Surge in Self-Employment as More Americans Become Entrepreneurs

Nearly one million U.S. workers have gone to work for themselves since February 2015, according to recent survey results from the Department of Labor as reported by Bloomberg Business. In May, the number of U.S. self-employed workers surged by 370,000, the largest single-month gain since the Great Recession. The Kauffman Foundation reports that U.S. startup activity improved in 2014, reversing its post-recession downward trend, with startup activity growing in 32 states. In addition, the annual Global Entrepreneurship Monitor 2014 Global Report suggests that most Americans believe there are good opportunities for entrepreneurship in the current economy.

U.S. entrepreneurial activity had its largest year-over-year increase in two decades last year, according to the 2015 Kauffman Index: Startup Activity. On average, 0.31 percent of American adults started new businesses every month. Most of these people who started new businesses were opportunity entrepreneurs, meaning they were neither unemployed or looking for new jobs before they launched their new business. Kauffman found that 79.6 percent of entrepreneurs fell into this category last year.

This uptick in startup activity was fairly well distributed between population demographics. All racial and ethnic groups saw increases, particularly Latinos, according to Kauffman. The entrepreneurship rate grew for all age groups, except 45 to 54-year-olds, who held steady. Women entrepreneurs, however, did not experience the same surge. Only 36.3 percent of people who started a new business last year were women, close to the two-decade low set in 2008.

Economic expansion in the Rocky Mountain and Plains states led to increases in startup activity last year, according to the report. Montana, Wyoming, North Dakota, Colorado and Vermont comprised the top five states, with high rates of new entrepreneurs in California, Nevada and New Mexico. The top 10 metros for startup activity remained the same in 2014 and 2015, led by Austin, Miami and San Jose.

Access the 2015 Kauffman Index: Startup Activity at: http://www.kauffman.org/microsites/kauffman-index.

The Global Entrepreneurship Monitor (GEM) confirms these findings in its own report on the entrepreneurship ecosystems of 73 countries. Participating countries are categorized as being factor-driven, efficiency-driven or innovation-driven economies, based on the United Nations ranking system for economic development levels. GEM data illustrates the perceptions that people around the world have about entrepreneurship, as well as their own ability to start a business.

The U.S., an innovation-driven economy, has maintained a high-rate of earlystage entrepreneurial activity throughout the last four years, despite the negative trends reported by Kauffman. Activity dropped immediately after the Great Recession, according to GEM, but has rebounded and remained stable over the past four years. Among the 26 developed economies tracked in the study, the U.S. ranks second in early-stage activity.

Slightly more than half, 50.9 percent, of Americans believe that there are good opportunities for entrepreneurship. This is the highest level in the GEM study since 1999. About 53 percent believe they have the abilities needed to start their own business, and fear of failure is lower than in most other developed economies.

Both entrepreneurship rates and perceptions are highest in U.S. regions where there are universities, good transportation and communication, many young people, clusters of industrial activity and high quality of life.

Download the GEM 2014 Global Report at: http://www.gemconsortium.org/report.