In Wednesday's presidential debate, former Mass. Gov. Mitt Romney commented on the weak state of entrepreneurship in the U.S. Specifically, he said, "Over the last four years small-business people have decided that America may not be the place to open a new business, because new business startups are down to a 30-year low."
Thursday morning my inbox was full and I had several phone messages from reporters checking the accuracy of this fact. That’s because I was one of the sources used to check similar statements by Speaker of the House John Boehner (R., Ohio) back in March and Republican Gov. Bob McDonnell of Virginia in August.
The truth of the matter is this: The latest available data from several sources show that Gov. Romney is correct.
- In 2010 the per capita number of new firms was at its lowest level since the data were first collected in 1977, according to U.S. Census Bureau numbers.
- Census data also show that in 2010 the per capita number of new establishments was at its lowest level since 1977.
- U.S. Small Business Administration data show that in 2009 the per capita number of new-employer firms was at its lowest level since 1977.
- U.S. Bureau of Labor Statistics data show that in August, the per capita number of unincorporated self-employed people was at its lowest level since August 1977.
- In 2010, BLS figures on the per capita number of establishments open less than one year were at their lowest since these numbers were first collected in 1994.
- All five of these measures were lower in the most recent year that they are available than at the time when President Obama took office.
While President Obama and Gov. Romney may have different theories about why rates of entrepreneurship in the U.S. have fallen to the lowest levels in 30 years, the facts are these: The federal government’s most current estimates of the fraction of the American population starting new businesses, beginning new-employer businesses, creating new establishments and working for themselves are lower now than at any time since 1977.
The author is an Entrepreneur contributor. The opinions expressed are those of the writer.
Scott Shane is the A. Malachi Mixon III professor of entrepreneurial studies at Case Western Reserve University. His books include Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, Investors, and Policy Makers Live by (Yale University Press, 2008) and Finding Fertile Ground: Identifying Extraordinary Opportunities for New Businesses (Pearson Prentice Hall, 2005).