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New Report Shows Entrepreneurship on the Rise

Mark Marich

A new report by the Kauffman Foundation shows that the level of entrepreneurial activity in the U.S. increased slightly from 2007 to 2008. The latest Kauffman Index of Entrepreneurial Activity shows that approximately 530,000 new businessesstarted up each month, representing a .02 percent increase over 2007. 

The states with the highest 2008 entrepreneurial activity rates were Georgia, New Mexico, Montana, Arizona, Alaska and California. Those with the lowest rates were Pennsylvania, Missouri, Wisconsin, West Virginia, Iowa and Ohio. The report further includes indices for all states and for the largest metropolitan statistical areas (MSAs).

“The overall pace of entrepreneurial activity did not suffer during the recession in 2008, which is great news. This is consistent with historical patterns, to the extent we understand them, which indicate that entrepreneurial activity is largely insensitive to the economic cycle,” said Robert Litan, vice president, Research and Policy at the Kauffman Foundation. “So far, at least through 2008, this pattern is holding up.”

However, it's likely that "necessity entrepreneurs" are responsible for at least a portion of the increase--which makes sense with unemployment figures climbing. The report shows that while entrepreneurship rates increased for the lowest-income-potential and middle-income-potential types of businesses, it decreased for the highest-income-potential types of businesses.

The group with the highest entrepreneurial activity rate was the oldest age group (ages 65 to 64), confirming that the typical entrepreneur has accumulated experience before launching his or her own business. The report also confirms other trends, such as the positive contribution of immigrant entrepreneurship to our economy: the immigrant rate of entrepreneurial activity increased from 0.46 percent in 2007 to 0.51 percent in 2008.

Information about the Kauffman Index, as well as public use data files and previous reports, is also available.

Report: Kauffman Index of Entrepreneurial Activity by Robert W. Fairlie

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