U.S.

Business Startup Activity Drops in 2011 but Remains Above Pre-Great Recession Levels
A Leading Indicator of New Business Creation in the United States
GREATON RECESSI

The Kauffman Index of Entrepreneurial Activity

.34% .32% .30% .29% .29% .30%

.34% .32%

2004

2005

2006

2007

2008

2009

2010

2011

Entrepreneurship dipped in 2011, but still remains above pre-recession levels, according to new data from the Kauffman Index of Entrepreneurial Activity. The Index captures annual information about new business owners in their first month of significant business activity, providing the earliest documentation of new business activity across the United States. It also provides information for demographic, state and select metropolitan statistical areas. New 2011 data, coupled with previous reports since 1996, reveal important shifts in the national level of entrepreneurial activity.

The 2011 0.32% business-creation rate translates into approximately

543,000
new businesses being created each month during the year.

From 2007 to 2011, the number of new employer firms remained at series lows. The quarterly employer establishment birth rate dropped from

0.13% 0.11%
to
A growing immigrant population and rising entrepreneurship rate contributed to a rise in the share of new immigrant entrepreneurs.
Native-Born Immigrant

Activity by Demographics
Between 1996 and 2011, changing demographics and changing propensities for entrepreneurship led to some large shifts in the composition of new U.S. entrepreneurs. New Latino entrepreneurs more than doubled (from 10.5% to 22.9%) from 1996 to 2011. The share of entrepreneurs ages 5564 group grew from 14.3% to 20.9% from 1996 to 2011

White Asian

Black

Latino Other

Ages 20-34 Ages 45-54

Ages 35-44 Ages 55-64

76.4% 8.4%

34.8%

1996

10.5% 3.5% 1.2%

1996

27.0% 23.9% 14.3%

1996

86.3% 13.7%

60.2% 9.1%

29.4%

2011

22.9% 5.3% 2.5%

2011

22.0% 27.7% 20.9%

2011

72.0% 28.0%

Activity by Gender
Men started companies at twice the rate of women.
0.5%

0.4%

Male

0.3%

Female
0.2% 0.1%

0 1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Activity by State
From 2010 to 2011, U.S. entrepreneurial activity rates decreased in all regions except the Northeast, which experienced a slight increase. The Western region had the highest entrepreneurship rate, and the Midwest had the lowest. The highest ranked states were Arizona, Texas, California, Colorado and Alaska; the lowest ranked states were West Virginia, Pennsylvania, Hawaii, Illinois, Indiana and Virginia.

Entrepreneurship Rates
Highest state rankings Medium state rankings Lowest state rankings

Activity by Metro Area

The Index also rated entrepreneurial activity in the fifteen largest metropolitan areas in the United States. Among these metropolitan areas, Los Angeles had the highest, followed by Atlanta and Phoenix. The metropolitan areas with the lowest rate were Chicago, Detroit, and Philadelphia.

www.kauffman.org/kiea