Latinos and immigrants helped to fuel an uptick in new business creation nationally, reversing a downward cycle that began in 2010, according to the 2015 Kauffman Index: Startup Activity released on Thursday.
The Startup Activity Index has generally followed the business cycle – up in the 1990s expansionary period and plummeting as the Great Recession took hold. The entrepreneurial activity increase in the 2015 Index – which reversed the downward trend since 2010 - represents the largest year-over-year increase in the last two decades. However, the return remains tepid and well below historical trends. In the 2015 Index, 310 out of 100,000 adults, or 0.31 percent, started new businesses each month, on average. In the 2014 Index, the average was 0.28 percent of the U.S adult population.
“This rebound in entrepreneurial activity lines up with the strength we’ve seen in other economic indicators, and should generate hope for further economic expansion,” said Dane Stangler, vice president of Research and Policy at the Kauffman Foundation, in the news release. “But it’s important to view this short-term uptick in context of the bigger picture – we are still in a long-term decline of activity, which affects job creation, innovation and economic growth.”
Some findings, according to the research:
* While all racial and ethnic groups experienced increases in the rate of new entrepreneurs between the 2014 Index and the 2015 Index, the Latino share of all new entrepreneurs rose from 10.0 percent in 1996 to 20.4 percent in 2013 to 22.1 percent in 2014.
* Kauffman said 28.5 percent of all new entrepreneurs are immigrants in the 2015 Index, compared to 13.3 percent in the 1997 Index and that immigrants are starting new businesses at nearly twice the rate of native-born Americans, creating an average of 520 businesses a month per 100,000 people last year.
* Most new entrepreneurs – 63.2 percent – were men. The 36.8 percent of females who became entrepreneurs in the 2015 Index is close to the two-decade low of 36.3 percent in the 2008 Kauffman Index. The rate of new entrepreneurs grew for all age groups except those aged 45 to 54, which experienced no change in the 2015 Index.
* Opportunity entrepreneurs, those who were not unemployed and not looking for a job before they started their new ventures, was 79.6 percent of the total number of new entrepreneurs. This number represented an increase over the 2014 Index, and was substantially higher than in the 2010 Index, when the number of opportunity entrepreneurs was at the lowest rate since the Kauffman Foundation began collecting this data in 1996.
* Startup density, or the number of new employer businesses by total population, increased from 128.8, or 128.8 for every 100,000 people, to 130.6 in the Startup Activity calculations from 2014 to 2015. Though startup density is climbing, it remains well below typical historical rates.
State and metropolitan data will be released June 4. Find the report on national findings here: www.kauffmanindex.org.