May 2010

Why Startups Surged During the Recession

From USNews.com.

Here's the good news: Americans aren't lazy.

With more than 15 million Americans unemployed, many for six months or longer, it's easy to stereotype the jobless as dropouts who have lost hope and motivation. But a new study of entrepreneurship suggests that the unemployed are quite industrious, helping spur the pace of new-business startups to a record level in 2009.

[See which states are the most and least entrepreneurial.]

The annual index of entrepreneurial activity published by the nonprofit Kauffman Foundation shows that the pace of new-business creation last year was the highest since the index began 14 years ago. It's not clear why there would be so many startups in the midst of a brutal recession, but it stands to reason that many new business owners these days are "necessity entrepreneurs"—people laid off from conventional jobs, with few other opportunities. "Either these people can't find jobs, or they're incredibly motivated to start businesses," says Bob Litan, vice president for research and policy at Kauffman. "I suspect it's a combination of both."

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