Photo: Mario Tama/Getty Images
The rate of new company creation in the United States dropped to a record low in 2010, according to a survey by the US Census Bureau’s centre for Economic Studies and the Ewing Marion Kauffman Foundation.Researchers found the business startup rate fell to 7.87 per cent, Reuters reported. It’s the first time it’s dipped below 8 per cent. The startup rate was at its highest in 1987, when it was 13.02 per cent.
New firms as a percentage of all firms also decreased in 2010, the data, published on Wednesday, show. New companies – defined as firms less than five years old – were 35 per cent of all companies in 2010, down from 49 per cent in 1982, CNN reported.
Only 12 per cent of US employment in 2010 was at new companies, compared with 20 per cent in the 1980s, Reuters reported.
More from GlobalPost: ‘Cash mobs’ give small businesses a boost
“There are a lot of questions as to why the economy has been slow coming out of the recession, and it is possible that some of that could be explained by the decline in the trend of startups and new firms in the US economy,” Javier Mirada, principal economist at the centre for Economic Studies, told Reuters.
Researchers found that in 2010, 394,000 startup businesses created 2.3 million jobs while the private sector shed 1.8 million jobs overall, the Associated Press reported.
“If we are to achieve and sustain a hearty recovery, policymakers, educators and organisations that help entrepreneurs commercialize their technologies must be willing to address every obstacle that stands in the way of new business formation,” Robert Litan, vice president of research and policy at the Kauffman Foundation, said in a statement.
NOW WATCH: Ideas videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.