The millennial generation is often hailed as a generation of entrepreneurs. Baby boomers picture them lounging on hanging chairs in open-concept offices, while wearing hoodies and Bluetooth headphones, tapping away on the latest MacBook. However, this is not the reality for most millennials.
Instead, the number of small-business owners under 30 has been steadily declining over the past two and a half decades. According to The Wall Street Journal, in 1989, 11% of small businesses were owned by under-30-somethings. This number has fallen to under 4%, as of 2013. Today, the average age of an entrepreneur is 40, and 55 – 65 year olds are the only age group to have rising entrepreneurial activity.
So what gives?
Many studies attribute this decline to the rise in student debt. For example, according to a study by Northeastern University, students who had more student debt were less likely to start a business. This was even true for those with high-reward-seeking, high-risk-taking personalities. Starting a business while already in debt seemed to make the consequence of failing that much more aversive.
However, the steep rise in tuition costs didn’t surface until 2004, which has lead economists to wonder what accounts for the other 15 years, from 1989 – 2004. Has there been a change in American values? A greater tendency toward stability and security? Are there other economic factors at play?
Whatever the reason(s), it is crucial we change this trend. According to John Dearie, executive vice president for policy at the Financial Services forum, speaking for Inc., “New businesses are disproportionately responsible for the innovation that drives productivity and economic growth, and they account for virtually all net new job creation[…] this is nothing short of a national emergency.