Slow growth in entrepreneurship in US

20 11 2007

The percentage of jobseekers starting their own business in the United States is on track to surpass last year’s level, according to a recently released survey. Despite the increase, however, 2007 probably will be the 11th consecutive year in which the start-up rate fails to achieve double-digit levels.  While some may view the lack of entrepreneurial activity among jobseekers as being indicative of a growing aversion to risk taking, the firm behind the latest data attributes the decade-long slowdown in jobseeker start-ups to the relative strength of the job market. In fact, the last time annual start-ups averaged higher than 10 percent was 1996. Even during the dot.com era, entrepreneurship among jobseekers averaged just seven percent. 

Data from the Bureau of Labor Statistics show that from 1993-2006, annual job creation has averaged 1.96 million (despite significant job losses in 2002 and 2003).  Professionals with four-year college degrees have been in particularly high demand and, since 1993, such graduates have experienced a significantly lower unemployment than other workers. Many jobseekers considering entrepreneurship may have been lured by employers offering benefits and incentives that self-employment cannot provide.  Although fewer jobless individuals may be willing to the take the financial risk of starting a business, the growing number of new firms and self-employed workers suggests that entrepreneurship remains strong.

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