Whither the Entrepreneurs?
According to research done by Tim Kane of the Hudson Institute, entrepreneurship in America is in decline.
Among some of his findings:
- “The number of new establishments a year peaked in 2006 with 667,000.
- That number dropped to 505,000 in 2010.
- The number of jobs created by establishments less than one year old has decreased from 4.1 million in 1994 to 2.5 million in 2010.
- Between the 1980s and 1990s, there were 11 startup jobs per 1,000 people.
- The average rate for entrepreneurial job creation under the last three presidents was 11.3, 11.2, and 10.8, respectively.
- However, during the past four years the average rate dropped to 7.8.
Kane offers several possible explanations:
- An unfavorable climate for entrepreneurship exists due to high taxes and uncertainty.
- The passage of the Affordable Care Act creates a complex and uncertain regulatory environment for employers.
- The IRS crackdown on employers’ use of independent contractors is forcing startups to pay for benefits they can’t afford.
- The increase in mandated occupational licensing by local governments is hurting opportunities for poor and middle class Americans that want to create startups.
You can find his report here.