Despite a popularly-held belief that the millennial generation is particularly ambitious, a Senate Committee hearing entitled, “America Without Entrepreneurs: The Consequences of Dwindling Startup Activity”, was held June 29 in response to Federal Reserve data showing young Americans in the business sector are more risk-averse than they’ve been since the early 1990s.
The percentage of Americans under 30 who own their own business has dropped by 65 points since the entrepreneurial golden age of the 1980s. Younger baby boomers, specifically age 55 to 65, are the only generation in which the percentage of business startups has grown since the late 1990s and the average age of a new business owner is now 40.
“Millennials are on track to be the least entrepreneurial generation in recent history,” Economic Innovation Group co-founder, John Lettieri, told the Senate committee.
Lettieri cited an 89 percent increase in student loan borrowers and a 77 percent increase in the average student debt holding between 2004 and 2014 as the main reasons why young Americans are choosing corporate careers over startup businesses.
A study conducted in 2014 found that 41 percent of 25 to 34 year-olds didn’t follow through on an idea they had to start a business because they were afraid to fail, compared to only 24 percent of those who said the same in 2001.
As a result of this trend, businesses that have been in operation for 10 or more years now comprise almost 50 percent all U.S. firms and employ over 80 percent of Americans with a job. In 1990, by comparison, less than 40 percent of all U.S. businesses were over a decade-old, and employed about 70 percent of workers.
The proverbial silver-lining, however, is found in a recently released survey conducted by Wells Fargo, showing 80 percent of millennial business owners planned to keep their start-up companies over a long period of time. A significant portion of those also said they would like to eventually hand the business off to their children.
Another study conducted by a UK-based accounting firm of 7,500 entrepreneurs, freelancers and students age 18 to 33 in the U.S., Europe, Asia, Africa and Australia, found that “the motives of millennial entrepreneurs are quite different,” than previous generations.
65 percent of those surveyed said they value living well more than work, principles over profit and are pursuing their own path to help the good of humanity.
Perhaps virtue is worth more than money now, at least in America. After all, the net worth of under-30 U.S. households has fallen to $44,354 — 48 percent less than in 2007.
[The Atlantic via Business Insider] [Wall Street Journal] [CBS News] [Forbes] [Photo courtesy mtlblog.com/Bill Dickinson]