Introduction

Changing demographic trends are altering the American economic landscape in ways that will affect the economy for years to come. Large numbers of workers are nearing traditional retirement age, and a new generation of young, highly educated workers is poised to take their place. The aging of Baby Boomers and the emergence of Millennials are two of the biggest demographic developments in America today.

These shifts are occurring at a time in which big questions remain about the strength and future of the U.S. economy. An increasing number of reports and data analyses have revealed that rates of business creation have been slowing across the United States—a troubling development since new and young businesses account for nearly all net new job creation.

Demographics are not determinative, but they can help us understand where we are headed. As Baby Boomers age, will they embrace retirement or continue to engage in entrepreneurial ventures as they get older? As the oldest of the Millennials enter the "peak age" for entrepreneurship, will entrepreneurial activity explode or continue to languish?

The answers to these questions are unknown, but public policy will shape the environment in ways that will either facilitate new business creation and growth or make it harder for individuals in these demographic groups to achieve their entrepreneurial potential.

Millennials and Baby Boomers by the Numbers

Millennials and Baby Boomers as Entrepreneurs

  • The Millennial generation has had the most exposure to entrepreneurship; college courses focusing on entrepreneurship increased from 250 in 1985 to 5,000 in 2008.
  • The oldest Millennials will turn 34 this year; the peak age for entrepreneurial activity is 40.
  • The share of new entrepreneurs between ages 20-34 fell from 34 percent in 1996 to 23 percent in 2013.
  • High-tech startups are twice as likely to be founded by someone older than age 50 as opposed to someone younger than age 25.
  • The percentage of entrepreneurs ages 55 to 64 has risen steadily from 14 percent in 1996 to 23 percent in 2013.
entrepreneurship policy digest
Millennial and Baby Boomer Access to Financial Resources
  • In 2014, the average student debt per recipient was $27,689, which is an increase of nearly $10,000 since 2007. 
  • Median net worth for households under age 35 fell 42 percent from 1995 to 2013 while median net worth for households over age 65 increased by 38 percent over the same time period.

Spurring Millennial and Baby Boomer Entrepreneurship

This massive generational shift was the theme of the 2015 State of Entrepreneurship Address, where four panelists each offered a policy idea to boost levels of entrepreneurship among Millennials and Baby Boomers.

  • Increase apprenticeship programs for Millennials to provide them with critical job skills.
    Aparna Mathur, resident scholar, American Enterprise Institute
  • Allow individuals to use federal aid money to attend non-traditional academic institutions.
    Shaila Ittycheria, cofounder, Enstitute
  • Create universal retirement accounts that follow the individual to encourage risk taking.
    Chris Farrell, economics editor, Marketplace Money
  • Reduce the estate tax rate to 20 percent for long-term investments made in startups and early-stage venture capital funds.
    –William A. Galston
    , senior fellow, Brookings Institution

Creating the Conditions for Entrepreneurial Renewal and Economic Growth

Address Student Debt 

  • Millennial balance sheets have suffered in a sluggish economy and under high levels of student debt. Four-in-ten unemployed workers are Millennials, making it difficult for many to pay off their student loans and become financially stable.
  • Two-thirds* of entrepreneurs report using personal savings to fund their startups.Policies that address debt and encourage the accumulation of assets will position Millennials to contribute to an entrepreneurial revival.

Create Tax Structures that Facilitate Entrepreneurship

Let Entrepreneurs Compete

Connect Entrepreneurs of All Ages

Peer-learning and mentor-mentee relationships can provide many benefits to entrepreneurs. Encourage these types of entrepreneur-to-entrepreneur connections to strengthen entrepreneurial ecosystems.

For More Information

Visit these links for access to the following resources, or contact Jason Wiens at jwiens@kauffman.org:

*Based on a Kauffman survey of 479 Inc. high-growth firms, the major methods of finance are personal savings (67 percent), bank loans (52 percent), and credit cards (34 percent), while finance from venture capital and angel investors share a small portion (15 percent combined).