American Entrepreneurship in Decline

The next president will face an imminent challenge: the nation’s marked decline in new job and business creation is one of the fundamental dilemmas of our time.

The United States has always been a nation of entrepreneurs, the upstarts who take risks and challenge the established order so they can build a better life. But Americans today are less likely to change jobs, relocate, or start a company than in recent decades. This decline in entrepreneurship is one of the fundamental challenges of our time—with far-reaching implications for all Americans.

The next president will inherit an economy in which entrepreneurs play a limited role. The Great Recession was particularly damaging to America’s entrepreneurial ecosystem and the ripple effects are still being felt today. For example, during the five years of “recovery,” from 2010 to 2014, nearly 60 percent of U.S. counties actually saw more businesses close than open.

Map of business growth

The entrepreneurial decline is not a new phenomenon. The U.S. economy has steadily become less entrepreneurial over the past 30 years. That decline turned into a rapid collapse following the Great Recession, when the economy produced hundreds of thousands fewer new businesses than it did in previous recovery periods, marking a lost generation of new enterprise.

Chart of change in business establishments

The Great Recession’s impact on U.S. entrepreneurship cannot be overstated. For the first time in decades, more firms closed than opened not only in 2009, but in 2010 and 2011 as well. Even by 2013, the economy was still struggling to replace dying companies with new ones.

As the number of startups wanes, older incumbent firms increasingly dominate. In fact, between 1993 and 2013, the share of firms in the economy aged 16 and over increased 12 percentage points, and the share of the workforce employed in such firms grew from 62 percent to 73 percent.

This matters for two reasons. First, older firms tend to be less dynamic, and an incumbent-dominated economy is one that may be less likely to achieve consistently strong rates of growth. Second, startups account for nearly all new net job creation.

Despite relatively strong job growth in the years following the recession, much of the growth has been driven by a few “knowledge economy” hubs while many industrial metropolitan areas continue to stagnate. Other measures of dynamism are declining at the same time: Americans are less likely to pack up and move than ever before, and they’re less likely to switch jobs, making widespread access to opportunity even more challenging.

The decline of American entrepreneurship and the unevenness of economic opportunity will be defining issues in the years ahead. The next administration and Congress will need to refocus on how to revive the engine of dynamism that has made our economy the world leader.

Steve Glickman is co-founder and executive director of the Economic Innovation Group and John Lettieri is co-founder and senior director for policy and strategy.

This is the first in a series of columns from the Economic Innovation Group who will be co-hosting an event with The Daily Beast during the Democratic National Convention. As the changing economy leaves many communities behind, our political institutions are facing the inevitable anxiety of many millions of Americans. Tomorrow, EIG and The Daily Beast will explore some of the roots of this resentment being felt across America.

Source: Daily Beast “American Entrepreneurship in Decline”

Note: This is Daily Beast’s article that reflects its writer’s and editor’s views. I post it for readers’ information, which does not mean that I agree with their views.


3 Comments on “American Entrepreneurship in Decline”

  1. Steve says:

    From 1992 to 1996 – a total of 420,850 US business establishments declined to a net change of just over 100,000 end 2014.

    This week the IMF Managing Director Christine Lagarde, World Bank Chiefs and International financial experts has confirmed an upbeat of China’s economic reform as sustainable, positive, strong and balanced growth for the long run. M/S Lagarde has even increased China’s GDP growth by 0.1 % to 6.6 percent. The world is highly dependent on China’s economic growth and management, rising steadily to the Zenith.

    I wish to reconfirm that the title of UNCLE HAN of PRC, should be bestowed immediately as a symbol of World Leadership in Economic and Financial Management………Yum Sing.!


    • johnleecan says:

      Most overseas Chinese that have taken other nationalities are also of Han origin. And although China is made up of mostly Han Chinese(almost 92%), I think it would be best not to use “Uncle Han”. Chinese government recognize 56 ethnic groups in China and they all have representatives in government. A must for a more harmonious society. We don’t want to alienate and/or make it seem other ethnic groups are unimportant.

      Just my opinion. Not my intention to offend you and sorry if I did.


      • Steve says:

        Appreciate your reply and thanks for your concern. Definitely No Offence. It’s All Good.

        I am aware of the dialects and over 60 ethnicities (formal & informal representations) in China, but All hold the same passports, learn mandarin, similar curriculums in education and mandarin speaking employments including military.

        HAN ZU in Chinese means “Han Ethnic groups.” Han Chinese culture and ancestry are diversely intertwined & multi-linguistic. I believe over 60/70 dialects divided between Northern and Southern Han with its rich history. It’s not alienation, but harmonious unity.

        According to the free encyclopaedia 90% of people living in China are Han and 97% in Taiwan are Han. Out of the world population 19% are Han. There will always be diversity within unity & unity within diversity. All Chinese in China should be proud of it’s diversity of Chinese culture, religion, language and living the Chinese dream.

        UNCLE HAN in principle is similar to Uncle Sam as in recognition for its world leadership and achievement in economic support for countries worldwide including science and technology, medicine, education systems, provisions of infrastructure, support for the UN peacekeeping force, military, All kinds of reformations, R & D, etc, etc ,etc.

        No difference to All ethnic groups living in the US calling themselves Americans on the passport, proudly enjoying American way of life eating American bread, Macdonalds, disneyland, Olympic representations & pursuing the American dream with uniquely American characteristics. The name Uncle Sam is known worldwide for its outstanding achievements. UNCLE HAN is No different. Should there be any impairment or racial riots.? I don’t think so.