U.S. entrepreneurial competition is declining, says latest Kauffman report

Entrepreneurship competition in the U.S. is waning, according to a report in the Kauffman Foundation‘s latest Entrepreneurship Policy Digest.

The report notes three major factors that contribute to entrepreneurship: labor markets, new entrants, and innovation.  There are several components that point to declining overall entrepreneurial competition in 2016:

  • Employees are staying in their current positions, reluctant to change jobs. This slows down fluid labor markets where entrepreneurs can start companies.
  • New firm formation has not return to pre-recession levels yet.
  • Older businesses are increasingly dominating the American economy; 17 percent of all firms were started before 1980, but those firms employ 57 percent of American workers.
  • Non-compete agreements hinder labor mobility because potential entrepreneurs are prohibited from starting a business that would compete with their employer.
  • The most profitable U.S. firms are getting an increasingly large share of profits within their industries, and this trend seems likely to continue.

According to the U.S. Census Bureau, the industries that have seen the largest increases in profit in 2016 are retail at 11.2 percent, finance and insurance at nearly 10 percent, and wholesale trade at 7.3 percent.

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