Home Despite Economic Recession, Entrepreneurial Activity Reaches Highest Point in 14 Years, Says Kauffman Report

Despite Economic Recession, Entrepreneurial Activity Reaches Highest Point in 14 Years, Says Kauffman Report

A recent report issued by the Ewing Marion Kauffman Foundation points to an increase in entrepreneurial activity over the last decade and a half. Despite – and perhaps as a result of – the economic downturn, entrepreneurial activity in 2009 reached its highest point in 14 years, according to the Kauffman report. The increased rate of entrepreneurship occurred across most demographic categories, with the largest increase coming among African-Americans and older individuals.

According to the report, men are substantially more likely to start businesses each month than are women, but the level of entrepreneurial activity increased for both men and women over the past two years.

The entrepreneurial activity rate among African Americans increased in the last year, reaching its highest level over the past decade and a half. In the same time span, Latino and Asian entrepreneurial activity rate decreased.

Entrepreneurship rates increased the most for high school and college-educated individuals.

Those aged 55 to 64 experienced the second-largest increase in business-creation rates from 2008 to 2009. Among this group, entrepreneurial activity rose from 0.36% to 0.40%. Although those in younger age groups also saw increased levels of entrepreneurship, that occurred at much lower levels. Those age 20 to 34, for example, have an entrepreneurship rate of .24%.

While the West continues to have a higher rate of entrepreneurship than other parts of the country, it showed a sharp decline in 2008, from 0.42% in 2008 to 0.38% in 2009. The states with the highest rates of entrepreneurial activity were Oklahoma, Montana, Arizona, Texas and Idaho. The states with the lowest rates of entrepreneurial activity were Mississippi, Nebraska, Pennsylvania, Alabama and Minnesota.

Among the fifteen largest metropolitan areas in the United States, the highest entrepreneurial activity rate in 2009 was in Houston. The area with the lowest was Seattle.

The increased entrepreneurial activity may be a promising indicator for an economic comeback. “Challenging economic times can serve as a motivational boost to individuals who have been laid-off to become their own employers and future job creators,” said Carl Schramm, president and CEO of the Kauffman Foundation. “Because entrepreneurs drive the economy, the growth in 2009 business startups is encouraging and hopefully points to a hopeful trend in terms of our economic recovery.”

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