U.S. Entrepreneurship Plummets: Should You Be Concerned?

Declining U.S. Entrepreneurship, What Should Americans Do?

Entrepreneurship is in a prolonged period of decline. This is particularly true for highly trained and experienced professionals who entered the workforce when the economy was propelling growth and falling behind. The number of entrepreneurs has been declining for decades and has recently begun to drop off a cliff. The number of new businesses formed in the U.S. each year has been on a downward trajectory for the past four years running, according to a new report from the Kauffman Foundation.

There is something immensely frustrating about this trend: many young people confidently enter the job market, knowing that they will find opportunities for growth once they get started. Compared with the Depression years before World War II, when unemployment reached 25 percent, today’s middle class is more resilient and can keep up with inflation and growing earnings.

Gains and Losses: Which Is More Material?

Entrepreneurship is one of the driving forces of America’s success, and it incidentally benefits its people. However, in recent decades, U.S. entrepreneurship has plummeted. Most people choose to work for these entrepreneurs instead of building their empires. Should the disappearance of U.S. entrepreneurship cause Americans to worry? Or should we let it happen? However, you may need to weigh the pros and cons, as well as its short-term and long-term effects, before drawing any conclusions.

There is no doubt that entrepreneurship brought numerous advantages to the people. There are a lot of privileges that we unconsciously savor from this activity.

Job Opportunities


Entrepreneurship has a direct correlation with job employment. It also drives rapid economic industrialization and economic growth in the U.S. economy. In addition, almost everything from our smartphones to heaters is the product of entrepreneurial spirit. Perhaps it has created market competition. However, it is the gateway to a more innovative, comprehensive, and creative world that can flourish.


On the other hand, entrepreneurship can undermine its privileges above due to its ruthless nature. This might start layoffs for companies that cannot compete in the market. Thus, entrepreneurship both creates and destroys the jobs of middle-class people. In addition, these startup companies have many regulatory and administrative burdens, such as the need for time for company registration, paperwork and red tape, etc.

This type of excessive regulation for entrepreneurs makes it difficult for them to realize their potential. This is also because rules are frequently changing, complicated and vague, making it arduous for entrepreneurs to survive in business. This survival of the fittest is not necessary. Maybe, this is happening because people do not want to burn their money. So, if you are an existing or potential startup company, will you venture into the business world?

U.S. Entrepreneurship Plummets: Should You Be Concerned?

The Genesis of U.S. Entrepreneurship

Becoming an entrepreneur is in the genes of every American. From the beginning, the United States has been a great player in the business world, deeply rooted in becoming a risk-averse innovator and accepting a new set of ideas and knowledge. The origin of U.S. entrepreneurship can be traced back to the primordial trading and bartering activities with Native Americans that even flourished in the post-American Civil War.

In the nineteenth century, it emphasizes the creation of capitalists, innovators, financiers, and businesspeople who are not limited to venturing out businesses but expanding existing businesses. It has been the secret weapon of the U.S. to prosperity, creation of job opportunities, generation of national income, advancing innovation, and upgrading business procedures.

Entrepreneurship in the United States

In the 1970s, entrepreneurs accounted for about 12% of all new jobs created in the United States. By 2000, that number had dropped to 8% and is now at an all-time low of 5%. Incomes for high-skilled workers have stagnated or declined, while those for low-skilled workers have increased. Projects by Berkeley economist Arun Sundararajan have shown that the number of startups with less than $1 million in funding has risen dramatically.

From the 1800s to the present, the innovative enthusiasm of the U.S. never fades. The U.S. has Andrew Carnegie, who founded the Carnegie Steel Company – the largest steel company in the history of the United States. The creation of the first car was also credited to U.S. entrepreneur Henry Ford – the founder of one the best manufacturers of automobiles. America’s pride Oprah Winfrey grew her media company with a global brand that attracts millions of television viewers. Moreover, the notable Bill Gates and Larry Page, who earn millions of dollars as they venture into the world of technology, also have American roots. The US is an essential player in the business world.

