If you’re looking for the silver lining in this pandemic-damaged economy, here’s a good one: American entrepreneurship is alive and well. In fact, COVID-19 appears to have exposed it.
According to census data, there were 500,219 new business applications in May 2021 – an increase of more than 68% year over year. Obviously, the pandemic caused a deep slump in early 2020, but startups have more than made up for those losses, reaching levels not seen in decades.
According to a February report by the Ewing Marion Kauffman Foundation, about 380 out of 100,000 American adults became new entrepreneurs every month over the past year. This rate has increased year over year for each demographic category: gender, ethnicity, immigration status, and age group.
The rise was also geographically universal. According to a report by Visual Capitalist, new business applications in Texas grew 78% from January 2020 to January 2021, which is roughly mid-table nationwide, well behind Louisiana (112%) and Mississippi (164.4%), but ahead of New Mexico ( 39.9%) and Colorado (47.3%). No state in the union saw a decline in start-ups during this period.
The most popular sectors for startups were retail, professional services, and construction, Visual Capitalist reported.
What makes this silver lining even brighter is that it comes after a long decline in American entrepreneurship.
“US entrepreneurship has largely been in decline for more than three decades,” complained Dallas developer and author Craig Hall in his 2019 book BOOM: Bridging the Opportunity Gap to Reignite Startups. While the raw number of startups was higher than Hall wrote, the number of startups as a percentage of all companies in the country has been declining for decades, according to Kauffman data.
Many sources, including Hall, have claimed that one of the factors driving the decline of entrepreneurship for decades has been consolidation. With large companies digging deeper into almost every market, there is less room for small companies. If the pandemic is upsetting this trend, that’s good.
But there may be another story among the numbers. In 2015, Inc. magazine reported on another method of tracking entrepreneurship by an academic consortium called the Global Entrepreneurship Monitor. This group not only examined government data, but also surveys of individuals and trade experts. His method encompassed a category of entrepreneurs who were nascent entrepreneurs: those in the embryonic stages of business creation. According to Inc., these are sideline people who would likely say they are employed by someone else but are actively pursuing their own commercial ventures. The GEM report said the rate of emerging entrepreneurship nearly doubled in just five years between 2010 and 2015.
So what may have happened in 2020 was not a rise in corporate behavior, but a lifting of the employment protection under which it operated. More and more Americans had to get their full-time gig to crowd.
Whatever the details, it appears that at least some of the people who have lost their jobs in the past year have started their own business. We wish you much success. Entrepreneurship has always been a key element of America’s prosperity. The dream of success and the willingness to take risks to achieve it are at the core of what makes America American. In that regard, the 2020 pandemic disruption could prove to be a good thing for the future of the American dream.
[ad_1]