Is entrepreneurship really a young person's game? You'd think so reading David Leonhard's column today in The New York Times. In an otherwise interesting piece about the Great Recession's split personality, Leonhardt drops in this comment: "The reasons for the slow churn are obviously complex. The baby boomers are moving out of the ages at which people typically start businesses."
Leonhardt goes on to cite a variety of other factors holding back the economy, including declines in manufacturing, education and infrastructure that supports business startups. I'm sure many of these reasons are valid--but the aging entrepreneur argument doesn't hold water. In fact, baby boomers are more active entrepreneurs than most other age groups.
I draw that conclusion from the latest Kauffman Index of Entrepreneurial Activity, which was released in May. The index, prepared by the Ewing Marion Kauffman Foundation, measures the rate of business creation at the individual owner level, using data from the U.S. Census Bureau's Current Population Survey.
The index shows that in 2005 Americans age 54-65 had the highest rate of entrepreneurial activity among all demographic groups; .34 percent of people in this age group started businesses. The second-highest rate was found among people age 35-44; they had a .30 percent startup rate. But guess who came in right behind them? People age 45-54 (.29 percent). Not surprisingly, seniors -- people over age 65 -- had the lowest rate of entrepreneurial activity, at .21 percent.
What's going on here?
It's no secret that boomers don't intend to retire. Most have been saying for quite a while that they intend to keep working past traditional retirement age. But that doesn't mean they'll all be staying in Corporate America. Many are burned out on big companies and want to try their hand running their own show before they hang it up for good. And their current employers aren't likely to keep them around, anyway, considering the state of the job market and ageist attitudes toward older workers. That means many will head off to start their own businesses.
All those factors will drive a major trend toward boomer entrepreneurship in the years ahead, The trend could really move into high gear if the Obama Administration is able to pass strong health care reform legislation. Many boomers are clinging to their jobs for dear life just for the employer-provided health insurance. Many would quit their jobs in a New York minute to start their own businesses if reasonably-priced health insurance could be guaranteed.
The ensuring entrepreneurial wave would have a big impact on job creation and innovation in our economy.