Kauffman study shows consistent entrepreneurial growth

Kansas City, Mo. - The rate of entrepreneurial activity has remained consistent over the past decade, but subtle year-to-year shifts in gender, demographic, geographic and ethnic make-up are changing the public face of the American entrepreneur, according to a national assessment of entrepreneurial activity by the Ewing Marion Kauffman Foundation.

The Kauffman Index of Entrepreneurial Activity also reported a decline in the Midwest, which had the lowest level of entrepreneurial activity of all regions for the first time in the past 11 years.

The annual study, which measures business start-up activity for the entire U.S. adult population at the individual owner level, reports that nearly 465,000 people are creating new businesses on average each month. In 2006, an average of 0.29 percent of the adult population, or 290 out of 100,000 adults, created a new business each month.

The rate of entrepreneurial activity for the adult population overall also was 0.29 in 2005, and also has remained consistent over the past decade.

Demographics The study said Asians, Latinos, and immigrants far outpaced native-born Americans in entrepreneurial activity last year, while African Americans experienced a decline.

Related findings are as follows:

• The immigrant rate of entrepreneurial activity increased from 0.35 percent in 2005 to 0.37 percent in 2006. As in previous years, the rate of entrepreneurial activity for immigrants was substantially higher than the rate for the native-born population (0.27 percent).

• The rate of entrepreneurial activity for Asians increased from 0.27 percent in 2005 to 0.32 percent in 2006.

• The rate for non-Latino whites remained constant at 0.29 percent between 2005 and 2006.

• For African Americans, the rate of entrepreneurial activity decreased slightly from 0.24 percent in 2005 to 0.22 percent in 2006.

• The Latino rate increased slightly from 0.32 percent to 0.33 percent during the same time period.

The rate of entrepreneurial activity for men, 0.35 percent, did not change between 2005 and 2006, ending the downward trend that began in 2003. The rate for women declined slightly from 0.24 percent in 2005 to 0.23 percent in 2006.

Regional picture

Regionally, the Midwest's low level of entrepreneurial activity replaced the Northeast, which historically had posted the lowest rates of entrepreneurial activity every year from 1996 to 2005.

The five states with the highest rates of entrepreneurial activity were Montana, which has 600 entrepreneurs for every 100,000 people; Mississippi, 520 entrepreneurs per 100,000 people; Georgia, 440 entrepreneurs per 100,000; Oklahoma, 430 entrepreneurs per 100,000; and Maine, 420 entrepreneurs per 100,000.

The five states with the lowest rates of entrepreneurial activity were Michigan, 160 entrepreneurs per 100,000; Pennsylvania, 170 entrepreneurs per 100,000; South Carolina, 180 entrepreneurs per 100,000; Illinois, 180 entrepreneurs per 100,000; and Delaware, 190 entrepreneurs per 100,000.

Wisconsin had 270 entrepreneurs per 100,000 people.

Among the fifteen largest metropolitan regions in the United States, the highest rates of entrepreneurial activity were in Miami (0.50 percent) and Atlanta (0.49 percent).

The large metropolitan regions with the lowest rates of entrepreneurial activity were Detroit (0.13 percent) and Chicago (0.18 percent).

Data for the Kauffman Index of Entrepreneurial Activity are derived from the monthly Current Population Survey (CPS), a national population survey conducted by the U.S. Bureau of the Census and the Bureau of Labor Statistics.

The Index is a key component and one of the 26 top indicators in the compilation of the Kauffman Foundation's State New Economy Index.

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