The U.S. creates about half as many new businesses today as it did in the 1980s, and fewer Americans are motivated to launch new companies because fewer actually work for startups, said Wendy Guillies, president and CEO Ewing Marion Kauffman Foundation, during the foundation’s annual State of Entrepreneurship Address on Wednesday in Washington.
But better times are ahead, Guillies said.
“The United States is about to experience a surge of labor market entry thanks to the millennial generation,” she said, “and as millennials approach the peak age for business creation — their late 30s and early 40s — there’s likely to be a boost in startup activity.”
Guillies added that the quality of today’s new businesses appears to be improving. New sectors are emerging, and entrepreneurs will be able to take advantage of the spread of software, cheap server storage and higher computing power. All these factors could contribute to an “entrepreneurial boom,” Guillies said. What’s also encouraging is that big companies support “intra-preneurship,” by initiating innovation.
But while entrepreneurs need more of some things, she said, successful startups need less of others: “Less cost to start, less cost to experiment— essentially, less cost to try.”
Guillies said the U.S. should look to France, which saw growth in its business sector after allowing an extension of unemployment insurance for individuals who start a company. Such regulations should consider not only the size of the firm, but also the company’s age, she said, because “many regulations protect incumbent businesses and thus skew the playing field against entrepreneurs.”
The Kauffman Foundation leader also encouraged American policymakers to consider implementing a “startup visa,” pointing out that the U.S. is not among the 15 countries in the world with some form of the policy, viewed as friendly to immigrant entrepreneurs. “In the global race for entrepreneurial talent,” Guillies said, “America is letting other nations define the course.”
How the U.S. moves forward will also depend on whether public policy supports the next era in entrepreneurship or interferes with it, Guillies said. While the success of young firms like Uber and Airbnb in creating jobs and enhancing productivity has been well documented, she said, high-growth companies like those are in shorter supply than they once were, and they’re growing more slowly.
Following the State of Entrepreneurship address, the event continued with a speech from Rep. Steve Chabot, R-Ohio, chairman of the House Small Business Committee, and a panel led by Paula Dwyer, a columnist for Bloomberg View.
According to panelist Rajshree Agarwal, a professor of entrepreneurship at the University of Maryland, globalization is a concern because “more and more, countries are adopting policies that allow for the American Dream to be realized not just in America.” That, she said, is causing the U.S. to lose its competitive advantage in terms of engaging people in enterprise and innovation and allowing them to pursue their ambitions.
Agarwal also said Americans should be less concerned about economic equality and more focused on ensuring economic mobility — that is, giving individuals a better chance of migrating from one social class to another.