Executive Summary
In 2009, the number of people reporting entry into entrepreneurial activity in the United States reached its
highest point over the last fourteen years. This increased rate of entrepreneurship was seen across most
demographic categories, with the largest increases coming among older individuals and African-Americans.
While the West continues to have a higher rate of entrepreneurship than other parts of the country do, it
showed a sharp decline in 2008. These trends and many more are discussed here in the Kauffman Index of
Entrepreneurial Activity, the leading indicator of new business creation in the United States.
Capturing new business owners in their first month of significant business activity, this measure
provides the earliest documentation of new business development across the country. The percentage of the
adult, non-business-owner population that starts a business each month is measured using data from the
Current Population Survey (CPS). In addition to this overall rate of entrepreneurial activity, separate estimates
for specific demographic groups, states, and select metropolitan statistical areas (MSAs) are presented. The
Index provides the only national measure of business creation by specific demographic groups.
New 2009 data allow for an update to previous reports, with consideration of trends in the rates of
entrepreneurial activity over the fourteen-year period between 1996 and 2009. The Kauffman Index reveals
important shifts in the national level of entrepreneurial activity and shifts in the demographic and geographic
composition of new entrepreneurs across the country. Key findings for 2009 include:
- In 2009, 0.34 percent of the adult population
(or 340 out of 100,000 adults) created a new
business each month, representing
approximately 558,000 new businesses per
month. The 2009 entrepreneurial activity rate
represents an increase over the 2008 rate of
0.32 percent and represents the highest level
over the past decade and a half.
- Overall, men are substantially more likely to
start businesses each month than are women.
The entrepreneurial activity rate for men
increased slightly from 0.42 percent in 2007
to 0.43 percent in 2008. The Kauffman Index
for women also increased slightly, from 0.24
percent to 0.25 percent.
- The entrepreneurial activity rate among
African-Americans increased from 0.22
percent in 2008 to 0.27 percent in 2009,
reaching the highest level over the past
decade and a half.
- The Latino entrepreneurial activity rate
decreased from 0.48 percent in 2008 to
0.46 percent in 2009, and the Asian
entrepreneurial activity rate decreased from
0.35 percent in 2008 to 0.31 percent in
2009. The non-Latino white business-creation
rate increased from 2008 to 2009 (0.31
percent to 0.33 percent).
- The immigrant rate of entrepreneurial activity
declined slightly from 0.53 percent in 2008
to 0.51 percent in 2009, but remained
substantially higher than the native-born rate
of 0.30 percent.
- The oldest age group (ages fifty-five to sixtyfour)
experienced the second-largest increase
in business-creation rates from 2008 to 2009,
contributing to a two-year upward trend.
Among this group, entrepreneurial activity
rose from 0.36 percent to 0.40 percent. The
age group thirty-five to forty-four also
experienced a large increase in entrepreneurial activity from 2008 to 2009
(0.35 percent to 0.40 percent). The youngest
age group (twenty to thirty-four) has a
substantially lower entrepreneurship rate
(0.24 percent).
- Entrepreneurship rates increased the most for
college-educated individuals (0.31 percent to
0.34 percent), and high school individuals
(0.35 percent to 0.38 percent) in 2009.
- The construction industry had the highest rate
of entrepreneurial activity of all major industry
groups in 2009 (1.55 percent). The secondhighest
rate of entrepreneurial activity was in
the services industry (0.42 percent).
- The entrepreneurial activity rate declined
sharply in the West, from 0.42 percent in
2008 to 0.38 percent in 2009. Businesscreation
rates increased in the Midwest
and South, but the West continues to have
the highest rates.
- The states with the highest rates of
entrepreneurial activity were Oklahoma
(470 per 100,000 adults), Montana (470 per
100,000 adults), Arizona (460 per 100,000
adults), Texas (450 per 100,000 adults), and
Idaho (450 per 100,000 adults). The states
with the lowest rates of entrepreneurial
activity were Mississippi (170 per 100,000
adults), Nebraska (200 per 100,000 adults),
Pennsylvania (200 per 100,000 adults),
Alabama (210 per 100,000 adults), and
Minnesota (220 per 100,000 adults).
- The states experiencing the largest increases
in entrepreneurial activity rates over the past
decade were Georgia (0.20 percentage
points), Arizona (0.14 percentage points),
Tennessee (0.13 percentage points), District
of Columbia (0.12 percentage points), and
Massachusetts (0.10 percentage points).
The states that experienced the largest
decreases in their rates were New Mexico
(-0.20 percentage points), Alaska
(-0.15 percentage points), North Dakota
(-0.12 percentage points), and Nebraska
(-0.10 percentage points).
- Among the fifteen largest MSAs in the
United States, the highest entrepreneurial
activity rate in 2009 was in Houston (0.63
percent). The large MSA with the lowest rate
of entrepreneurial activity was Seattle
(0.16 percent).
