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High US unemployment maintained the high rate of US startups
in 2010 and immigrants account for 29.5% of new firms.
However, the trend has been termed 'Jobless Entrepreneurship' because
entrepreneurs are opting for a self-employed status rather than hiring
According to the
Index of Entrepreneurial Activity,' (pdf) a leading
indicator of new business creation in the United States,
0.34% of American adults created a business per month in
2010, or 565,000 new businesses, a rate that remained
consistent with 2009 and represents the highest level of
entrepreneurship over the past decade and a half. In
contrast, however, the quarterly employer firm rate has
dropped from 0.13% in 2007 to 0.10% in 2010.
"Since it began, the
recession has triggered annual declines in the rate of employer enterprise
births," said Carl Schramm, president and CEO of the
Kauffman Foundation. "Far too many founders are
choosing jobless entrepreneurship, preferring to remain self-employed or to
avoid assuming the economic responsibility of hiring employees. This trend, if
it continues, could have both short- and long-term impacts on economic growth
and job creation."
Capturing new business owners in
their first month of significant business activity, the Kauffman Index of
Entrepreneurial Activity provides the earliest documentation of new-business
development 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 US 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
"Regional patterns have a
significant effect on entrepreneurial activity rates," said Robert W. Fairlie, the study's author who is a professor of
economics, based at the University of California, Santa Cruz. "From 2009 to 2010, entrepreneurial activity rates increased in
the West, further widening the gap between the West and other regions. Rates in
the South remained steady, but declined in the Northeast and Midwest."
Other key findings for 2010 include:
The immigrant rate of
entrepreneurial activity increased substantially - - from 0.51% in 2009 to
0.62% in 2010 - - and declined slightly for the native-born. This
increase expanded the large positive gap that already existed between
immigrant and native-born entrepreneurial activity rates.
A growing immigrant
population and rising entrepreneurship rate contributed to a rise in the
share of new entrepreneurs that are immigrant, from
13.4% in 1996 to 29.5% in 2010.
increased slightly for men and decreased slightly for women. For men, the
entrepreneurial activity rate increased from 0.43% in 2009 to 0.44% in 2010.
The female entrepreneurship rate decreased from 0.25% to 0.24%.
entrepreneurial activity rate decreased from 0.27% in 2009 to 0.24% in 2010.
The white entrepreneurial activity rate decreased from 0.33% to 0.31%.
The entrepreneurship index was
highest among the least-educated group, moving from 0.49% in 2009 to 0.59%
in 2010, suggesting an increased number of people entering
entrepreneurship out of necessity. The largest decrease in
entrepreneurial activity occurred for high school graduates.
Among the United States fifteen
largest metropolitan statistical areas, Los Angeles had the highest
entrepreneurial rate (0.62%) in 2010. Philadelphia had the lowest rate
Veteran journalist Tom Brokaw’s special report on the NBC Nightly News said that immigration rules are roadblocks for enterprising foreigners who want to stay in the United States to create companies and jobs: