startup activity in america -- a look at startup policy and the kauffman index
TRANSCRIPT
© 2013 Ewing Marion Kauffman Foundation
www.kauffman.org© 2013 Ewing Marion Kauffman Foundation
Startup Activity in America
Jason Wiens & Arnobio MorelixEwing Marion Kauffman Foundation
August 31, 2016
© 2013 Ewing Marion Kauffman Foundation
Young Firms Create the Most Jobs
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-3500000
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Net Job Creation by Firm Age
Age 0-5 Age 6-10Year
Net
Job
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© 2013 Ewing Marion Kauffman Foundation
Startups Create Jobs and…
Spur innovation, and
Provide paths to upward economic mobility, and
Make the U.S. economy dynamic.
© 2013 Ewing Marion Kauffman Foundation
Understanding the Kauffman Index of Entrepreneurship Series
• Go-to set of indicatorso “Jobs Report” for unemployment rate and labor market healtho Consumer Price Index for inflation rate and changes in prices
• Kauffman Index: set indicators to measure all things entrepreneurship
© 2013 Ewing Marion Kauffman Foundation
3 Distinct Aspects of Entrepreneurship
© 2013 Ewing Marion Kauffman Foundation
Kauffman Index of Startup Activity
© 2013 Ewing Marion Kauffman Foundation
4 Takeaways from the Kauffman Index of Startup Activity
• Startup Activity is on the Riseo Increased for the second year in a row after reaching its lowest level in the past two
decades only two years agoo Increase in 23 out of 40 largest metros and in 30 of the 50 stateso 889,000 jobs created by new establishments in the last quarter of 2015 alone
• highest job creation number by new establishments since early 2008
• 4 Takeawayso 1) New Face of the American Entrepreneuro 2) Return of Opportunity Entrepreneurshipo 3) Geography of Startup Activityo 4) Startup Great Recession Hangover and Long-Term Decline
© 2013 Ewing Marion Kauffman Foundation
1) New Face of the American Entrepreneur
• Narrowing Startup Gender Gapo Rate of new entrepreneurs for women is the highest since 1996o Startup gender gap is still wide, it has narrowed in the latest year
• from 0.22% in 2014 to 0.26 in 2015 for females• 0.42% for males
• Increasing Racial Diversity Among New Entrepreneurso New entrepreneurs from racial minority backgrounds (e.g., Asian, Black, Latino,
Native-American)• 1996: 23% (2 in 10 new entrepreneurs)• 2015: 40% (4 in 10)
© 2013 Ewing Marion Kauffman Foundation
2) Return of Opportunity Entrepreneurship
• In 2015, the share of opportunity entrepreneurs was 84 percent – 10 percent points higher than it was in 2011 in the aftermath of the Great Recession
© 2013 Ewing Marion Kauffman Foundation
3) Geography of Startup ActivityMetro Areas
• Highest Startup Activity – 2016 Rankings
1. Austin2. Miami3. Los Angeles4. San Francisco5. Las Vegas
• Biggest positive shift in ranks from 2015 to 2016 were:
1. Orlando (33 to 21)2. Kansas City (29 to 18)3. Cincinnati (31 to 24)4. Nashville (23 to 16)5. Detroit (35 to 30) and San Francisco
(9 to 4)
© 2013 Ewing Marion Kauffman Foundation
3) Geography of Startup ActivityLarger States
• Highest Startup Activity – 2016 Rankings
1. Texas2. Florida3. California4. New York5. Colorado
• Biggest positive shift in ranks from 2015 to 2016 were:
1. New Jersey (18 to 7)2. Michigan (19 to 11)3. Minnesota (24 to 21)
© 2013 Ewing Marion Kauffman Foundation
3) Geography of Startup ActivitySmaller States
• Highest Startup Activity – 2016 Rankings
1. Montana2. Nevada3. Wyoming4. Oklahoma5. Alaska
• Biggest positive shift in ranks from 2015 to 2016 were:
1. Oregon (22 to 15)2. Oklahoma (8 to 4)3. North Dakota (11 to 7)
© 2013 Ewing Marion Kauffman Foundation
4) Startup Great Recession Hangover
• Still below peak preceding Recession dropo Long Great Recession hangover in startup activity
© 2013 Ewing Marion Kauffman Foundation
Challenge: Fewer Americans Are Starting Businesses
© 2013 Ewing Marion Kauffman Foundation
Challenge: Death Rates Are Increasing
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Firm Births and Deaths over Time
Firm Births Firm Deaths
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U.S
. Firm
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© 2013 Ewing Marion Kauffman Foundation
Good Policy Can Overcome Challenges
1. Welcome Immigrants
2. Reduce and Eliminate Barriers to Entry
3. Develop Human Capital
© 2013 Ewing Marion Kauffman Foundation
Welcome Immigrants
© 2013 Ewing Marion Kauffman Foundation
Reduce and Eliminate Barriers to Entry
Occupational Licensing• Apply the appropriate protection at minimal burden
Non-Compete Agreements• Ban• Narrow the scope• Disclose earlier• Educate workers
Opportunity Cost of Trying• The opportunity cost of trying—not insufficient funds—is a primary
barrier to starting a new business.
© 2013 Ewing Marion Kauffman Foundation
Develop Human Capital
© 2013 Ewing Marion Kauffman Foundation
Consider Kauffman a Resource
Entrepreneurship Policy Digest www.kauffman.org/policydigest
Kauffman Index of Entrepreneurship Serieswww.kauffmanindex.org
Jason Wiens Arnobio MorelixPolicy Director Senior Research [email protected] [email protected]