trade or as permanent residents”. 22

After establishing a friendly relationship with China, immigrants flooded American shores. The Chinese were industrious laborers and successfully obtained jobs in low-skill, low-wage industries, which were plentiful during the time. Chinese foreign laborers served as victims of split-market labor, that is an excessive wage differential between native labor and foreign laborers.23 Often times, Chinese immigrants would receive less than half what a native worker would be paid. Over the next few years, economic anxiety, cultural biases and fears of job displacement kindled legislation to restrict Chinese immigrants from entering the United States. The 1882 Chinese Exclusion Act was a piece of federal legislation which forbid immigration from China for 10 years. In the aftermath of the Chinese Exclusion Act, Chinese immigration abruptly halted.

Chinese immigration in the new millennium has risen dramatically and assisted in the creation of overseas business ties with native China. It has also resulted in the incredible upward social mobility of foreign-born Chinese workers. According to the U.S. Census Bureau, 17.5 percent of Chinese immigrants earned between $50,000 and $74,999, while 12.5 percent earned $100,000 through $149,999 in the year 2000.24 Several factors contribute to high success rate of Chinese immigrants into the United States economy. First, Chinese workers have higher levels of educational attainment upon entrance to the United States. Portes (2006) indicates that of the 997,301 Chinese immigrants who entered the United States in 2000, 41.6 percent were college graduates, with 36.8 percent in professional specialty occupations.25 Second, many Chinese immigrants initially enter the United States as temporary workers and eventually gain permanent jobs. By accepting a temporary position at a corporation in the U.S., Chinese immigrants often sign contracts ensuring citizenship and high salaries while industriously working on a temporary worker visa. These temporary I-9 visasa also allow Chinese immigrants to gain social capital while in the U.S. which will later help creates bonds that encourage relationships in ethnic economies, often encouraging immigrants to stay in America.Mexican Immigration

Immigrants from neighboring Mexico have encountered a similar immigrant experience in facing discrimination due to a large wave of immigrants entering the U.S. within a small segment of time. In the 1942, the Bracero Program contractually authorized Mexican laborers one year of work in American agricultural fields. When the program ended in 1962, few of the Bracero participants returned to Mexico; however, “Operation Wetback” expedited mass deportations of Mexican Bracero participants.26 Consequently, corporations, spoiled by Mexican cheap labor, continued to hire illegal labor, in effect creating the “contradiction between the legal regime and the social reality” that still exists today.27 This contradiction between legal statutes regarding immigration serves as one of the bases for discrimination against Mexican immigrants. U.S. dependence on Mexican labor became especially prevalent during the early 1990s, when a construction and manufacturing boom created a demand for low skilled, low paid workers.

The wave of Mexican immigration continued to rise through the new millennium. In 2004 alone, the construction industry increased employment of foreign-born Hispanics by 26.8 percent, according to a poll by the Pew Research Center.28 For clarification purposes, we will assume that since Mexican immigrants represent the 57

20 See Footnote 1421 Chinatown. PBS Special22 Chin, Gabriel Chae Chan Ping and Fong Yu Ting: The Origins of Plenary Power (excerpt from Burlingame Treaty)23 Terry E. Boswell. “A Split Labor Market Analysis of Discrimination Against Chinese Immigrants, 1850-1882”. American Sociological Review, Vol. 51, No. 3. (June, 1986) p. 352 (“Split labor markets exist when the cost of labor substantially differs along ethnic lines”)24 Census Bureau Foreign Born Population: Chinese 200225 Portes, Alejandro and Rubén Rumbaut. Immigrant America: A Portrait, Third Edition, Expanded and Updated. University of California Press, Berkley (2006). 26 AMM, Chapter Six: Unauthorize Migrants in the United States page 60427 Daniel Kanstroom. Deportation Nation. Page 22028 “Indicators of Recent Migration Flows from Mexico”. Pew Hispanic Center: Pew Research Center. May 30, 2007 http://pewhispanic.org/files/factsheets/33.pdf

percent of illegal immigration population in the United States today, most of the legislation discussed is directed at that population.29

