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Entrepreneurial Activity Strongest Among U.S. Immigrants, Males and Latinos, According to Kauffman Index

September 26, 2005

Between 1996 and 2004, an average 0.36 percent of the U.S. population created a new business each month, representing approximately 500,000 new businesses per month, according to the Kauffman Index of Entrepreneurial Activity.

Using matched data from the monthly Current Population Surveys, a national population survey conducted by the U.S. Bureau of the Census and the Bureau of Labor Statistics, the Kauffman Foundation created a new measure to provide information on recent entrepreneurial trends at the national level. The Index looks at business creation at the individual owner level by gender, education, region, age, immigrant status, and major industries.

Unlike previous studies that capture young businesses that are more than a year old, the Index captures all adults 20-64 who initially start a business, including those who own incorporated and unincorporated firms and who are employers and non-employers, said the Kauffman Foundation.

Surprising, the report notes, is the relative constancy of the Index despite economic changes over the period measured. Entrepreneurship did not change substantially in the strong growth period of the late 1990s, and moreover, the recession of the early 2000s did not result in a major change in entrepreneurship rates. Key findings include:

  • The average rate of entrepreneurship for men is much higher than women: The average rate for men is 0.46, compared to 0.28 percent for women. The rate at which women are starting new businesses does not appear to have changed over the past decade.
  • Entrepreneurship rates overall are highest among Latinos at 0.41 percent, followed by Non-Latino whites and Asians at 0.37 percent. African-Americans have the lowest rate at 0.29 percent; however, there is evidence that these rates have increased over the past decade.
  • Immigrants have substantially higher rates of entrepreneurship than U.S.-born individuals. The average rate for immigrants is 0.46 percent, compared to 0.35 for U.S.-born citizens.
  • Entrepreneurial activity is highest in the West, while activity has increased most in the West and the South. The entrepreneurship rate in the West increased from 0.42 percent in 2001 to 0.49 percent in 2004, and in the South the rate increased from 0.35 percent to 0.41 percent.
  • Entrepreneurship rates are the highest in the field of construction and lowest in manufacturing.

The Kauffman Index of Entrepreneurial Activity is available at: http://www.kauffman.org/items.cfm?itemID=640