Jim Clifton, who is Chairman & CEO of Gallup, presents data showing that creation of new businesses has fallen considerably over a long-term trend running from 1977 to the present, and that for the last several years, the number of firms created has actually fallen below the number of firms closing.
The U.S. now ranks not first, not second, not third, but 12th among developed nations in terms of business startup activity. Countries such as Hungary, Denmark, Finland, New Zealand, Sweden, Israel and Italy all have higher startup rates than America does.
Read the whole thing.
These numbers and trends seem somewhat counterintuitive to me. I see a lot of startups looking for angel funding, and quite a few of them getting it. There is a lot of public interest in entrepreneurship, as evidenced by the success of TV programs such as “Shark Tank”, and even universities are attempting to capitalize on the interest in entrepreneurship by offering courses and programs on the topic.
I suspect that much of the decline in business creation is among people who don’t have a lot of formal education–many of them immigrants–and who in former years would have started businesses but are now inhibited by inability to navigate the dense thicket of regulations and pay the substantial costs involved in doing so. OTOH, I also suspect that quite a few of these people have actually created businesses, in fields such as home maintenance or home day-care, and are doing so off-the-books in ways that don’t get counted in the formal statistics.
Among those who do have college degrees–and especially among those who have spent six, eight, or more years in college classrooms–student loan debt, much of it incurred on behalf of degrees having little or no economic or serious intellectual value, surely also acts as an inhibitor to business creation.