Regrettably, it is Mexican immigration that tackles much of the discrimination placed on “illegal” immigrants entering the U.S. covertly. The attacks on the World Trade Centers and the Pentagon truly shifted America’s stance on immigration to encourage and ensure national security. Several years after the attacks, in 2005, the House of Representatives passed the Border Protection, Antiterrorism and Illegal Immigration Control Act. This sweeping piece of legislation approved the collection of biometric data, use of canine detections teams and requires passports for the entry and exit into the United States among other comprehensive changes.30 On September 14, 2006, the House of Representatives passed H.R. 6061,the Secure Fence Act. This piece of legislation was formed to “establish operational control over the international land and maritime borders of the United States” along the southern border of Mexico through “reinforced fencing” along the major ports of entry.31

Tensions on the Southern border continue to remain heated along the scorching desert border. Vigilante groups like the Arizona Vigilantes and the Arizona Minutemen, non-governmental organizations who patrols the Arizona desert in an attempt to help the Department of Homeland Security. The group provides surveillance on the Arizona border and apprehend illegal immigrants. This is an emotional stress on immigrants who are often already severally physically handicapped due to a lengthily duration of time in the harsh desert climate.

It is additionally important to recognize that, “Mexico is not really a poor but a middle-income nation, yet its proximity to the United States and the approximate seven-to-one wage gap for manual labor create a continuing incentive for peasants and workers to seek to join their co-nationals already in the United States”.32 Since the Bracero Program, which hired temporary workers from Mexico to fulfill agricultural positions, during the 1940s, it codified the relationship between the US reliance of Mexican labor in agribusiness and various other low-skill industries like construction.33 Still, exploitation of undocumented Mexican workers is sizeable although legislation hindering immigration from the Southern border continues to increase. It is these groups of highly unskilled, low-wage immigrants who send the most money to Mexico. After earning a significant amount of money, it is commonplace to return to Mexico and return to the United States when more capital is needed to sustain life.Social Capital

Robert Putnam (2007) reports that, “it is sadly true in the United States that poverty, crime and diversity are themselves intercorrelated…greater ethnic diversity is associated with less trust in neighbors”.34 His findings reveal that ethnic communities possess a greater amount of trust among their own ethnic communities. Trust is central to social capital, which evolves through the creation of relationships inside and outside the workplace. Stability in long term relationships between firms and individuals encourages the strengthening of relationships, allowing ethnic business communities to develop and strengthen ties.

Social capital can be equally beneficial as it is detrimental to immigrant businesses and social relationships within the context of the greater community. Through the creation of ethnic neighborhoods, immigrant groups become secluded, allowing stereotypes and stigmas can become attached to and perpetuated in these areas. To review, social capital exists when individuals create bonds extending past the workplace. This type of capital can be created, wasted and conserved, just as other forms of capital.35 Westlund and Bolton (2003) describe social capital’s dynamic ability to inhibit and encourage economic stimulation within its economy. As relationships are tended to and

29 Steven A. Camarota. “Immigrants in the United States, 2007: A Profile of America’s Foreign-Born Population”. Center for Immigration Studies Backgrounder, November 200730 HR 4437. Border Protection, Antiterrorism, and Illegal Immigration Control Act of 2005. 31 H.R. 6061 Secure Fence Act of 200632 See Footnote 1833 Martin, Philip L and Michael S. Teitelbaum. “The Mirage of Mexican Guest Workers”. Foreign Affairs. (2000) http://heinonline.org.ezproxy1.lib.depaul.edu/HOL/PDF?handle=hein.journals/fora80&collection=journals&id=1073&print=15&ext=.pdf 34 Putnam, Robert. “E Pluribus Unum: Diversity and Community in the Twenty-first Century The 2006 Johan Skytte Prize Lecture”. Scandanavian Political Studies. Vol 2, pp137-174 (2007). http://www.blackwell-synergy.com/doi/full/10.1111/j.1467-9477.2007.00176.x?cookieSet=1 35 Westlund, Hans and Roger Bolton. “Local Social Capital and Entrepreneurship”. Small Business Economics, Volume 21, pp 77-113. Kluwer Academic Publishers (2003).

sought after, trust and social capital elevates and strengthens neighborly kindness and solidarity within an immigrant group.

