Entrepreneurial Activity Rose to Record Levels in 2009, Report Finds

Despite a deep recession and high unemployment, business start-ups reached their highest level in fourteen years in 2009, exceeding the number of startups during the peak of the technology boom in 1999 and 2000, a new report from the Ewing Marion Kauffman Foundation finds.

Using data from the U.S. Bureau of the Census and the Bureau of Labor Statistics' monthly Current Population Survey, the Kauffman Index of Entrepreneurial Activity: 1996-2009 (28 pages, PDF) found that the number of new businesses created during the 2007-09 period increased steadily each year, with 27,000 more start-ups created per month in 2009 than in 2008, and 60,000 more created per month in 2008 compared to 2007. In all, 0.34 percent of adults started businesses each month in 2009, a 4 percent increase over the previous year.

Among racial groups, African Americans accounted for the largest increase in entrepreneurial activity between 2008 and 2009, with the rate rising from 0.22 percent of African-American adults in 2008 to 0.27 percent in 2009 — the biggest increase in fourteen years but still below the rate for other racial groups. The report also found that the age group with the greatest growth in entrepreneurship rates was the 35- to 44-year-old cohort and that entrepreneurial activity increased year-over-year for both men and women, even as it declined slightly among immigrants.

"Challenging economic times can serve as a motivational boost to individuals who have been laid-off to become their own employers and future job creators," said Kauffman Foundation president and CEO Carl Schramm. "Because entrepreneurs drive the economy, the growth in 2009 business startups is encouraging and hopefully points to a hopeful trend in terms of our economic recovery."