Start-Ups Gradually Vanishing: Numbers and Reasons

Many studies have shown that U.S. entrepreneurship is disappearing. According to data from the Brookings Institution, in a 2015 report released by the U.S. National Bureau of Economic Research (NBER), the number of business closures also exceeded the number of new startups. According to a report released by NBER, the entrepreneurial spirit in the United States has been declining for the past three years.

Historically, only 13% of companies were considered startups in the late 1980s, and this number has fallen to eight percent just in two decades. Between the 1980s and 1990s, the rate decreased, but in the 20th century, new businesses provided fewer opportunities than in the first decades.

Regulatory Statutes

The contributors to this significant decrease in entrepreneurial activities in the U.S. are primarily anchored on regulatory statutes. Dearie and Geduldig revealed in their book “Where the Jobs Are: Entrepreneurship and the Soul of the American Economy” that some of the reasons for the decline in entrepreneurial activity in the United States are:

  • Lack of startup capital
  • Difficulties with stricter government policy
  • Regulations that need to be overhauled to attract more entrepreneurs

Others argue that the rivalry has become so fierce that it is difficult for an entrepreneur to start and survive. Furthermore, economies of scale make it difficult for small enterprises to offer competitive prices while remaining in business.

U.S. Entrepreneurship Plummets: Should You Be Concerned?

Student Debt

From a student’s perspective, another factor that hinders students’ entrepreneurial ability is student debt. It is estimated that student borrowing soared to 1.3 trillion U.S. dollars, equivalent to more than 5% of the overall U.S. Treasury bonds. This situation worsens year after year, resulting from students’ debt of about $26,000 in 2013 and more than $35,000 who graduated in 2016. The students want to start, but they have no financial leeway.

Today’s personal and economic challenges require a closer look at the business perspectives held by many people in the United States who have been hampered for some reason. Stakeholders must create and support new entrepreneurs to start businesses. These efforts will promote economic growth and help expand profitable opportunities for all workers across the United States.

Flourishing New Innovators

Who can help our future entrepreneurs to be successful in business? If necessary, how and what strategies and policies should the government develop to support business activities in the United States flourish as before? These are some questions that need to be answered and given a platform to create new personalities, which will provide new opportunities to tell a story of success.

Enhancing Entrepreneurship for the 21st Century Act

On July 21, Rep. French Hill outlined the relevance of promoting entrepreneurship and procedures to offset the decline in U.S. entrepreneurship, together with Representatives Bill Foster, Steve Chabot, Stephanie Murphy, David Schweikert, and Marc Veasey. They relaunched the bipartisan Congressional Entrepreneurship Caucus and reintroduced HR1345, the Enhancing Entrepreneurship for the 21st Century Act. This restart is aimed at reversing the plight facing Americans across the United States.

The Caucus hopes to integrate the various knowledge, ideas, and ways of thinking of the organizations, including the American Entrepreneurship Center, Engine, Kauffman Foundation, and Entrepreneurship with American entrepreneurs. Identifying and removing obstacles will be the primary goal of this move on behalf of Hill and his company.

Another point of view from Salgado pointed out that borrowing costs can affect the trend of business activities. Compared to entrepreneurs who have established brands, this subsidy is of great importance for young small entrepreneurs. Salgado pointed out that fixed subsidies cannot eliminate the effects of technological changes that affect the economy, which has led to a proportional decrease in the participation of entrepreneurs and the business entry rate.


For the mindset of every potential entrepreneur to flourish, financial assistance is not the only way to solve the problem. Every American needs to increase the value of risk appetite. From Edison to Gates to Page, they bet on life and uncertainty. They have accepted risks and possibilities at every step, regardless of the future. Furthermore, as the adage goes in the business and financial world, the larger the risk, the higher the payout. Without sacrifice, there can be no wealth.

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