Advantages. Within the context of immigration, social capital allows immigrants who are new to a host society the ability to gain a sense of kinship and comradery in newly formed bonds with those in America. Connections and engagement in societies eventually unlock the door to a network of social and economic opportunities that may lead to a future job position. Social capital is observed in both immigrant entrepreneurship and in remittance transfers. Immigrant entrepreneurs must have confidence in the co-ethnic individuals they hire. It is essential owners hire the strongest and most reliable workers to operate their businesses efficiently and honestly. Here, trust continues to function as an important determinant in deciding who gains work and who does not. Often times, recommendations for jobs are based on word-of-mouth interactions between hiring partners within ethnic communities. Trust also reduces the amount of transaction costs, making businesses more productive and successful. In trusting business associates, security fees, tracking devices and monitoring systems are not only unnecessary but would be offensive to a confidant.

Disadvantages. Just as trust is an advantageous component of social capital, it can ultimately exist to be detrimental in business relationships. Negative effects of social capital are a consequence of stagnantion. When new opportunities, innovations and relationships fail to take place within any market, a business becomes dormant. The same is true for social capital in immigrant business firms. Especially in ethnic economies which become familiar and trusting with business relationships, these communities can become likewise corrupted because of increased social capital. Westland and Bolton (2003) articulate that “social capital… [is] also found in enclaves as ghettos and mafia cultures”.36 This describes situations where information is passed covertly to prevent others from benefiting from certain polices and agreements. Further, Schumann (2004) contends that social capital is merely membership to a club.37 In examining immigration groups, this contention would imply that to be an active member of an ethnic economy, an individual would need to share the same country of birth.

Principles illustrated in this section can be applied to the role of immigrant entrepreneurs in the United States today. Chinese and Mexican immigrant entrepreneurs have established foundational ideas in the discussion of social capital. Immigrant Entrepreneurship

Immigrant entrepreneurship is significant in this discussion, because those who operate, own and manage firms often dictate the requirements to obtain work. As stated in the former section, social capital frequently encourages businesses to act in certain ways. Interactions and community networks begin to become interrelated for groups who share a common heritage and are adjusting to new practices, traditions or formalities of a new country.

Many studies have deliberated the role of entrepreneurship in immigrant groups. They have attempted to draw disparate conclusions distinguishing each region of origin to provide insights as to whether or not parallels can be made. Pedace and Rohn (2008) draw interesting conclusions in their study which monitors the effects of employment and salary within the contexts of ethnic enclaves. Their evidence shows that ”for Mexican and Central American workers, an increase in the concentration of their ethnicity tends to be associated with lower earnings, but for East Asian workers the opposite relationship is observed”. 38 Their study illustrates that various regions of origin affect the success rate of ethnicity in immigrant entrepreneurship. Still, Tseng (2000) illustrates immigration as a necessary means for families to spatially divide labor around the world, essentially diversifying their business opportunities through migration and mobility of human and social capital. Further, Tseng (2000) highlights the importance of long term aspirations for immigrant entrepreneurs who establish commercial relationships and networks to facilitate the future of second generations.

Chinese immigrants owned 2.3 percent of all accommodation and food services in the United States. The Census also reported that 40.5 percent of Chinese business owners are in the Wholesale trade industry, where they earned $42,510,000 in 2002.39 This immigrant group owns predominately wholesale trade businesses which represent 40.5 percent of total receipts for all Chinese owned firms according to the U.S. Census Bureau Survey of Business owners.

36 See Footnote 1937 SEE EARLIER FOOTNOTE SCHUMANN38 Pedace, Roberto and Stephanie Rohn. “A Warm Embrace or the Cold Shoulder: Wage and Employment Outcomes in Ethnic Enclaves”. Center for Economic Studies, Bureau of the Census (April 2008).39Industries Accounting for the Largest Receipts for Chinese-Owned Firms: 2002. U.S. Census Bureau. (Revised August 29, 2006) http://www.census.gov/csd/sbo/chinesetable_a.xls

In 2002, the Census Bureau reported that 42.6 percent of Mexican owned firms were involved in construction, administrative and supportive and waste management services and other services, which is representative of 9.5 percent of all the U.S. business in this industry. 40 Propensities to work in lower skilled groups provide American owned industries to capitalize on immigrants who are willing to settle for lower wage. As Kessler (200) articulates, “immigration is economically efficient and redistribution provides a theoretical mechanism through which to compensate those suffering temporary dislocation”.41 For Mexican immigrants, little prestige and possibility for upward economic movement is attached to these jobs. This, in conjunction with the lack of educational attainment, perhaps illustrate why Mexican immigrant entrepreneur shave become established within the booming construction industry.

