The Census Bureau has released new tabulations for its Business Dynamics Series that show in stark detail how the recession has not only significantly impacted job destruction in the U.S. but also the rate of job creation.  2009 brought job creation rates in the U.S. to their lowest level on record (in 29 years).  Read an overview report or explore the data (which is available by SIC and state, as well as what is included in the report).  

This morning we released the 2010 Kauffman Index of Entrepreneurial Activity.  The Kauffman Index is a rather unique measure of entrepreneurship as it relies on a quirky design of the U.S. Current Population Survey to come up with a monthly measure of the number of households transitioning into entrepreneurship from other labor force statuses.  

Since we are working from a household survey, the Kauffman Index has the advantage of being able to give very detailed demographic information about who is becoming an entrepreneur.  Indeed, it's from this perspective that these current year findings arise:

• The immigrant rate of entrepreneurial activity increased substantially – from 0.51 percent in 2009 to 0.62 percent in 2010 – and declined slightly for the native-born. This increase expanded the large positive gap that already existed between immigrant and native-born entrepreneurial activity rates. 
• A growing immigrant population and rising entrepreneurship rate contributed to a rise in the share of new entrepreneurs that are immigrant, from 13.4 percent in 1996 to 29.5 percent in 2010.
• Entrepreneurial activity increased slightly for men and decreased slightly for women. For men, the entrepreneurial activity rate increased from 0.43 percent in 2009 to 0.44 percent in 2010. The female entrepreneurship rate decreased from 0.25 percent to 0.24 percent.
• The African-American entrepreneurial activity rate decreased from 0.27 percent in 2009 to 0.24 percent in 2010. The white entrepreneurial activity rate decreased from 0.33 percent to 0.31 percent.
• The entrepreneurship index was highest among the least-educated group, moving from 0.49 percent in 2009 to 0.59 percent in 2010, suggesting an increased number of people entering entrepreneurship out of necessity. The largest decrease in entrepreneurial activity occurred for high school graduates.

On Data Maven, I wanted to specifically point out two new features of this year's report.  First, and most importantly, is the expansion of the report to utilize the Business Employment Dynamics (BED) series data from the Bureau of Labor Statistics.  One of the limitations of the CPS as a data source is that we are not able to disaggregate the type of businesses whose start is captured in the Kauffman Index.  Thus, the Kauffman Index captures both transitions to self-employment as well as the start of larger businesses.  In an attempt to add more depth of understanding to the current state of entrepreneurship in the United States, an aggregate measure of new employer establishment starts was computed this year from the BED.  The resulting picture, shown below, gives a much more accurate national picture, in my view:

Taking the Kauffman Index and BED-based measures both into account gives the picture of an economy with the highest number of people becoming entrepreneurs on a monthly basis but most of them only going into self-employment or starting lower employment-potential businesses.  

The second change that I wanted to highlight this year was something which I originally wrote about last year in a blog post - a look at the changing look of entrepreneurs, in the aggregate.  This takes into account both the proclivity to become an entrepreneur (the Kauffman Index) and also the changing demographic composition of the U.S. to look at changing total numbers of new entrepreneurs.  For three categories in particular, this measure is quite telling.  

On the heals of the Kauffman Index release, I want to call on the Census Bureau to produce more information on immigrant entrepreneurs.  In my other posting I pointed to some of the big shifts which have occurred in the composition of new entrepreneurs over the last decade but I think it's worth repeating that here:



As the Kauffman Index shows  immigrant entrepreneurs made up almost 30 of all new entrepreneurs in 2010, more than doubling over the last decade and a half, and yet this is a group which we know very little about systematically at the national level and especially at the sub-national level. There are competing streams of research (see Wadwha, et. al and Hart, et. al), some of which Kauffman has funded, that point alternatively to the importance or the normalcy of immigrant entrepreneurs.  Regardless of which stream of research you believe more, the Kauffman Index numbers make it strikingly apparent that we need to know more about rapidly growing population of new entrepreneurs.  

I specifically suggest to Census that it consider adding a report to the current production schedule for the Survey of Business Owners which is the largest survey of small business owners.  In 2007 this survey added a question about immigrant status of business owners (a good move!) but currently there are no plans to specifically provide a detailed overview of immigrant entrepreneurs (see SBO release schedule here).  The SBO already provides detailed overviews of Black, Hispanic, Native American, American Indian or Alaska Natives, Native Hawaiian or Pacific Islanders, Asian, Women, and Veteran-owned businesses.  The immigrant data will be part of the June release of the report "Characteristics of Business Owners" but today I want to call on Census to consider adding a separate and more detailed Immigrant overview.  The SBO could provide detailed sub-national estimates of the type and impact of immigrant-owned businesses and help to understand what has been a seemingly large shift in the composition of new entrepreneurs.  The data exists; all that is needed is a recognition of this important group among entrepreneurs.