Startup rate at 15-year high

By Catherine Clifford, staff reporter


NEW YORK (CNNMoney) -- Necessity is the mother of invention: In this economy, if you can't find a job, make one.

That seems to be the strategy of many people lately: The percent of Americans starting businesses in 2010 and 2009 was the highest in 15 years, according to a report from the Kauffman Foundation released Monday.

Last year, 340 of every 100,000 adults launched a business each month, creating 565,000 startups monthly, the report found. That was the same percentage as 2009, when 558,000 new businesses a month were created.

Continued high unemployment as a result of the Great Recession is driving the trend, according to Kauffman.

The rate of business creation has been steadily rising since 2006, Kauffman found.

More start-ups, however, don't necessarily mean more job opportunities.

"Individuals are starting businesses partly out of desperation," said Robert W. Fairlie, author of the report and professor of economics at the University of California, Santa Cruz. "And if you are going to start a business in those conditions, then it is probably not the best idea to start one hiring employees."

Indeed, the percent of Americans who created businesses that have employees has been falling steadily since 2007: The rate now is 100 in 100,000, down 23% from three years earlier.

"Far too many founders are choosing jobless entrepreneurship, preferring to remain self-employed or to avoid assuming the economic responsibility of hiring employees," said Carl Schramm, president and CEO of the Kauffman Foundation, in a written statement.

Who is starting what: Immigrants -- particularly Latinos -- were more likely to start their own businesses compared to Americans born in the U.S. The entrepreneurial activity rate for Latinos last year was 560 per 100,000, twice as high as for Americans born in the U.S.

High school dropouts also had a high rate of entrepreneurship. The rate rose 20% last year to 590 per 100,000, "suggesting an increased number of people entering entrepreneurship out of necessity," the report says.

The construction and service industries had the highest startup rates; manufacturing had the lowest.

Nevada and Georgia had the highest rate of entrepreneurial activity (510 per 100,000 adults), while West Virginia had the lowest (170 per 100,000).

The Kauffman index measures the percent of people age 20 to 64 who start a business each month with 15 or more hours worked. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Questions & Answers



QHow does a florist sell more in this economy? We changed our business to designing weddings and events only, as the everyday flowers are not selling. We had to throw out too much product at the end of the week -- flowers are perishable! More
Get Answer
- The Flower Lady, Suwanee, Ga.
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.98%3.95%
15 yr fixed3.05%3.05%
5/1 ARM3.32%3.71%
30 yr refi4.05%4.03%
15 yr refi3.12%3.11%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:

Sections

New York headlines took a straight forward and direct approach with NYC's Ebola news. More

The midterm elections are around the corner, and the economy remains a top concern. With unemployment down and inflation low, why do people still feel the economy stinks? More

Shares of Facebook recently topped $80. They've more than quadrupled from their post-IPO lows of two years ago. Can Mark Zuckerberg keep the momentum in mobile going? More

Using technology developed for the military and implemented in Iraq, schools have installed alarm systems that detect gunfire. More

If you're looking to fly this holiday season, the clock's ticking to get the best prices. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.