Remittances

In today’s economy, national identities are often separate from ethnic identity. The free flow of intellectual property and labor, ability to travel with reasonably priced transportation and exposure to other culture have greatly changed perceptions of national identities. This is due in large part to globalization which has increased interdependence between nations, or transnationalism, throughout the global economic structure. It is now time to discuss the propensities involved with how immigrants spend their wages earned in the United States.

As immigrants are granted legal opportunities to obtain employment visas into the United States, it increases the mobility of labor forces. No longer are workers held captive by their nation-state, because technology and other means of communication identify economic prospects in other, more developed, nations. Florence Jaumotte and Irina Tytell (2008) note that “the on going globalization of labor has contributed to rising labor compensation in advanced economies by boosting productivity and output”.42 Certainly, it is essential to take into account Ratha’s (2003) notion that for remittance flow to occur there is a presupposition that international migration is transpiring freely and encouraging the flow of labor.43

As illustrated in the earlier discussion of the current immigration structure, America relies heavily on the talents and skills of individuals from foreign lands. It appears immigrant waves are admitted to America as either highly trained and skilled individuals or lack education and skills. This polarization among immigrant skill set creates an interesting dialectic. Approximately 42.7 percent of Chinese immigrants who immigrated in 2000 obtained a Bachelors Degree or higher, while another 18.4 percent of Chinese immigrants received less than a high school education.44 Starkly contrasting these numbers are immigrants from Mexico of whom only 3.2 percent came to the Untied States with a Bachelors Degree or higher in 2000. The Census reports that a stunning 48.3 percent of Mexican immigrants came to America with less than a 9th grade education.45 As earlier discussed, the level of schooling each immigrant attains, assists in the ability to succeed and gain more money to send to families over seas.

It has become common practice for one family member to migrate to the United States, leaving children with grandparents or a single parent running the household. After providing a corporation with duration of steady, excellent work, temporary workers try to adjust their non-immigrant visas to LPR status, subsequently opening the opportunity for closely related family members to enter the United States through family-related visa.

Still, for the large number of immigrants who come to the United States with few skill levels and even a smaller amount of financial capital to waste, this process may be an opportunity that will take years to achieve. Often political and economic climate within native country is bleak, lacking infrastructure and stability, and immigrant

40 Industries Accounting for the Largest Receipts for Hispanic-Owned Firms: 2002. U.S. Census Bureau. (Revised August 29, 2006) http://www.census.gov/csd/sbo/hispanicsummaryoffindings.htm 41 Kessler, Alan. Immigration, Economic Insecurity and the “Ambivalent” American Public. Center for Immigration Studies (September 2001)42 Jamouette, Florence and Irina Tytell. Chapter 5: The Globalization of Labor. IMF Working Papers. (2008).43 Ratha, Dilip. “Chapter 7: Workers’ Remittances: An Important and Stable Source of Externatl Development Finance.” Global Development Finance. (April 2, 2003). 44Table FBP-1 Profile of Selected Demographic and Social Characteristics: 2000. People Born in China. http://www.census.gov/population/cen2000/stp-159/STP-159-china.pdf 45 Table FBP-1. Profile of Selected Demographic and Social Characteristics: 2000. U.S. Census Bureau http://www.census.gov/population/cen2000/stp-159/STP-159-Mexico.pdf

communities recognize that remittances among the only stable forms of capital gains, even in times of economic turmoil and downturn. Remittance funding has ensured that family members and relatives will receive money necessary to survive each month.

