Study Finds US Entrepreneurship on the Rise

by Nathaniel Whittemore · 2010-05-26 13:56:00 UTC
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The Kauffman Foundation recently published its annual survey of new business creation in the United States, and found the promising news that rates of entrepreneurship have gone up across the board over the last few years, reaching their highest rates overall in the last 14 years.

The Kauffman Index of Entrepreneurial Activity basically uses the monthly demographic trends captured by the US Census Bureau to identify newly created businesses. They can segment the information by ethnic group, immigrant status, and other group factors to get a picture not only of the overall trends in new business creation but also understand trends within specific groups as well.

One note: the "startups" that they are keeping track of are not necessarily all trying to be the next Google. Most of them are likely small stores or "lifestyle businesses" that are more about freedom, control, and comfort than about becoming millionaires.

Some of the more important or interesting findings include:

The overall rate of entrepreneurship increased 4% between 2008 and 2009. The overall rate of entrepreneurship was 0.34% (340 out of 100,000 adults started businesses each month), up from 0.32% in 2008 and 0.3% in 2007. That means 27,000 additional businesses per month in 2009 versus 2008.

Growth in entrepreneurship rates within specific ethnic groups was highest among African-Americans, who saw a rate jump from 0.22% in 2008 to 0.27% in 2009. That still puts African-Americans below the average rates of entrepreneurship, but is a positive sign.

Growth in entrepreneurship rates within a specific age group was highest among 35-44 year olds, which jumped from 0.35% to 0.4%. Over 55s also saw a two year trend push them up to 0.4%.

Immigrants have a significantly higher rate of entrepreneurship (0.51% in 2009) than native-born Americans (0.3%).

What are we to make of all of this? The increase in entrepreneurship is at once a lagging indicator of the economic trouble we've been experiencing and at the same time a hopeful sign for the future. In times of recession, entrepreneurship sometimes increases as people are forced into positions where they have to take bigger chances. Yet some of the biggest businesses in America -- Burger King, Hewlett-Packard, Hyatt, FedEx, Microsoft, for example -- were created during recessions.

Overall, it's a hopeful sign for those of us who thing that entrepreneurs are an ever growing force for economic and social good. Oh, and it probably is one more piece of evidence that we should stop acting like boneheads when it comes to immigration policy.

Photo credit: nDevilTV

Nathaniel Whittemore is the founder of Assetmap. Previously he was the founding director of the Northwestern University Center for Global Engagement.
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