New Business Startups Declined in 2011 Annual Kauffman Study Show

(via the Kauffman Foundation)

Contact:
Rossana Weitekamp, 516-792-1462, rossana@weitekamp.com
Rose Levy, 646 660 8641, rose@goldinsolutions.com, Goldin Solutions
Barbara Pruitt, 816-932-1288, bpruitt@kauffman.org, Kauffman Foundation

The Kauffman Index shows that, despite a drop from 2010, U.S. startup activity remains above pre-Great Recession levels

(KANSAS CITY, Mo.), March 19, 2012 – Entrepreneurship is alive and well in the wake of the Great Recession, although the rate of new business creation dipped during 2011 and startup founders remained more likely to fly solo than employ others. That's the big take away from the "Kauffman Index of Entrepreneurial Activity," a leading indicator of new business creation in the United States published annually and released today by the Ewing Marion Kauffman Foundation.

The Index shows that 0.32 percent of American adults created a business per month in 2011 – a 5.9 percent drop from 2010, but still among the highest levels of entrepreneurship over the past 16 years. The quarterly employer firm rate also remained essentially flat from 2010 to 2011 at 0.11 percent.

"The Great Recession has pushed many individuals into business ownership due to high unemployment rates," said Robert Litan, vice president of research and policy at the Kauffman Foundation. "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."

Capturing new founders in their first month of significant business activity, the Kauffman Index of Entrepreneurial Activityprovides the earliest documentation of new business establishment across the country. The percentage of the adult, non-business-owner population that starts a business each month is measured using data from the monthly Current Population Survey (CPS), conducted by the U.S. Bureau of the Census and the Bureau of Labor Statistics. In addition to this overall rate of entrepreneurial activity, the Kauffman Index presents separate estimates for specific demographic groups, states and select metropolitan statistical areas (MSAs). It provides the only national measure of business creation by specific demographic groups. The 2011 data allow for an update to annual reports dating back to 1996. Interactive data spanning all 16 years is available at www.kauffman.org/kiea.

See the rest of the data from this study