The process of transferring remittance funding has been largely informal, often involving a third-party merchant to wire the funds overseas. Since September 11th, it has become a governmental issue to monitor remittance funding to prevent money laundering and the proliferation of funding terror organizations. To discuss these issues, the G-7 summit created the Financial Action Task Force (FATF) task force to “spearhead the effort to adopt and implement measures designed to counter the use of financial system by criminals”.46 This taskforce requested that G-7 countries take action to formalize remittance systems to ensure that they are not benefiting terrorists or criminals. This is significant in the discussion of remittances, because of the dependence many residents of developing countries possess utilize informal transactions of remittances.

Is necessary to understand the role and operation of both formal and informal remittance systems . Formal remittance systems represent the monitored and sanctioned businesses which include Western Union, Moneygram, PayPal, and Xoom.com. Multinational relationships through banks have also emerged with the influx of remittance sending. In 1990 Citibank and BancoMexico were among the first financial institutions to create a relationship to send remittance funds. Other banks have followed their example in creating transnational systems to wire money quickly, speedily, and safely. Bank of America created its SafeSend system, which transfers funds to over 4,500 secure financial institutions all over the world. Wells-Fargo Bank has established it’s Global Remittance Services, providing services to Asia and Latin America. Each of these institutions provide customers with 24 hour hotlines, with the operators who speak Mandarin, Cantonese, Spanish and any many other native languages of top remittance receiving countries. Additionally, they also require that customers obtain checking accounts to send remittances to their home country, contributing to the success of the bank itself .

Informal remittance systems are equally important to immigrants sending funds. Maimbo (2004) recognizes that “informal value transfer systems” require three parties. 47 These transactions, according to Maimbo, rely heavily on trust that is gained through years of interactions of sending-transmitting-receiving, since customers obtain reliable and honest service throughout their stay in America. A second advantage to these systems arises when an individual does not have any form of documentation in to remain in the United States. Although Mexico has established a matriculas system, which grants those in America with identification cards from the Mexican Consulate, with the United States, many still do not obtain these forms of identification and rely solely on the informal wire transfers that are familiar to the area. An empirical analysis performed by Dorsey (2008) illustrates that private, informal inflows to low income countries have increase fourfold in the past two decades.48

Aside from India, China and Mexico were the largest receiving remittance receiver countries in 2007. China received 25.7 billion dollars. Mexico received a $25.0 billion dollars. 49 As discussed in prior sections, these funds have contributed greatly into the development of these countries’.

Motivations for sending remittances to native country have gained the attention of global scholars. Fernando Lozano Ascencio (2004) describes the loss of workers in Mexico and argues that political complacency allows.50 Ameudo-Dorantes and Pozo (2006) complete an empirical analysis of remittances flow from the United States. After analyzing Census data, they found that, “emigrants with higher levels of education and competence in language sent remittances than those emigrants with less scholastic achievement and less experience with the English language [translation original text in footnote]”.51 In contrast, Chinese immigrants find sending remittances to family members

46 FATF Website. About FATF and GATF http://www.fatf-gafi.org/pages/0,3417,en_32250379_32236836_1_1_1_1_1,00.html 47 Maimbo, Samuel. “Informal Remittance Systems: Emerging Oversight Strategies”. World Bank, Working Papers (November 24. 2004). 48 Dorsey, Thomas. The Landscape of Capital Flows to Low-Income Countries IMF Working Papers. http://www.imf.org/external/pubs/ft/wp/2008/wp0851.pdf49 Ratha, Dilip. Sanket Mohaparta, K.M. Vijayalakshimi, Zhimei Xu. “Remittance Trends: 2007.” Migration and Development Brief 3, Development Prospects Group, Migration and Remittances Team. International Monetary Fund. (November 29, 2007). 50 Ascencio, Fernando Lozano. “Tendencias recientes de las remesas de los migrantes mexicanos en Estados Unidos”. Center for Comparative Immigration Studies. (2004) http://repositories.cdlib.org/ccis/papers/wrkg99

and friends a “patriotic duty” for those still left in native China, consequently sending large amounts of money to China, according to the Houston-Chinese Consulate.52 Discussion, Comparison, Conclusions

After gaining a comprehensive analysis of Mexican and Chinese immigrant history within the United States and further examining how they earn their money and where they spend it, a comparison can now be made between the two groups in terms of remittances and the way their actions are influenced by the social capital.

