Startups Continue Several Multi-Decade Declining Trends, According to Kauffman Study
The pace of business startups in the U.S. has exhibited a long-run decline that started in the early 1980s and has continued through 2010, according to a new report — Where Have All the Young Firms Gone? — from the Kauffman Foundation. Using data from the U.S. Census Bureau's Business Dynamics Statistics (BDS), the report found several other long-run declines in the business activity of U.S. startups and young firms (defined here as firms aged five or less) between 1980 and 2010 including:
- A steady decline in the rate of job creation by business startups (as a percentage of all firms) from almost 13 percent in 1980 to less than 8 percent in 2010;
- The share of young firms has declined from close to 50 percent in 1980 to less than 35 percent in 2010;
- A steady decline share of job creation from young firms has fallen from above 40 percent in 1980 to around 30 percent in recent years; and,
- The share of employment accounted for by young firms has fallen from more than 20 percent in 1980 to as low as 12 percent in 2010.
According to the data, these declining national trends were accelerated by the Great Recession and have not recovered. Kauffman researchers also looked at state-level data and found long-run (between 1980 and 2010) and short-run trends (between 2006 and 2010) in the business activity of young firms. Utilizing state-level BDS data, they found that long-run declines in business activity by young firms have been present across all states, but with varying magnitude. A common trend emerged in states with the largest declines in business activities by young firms — they are the states that had some of the highest initial shares of business activity in the 1980s.
In the short-run, states with the greatest net contractions in the Great Recession also exhibited the largest decline in the share of activity accounted for by young businesses. Although no long-term regional patterns exist, there were discernible regional patterns in the short-run. The largest declines in business activities by young firms are concentrated in the West, Southwest and South.
entrepreneurship, stats