March 20, 2012

State of Alabama
Press Release: Alabama Department of Commerce

American Entrepreneurial Activity on the Decline?

March 19, 2012


The United States’ entrepreneurship machine slowed last year but continues to chug along faster than in the years leading up to the recession, according to new data from the Kauffman Foundation.

“The Great Recession has pushed many individuals into business ownership due to high unemployment rates,” Robert Litan, vice president of research and policy at the Kauffman Foundation, said in a statement. “However, economic uncertainty likely has made them more cautious, and they prefer to start sole proprietorships rather than more costly employer firms. This ‘jobless entrepreneurship’ trend negatively effects job creation and the larger economic recovery.”

The group’s 2011 Index of Entrepreneurial Activity, released Tuesday, takes into account information about new companies’ first months in business, providing an indicator of the state of new company creation across the country. The report breaks the data down into demographic, state and metropolitan areas, revealing the following:

• Approximately 543,000 new firms were created each month in 2011.

• Of those starting their first companies, the percentage that was foreign-born doubled in the last 15 years. So did the Latino percentage.

• Men are still creating businesses at twice the rate of females.

• Entrepreneurship activity dipped in all geographic regions except the Northeast, which experienced a slight increase.

Weigh in: What will it take to get the start-up activity level headed back in the right direction this year? Please share your thoughts below.


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