Without the presence of social capital within immigrant communities, it would a much more difficult and competitive labor market would emerge among immigrant workers, especially immigrant workers with little or no skill. Social capital in a diverse society is difficult to obtain, thus reliance on ethnic enclaves and other forms of social capital are vital to the livelihood of immigrants new to the country. Although immigrants with little educational attainment and skill levels can find work, they are often only able to gain work within their ethnic enclaves. Today, immigration policies prioritize highly educated and skilled laborers. This is evident in the current immigration system, which has special categories, like H1-Bs, to entice skilled foreign born workers to the United States. America’s priorities are further illustrated in the quantity of family visas granted to family members, who already have naturalized and are legal permanent residents in the U.S.

After researching both Chinese and Mexican immigrants in the United States, it can be concluded that the most important factors to contribute to success in the U.S. is educational attainment and capacity to speak the native language. China, with a high degree of the population coming to the United States with a skilled labor, illustrates ability to utilize skills acquired in native countries. For Mexican immigrants, who generally come to the U.S. with less education, there are several outcomes. On one level, many Mexican immigrants come to the United States undocumented, impairing even skilled immigrants from the ability to legally work for a company who faces fines and other sanctions if the government identifies they hire illegal immigrants.

Employment in the United States differs between the ethnic and multiethnic economy. As illustrated the previous discussions, dependence on kinship ties and familial relationship provide migrants with the ability to work for families and friends. These positions are respectable; however, they often result in lower wages, higher number of hours per week and poorer working conditions. This explains the high turn over rate in immigrant jobs, since any prospects of higher pay and better conditions results in the transition in jobs. Experience in these jobs will create experience and expand an individual’s relations outside of its ethnic community. Although, these categories can be applied to both Mexican and Chinese immigrants, it is still important to distinguish the two groups. Recommendations

In 2005, George Bush signed the Border Security and Visa Entry Reform Act. Upon signing the piece of legislation he said, “America is not a fortress; no, we never want to be a fortress. We’re a free country’ we’re an open society. And we must always protect the rights of our law—of law abiding citizens from around the world who come here to conduct business or to stay or spend time with their family.” It appears that through the comparison of Chinese and Mexican immigration the immigrant experience can be generalized, because each group travels to the United States with aspirations to achieve a higher social status through economic opportunities.

To increase equality among immigrant groups, the United States would undergo huge, unrealistic reforms to ensure equality and education for all those who enter the society. Nevertheless, our current structure creates an inherent power differential by failing to enforce enacted, restrictive immigration policies. Ending illegal immigration calls for corporations and small business firms to discontinue the hiring of undocumented workers to end the wage differential between native U.S. workers and foreign born workers. Education determines the trajectories immigrants

51 Ameudo-Dorantes, Catalina and Susan Pozo. "El Patron Temporal de las Remesas: Evidencia de emigrantes mexicanos" El patron temporal de las remesas evidencia de emigrantes mexicanos. Bienestar y Política Social, Vol 2, No. 2, pp 53-71 (2006). Actual quote: “En este sentido, observamos que, después de controlar por el nivel de los ingresos, los emigrantes con mayor nivel educativo y competencia en el habla del idioma envían menos remesas que aquellos emigrantes con menor grado escolar y menos domino del idioma inglés. ” (p. 63)52 “American-Chinese sent back $1 billion during Spring Festival”. Consulate General of the People’s Republic of China in Houston. (2008) http://houston.china-consulate.org/eng/nv/t61746.htm

presume during their first years in the United States. Certain visas ensure that select immigrant groups obtain a particular level of financial success, because of their skill set acquired in their native countries.

Through examination of concepts of remittances, immigrant entrepreneurship and informal social relationships that present an opportunity to show that immigration is not only a choice to benefit the individual. Often, it is an individual sacrifice for the greater good of the collective family, and moreover the elevation of the country. By acquiring funds in another and forfeiting time with young and elderly relatives, it becomes a way to maintain connections with family. Trust, through social capital exists in formal and informal settings to translate into interdependence among individual of the same ethnic group. The implications of this type of trust can benefit and disadvantage communities who put too much emphasis on these relationships. Still, it is these interpersonal relationships that drive the ethnic economy in America and beyond.