Entrepreneurial Statistics

A couple of weeks ago I was watching an O’Reilly Factor broadcast which was a group of interviews with prominent politicians and pundits from the latter part of 2011.   One of the politicians was Mike Bloomberg, the Mayor of New York.  During his answer on a question about immigration policy and border control Mr. Bloomberg made a comment something to affect that for every educated immigrant to the US approximately 2.5 jobs were created for the rest of Americans. His answer to the jobs problem… increase the number of educated immigrants!

Being puzzled by the comments of Mr. Bloomberg, I did some internet research and found some interesting data that was tabulated and published as the Kauffman Entrepreneurial Index.  I thought it would be interesting to share, especially since my wife and I are entrepreneurs and work with folks who have that spirit.

The index was originally reported as a percentage, but I converted it to the number per 10,000.  What the charts below show are the numbers of new business ventures started per 10,000 individuals per category.  The one index that I won’t show is the one that breaks new business ventures down by age group, simply because the entrepreneurial rates for those between the ages of 21 and 64 are essentially the same regardless of age group.

Index by Gender

Figure 1. Index by gender

The first index, shown as Figure 1, was a little surprising to me.  What is shows is that men have a much higher entrepreneurial index than women.  The Kauffman Report didn’t offer any explanation for this, but the disparity between the genders has been fairly constant since 1996.  I found this quite interesting since we work with a number of entrepreneurs on Facebook, and most are women.  The report goes on to say that this index translates into 62% of the new business ventures being created by men to 38% by women.

The second index was also a surprise, which examined the entrepreneurial rate by education level.  I have always wanted to own my own business my entire adult life, and my father never understood it.  He never understood why I would have spent so much time in college and graduate school only to go out to pursue ventures that didn’t make me nearly as much money as my employment as an analytical chemist.  I use to tell him that if it wasn’t for the confidence and knowledge that I learned through all my educational experiences that I would never had the ability to pursue self-employment.  He was always quite aggravated about my self-employment goals.

Index by Education Level

Figure 2. Index by Education Level

The data shown in the Kauffman report seems to suggest that most are not like me.  Figure 2 shows the index for entrepreneurs by education level.  Those who have attained at least a high school education have a much smaller index than those who never finished high school.  It may very well be that those without HS diplomas feel more motivated to start their own business ventures because they occupy mostly minimum wage jobs.  What ever the reason, even though as a category they show a much higher entrepreneurial motivation, they account for only 18% of the new business ventures over all.   Certainly a good education will help anyone attempting to start a business.

I find Walmart to be an interesting place to visit, not because of the shopping, but because of the diversity of their customer base.  Most of the time when we make the “Wally World” trip, my wife is the one who actually goes into the store and does the shopping.  I usually sit in the car and watch people as they go in and out.  One of my favorite activities is to count the numbers of folks that appear to fall into one or more categories:  men vs women, ethnicity mix, age range, and so forth.

Index by Race

Figure 3. Index by Race

The third from the Kauffman report was quite interesting.  It breaks up the entrepreneurial index up into categories based upon origin.  Figure 3 shows the chart and by far the highest index is for the Latino category.  This doesn’t surprise me at all.  I have lived in a number of major metropolitan areas and it amazes me to see the huge number of Hispanics doing extremely hard work, e.g., landscape and lawn work, roofers, etc.  It makes sense to me that folks who are involved in such hard work and who obviously work extremely hard, would be motivated to venture out on their own when success could be a substantial increase in their income level.  I don’t know that to be the actual reason, but it makes sense to me.  UnfortunatelyBlacks still have the lowest index, though the trend over the years has gradually increased.  Everybody else still has about the same index level.  The Latinos account for about 23% of the new business ventures, the Blacks about 9%, and the Asian group 8%

What is interesting, however, is Figure 4, which shows the index for immigrants vs native born citizens, and gets back to the original reason I was doing the internet research, i.e., the comments from Mayor Bloomberg.  According to the data shown in this study, immigrants have and entrepreneurial index that is over 200% of that for native born Americans.  However, immigrants accounted for only 28% of the new business ventures in 2011.

Index by Origin

Figure 4. Index by Origin

About clayandali
Trained as a research chemist, but have been involved with Entrepreneurship for over 30 years. I have been involved in photography for 41 years. Ali is a graduate of the Ohio Institute of Photography in Dayton, OH. She loves both portrait and landscape work.

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