The Decline of American Entrepreneurship

THE DECLINE OF AMERICAN ENTREPRENEURSHIP AMERICAN ENTREPRENEURSHIP IS SHRINKING Brand new companies added 2.34 MILLION jobs in 2010, compared to an average of about 3 MILLION a year dating back to 1977. 2010 1977 That's Approximately 660,000 less job for the year of 2010 compared to 1977. That's Enough jobs to fill 10 THOUSAND YELLOW SCHOOL BUSES worth of people. (7.8 Since 2009, we've averaged 7.8 start-up jobs per 1000 Americans, compared to 10.8 during the Bush years and 11.2 during the Clinton administration. START UP JOBS OBUSH OCLINTON OBUSH OOBAMA 15 11.3 11.2 10.8 7.8 12 89' 90' 91' 92' 93' 94' 95' 96' 97' 98' 99' 00' 01' 02' 03' 04' 05' 06' 07' 08' 09' 10' 1 While they've pulled back from the excesses of the dotcom bubble, venture capitalists are now INVESTING IN MORE THAN DOUBLE the number of companies they were in the 1980s, suggesting there are plenty of small, dedicated teams of programmers and engineers out there plotting to take over the Internet (or biotechnology, or energy, or medical devices). BILLIONS OF DOLLARS are chasing these elite entrepreneurs, and while it might not hurt to have even more of them, venture investors already fail to recoup their cash on THREE QUARTERS of their deals, according to one new estimate from Harvard Business School's Shikhar Ghosh. According to the Census Bureau's Business Dynamics Statistics, which track all new firms with paid employees, start-ups made up more than 12 PERCENT of U.S. companies in 1980. Today, they're less than 8 PERCENT. That share declined sharply during the late 80s, late 90s, and late 00's. 1980 2012 Some of the reasons for the decline may be industry specific. Take construction: In 2000, the sector generated more than 61,000 new firms. In 2010, there were around 17,000. In other words, we had a housing bust. Another factor may be the success of national chains. Each START-UP time a mom and pop team opens a new restaurant or grocery store, it's counted as a start-up. When a new Walmart or McDonald's opens, it's not. Instead, the government considers it an "establishment," which is just a short way of saying either a new business or a new location for an existing business. This chart from the University of Maryland economist John Haltiwanger illustrates that gradual mellowing of our job market that was interrupted by the recession. PERCENT OF EMPLOYM ENT O JOB CREATION O DESTRUCTION 10 9. 90' 91' 92' 93' 94' 95' 96' 97' 98' 99' 00' o1 02' 03' 04' 05' O6' 07' 08' 09' 10' -53% -20% Studies found the number of That's means for every The share of self-employed ENTREPRENEURS America had in 1977, there was one new entrepreneurs, Americans, meanwhile, has measured per capita, has been declining since 1991; by been dropping for a generation - by 53 PERCENT entrepreneur in 2010. 2010 it had dropped by more than 20 PERCENT. between 1977 and 2010. SUPPORT AMERICAN ENTREPRENEURSHIP BROUGHT TO YOU BY: TrinityDigital Marketing The Leading Time-Saving Web Design Firm VISIT TRINITYDIGITALMARKETING.COM SOURCES http://www.theatlantic.com/business/archive/2012/09/the-30-year-decline-of-american- entrepreneurship/262831/ http://www.hudson.org/files/publications/Kane--TheCollapseofStartupsinJobCreation0912web.pdf http://www.nvca.org/index.php?option=com_content&view=article&id=257<emid=103 http://online.wsj.com/article/SB10000872396390443720204578004980476429190.html? mod=wsi_share_tweet http://www.census.gov/ces/dataproducts/bds/index.html http://econweb.umd.edu/-haltiwan/c12451.pdf http://newamerica.net/pressroom/2012/american_entrepreneurship_declining http://newamerica.net/publications/policy/out_of_business %24