Depending on which research you consult, millennials are ripe for entrepreneurship as one of the most ambitious generations in recent history. Or, if you read a conflicting report, maybe millennials aren’t as entrepreneurial as we should be, or at least have the potential to be. There’s no definitive answer on the current status of new business start-ups launched by young people, and the mish-mash of data points to an entirely uncertain picture.
The Kauffman Foundation, a nonprofit focused on entrepreneurship and education, released one of the leading reports of the last year that suggests that millennial entrepreneurship is lagging behind other recent generations. Almost 20 years ago, Kauffman reports, start-up rates among 20 to 34 year olds peaked at 35 percent, a believable surge within the context of the then-burgeoning dot-com boom. More recently, in 2013, the same age group were launching businesses at a rate of 23 percent. The worry, chiefly among economists, is that low rates of entrepreneurship signal a lack of innovation and that we might be experiencing a new normal, according to CNBC.
So what’s holding us back? Forbes’ Jared Meyer, a fellow at Economics21 at the Manhattan Institute for Policy Research, penned a lengthy two-part op-ed on the barriers between young people and starting a business, but his premise might be faulty. Meyer notes that, according to a Bentley University survey, 66% of respondents have an interest in becoming an entrepreneur, 37% would like to work for themselves, and a quarter would like to own their own company. Yet, those are easy questions to answer—most of us would probably agree that working for ourselves or owning a business sounds like a good way of life—and the gap in wanters and doers in the entrepreneurial space isn’t anything new or surprising. Meyer’s argument then (see Part 2) is that government regulation is what’s holding back millennial start-ups. This might be true in part and Meyer makes good points throughout—low-risk professions like hair-braiding and interior design, he notes, shouldn’t be encumbered by overzealous licensing requirements—but to blame the government for a lack of millennial entrepreneurs also seems like a familiar red herring. Meyer’s main gripe is with what he dramatically calls “anti-competitive restrictions,” evidenced by regulations barring certain types of equity-based funding.
Another more obvious but less researched hindrance to millennial start-ups is ubiquitous student debt among the same generation. Not only are millennials consumed with the fear of looming debt, we’re taking on more and more of it all the while. A recent Allstate/National Journal Heartland Monitor poll turned back results that almost 30% of respondents cited student loan debt as their primary financial burden, according to The Atlantic. Taken a step further, 38% of respondents reported that debt has affected major life decisions such as when to get married or buy a house “a great deal.” If millennials are barely coming to terms with our student debt in the context of common life planning, how realistic is it to expect large numbers of start-ups from the same group of people?
There seems to be at least one easily agreed-upon fact about millennials and entrepreneurship: young people want to start our own businesses. There’s a lot of things holding us back, but there are also examples of millennials start-ups that have become beacons of innovation, never mind household names. With the likes of Facebook, Dropbox, and Airbnb as outliers, maybe successful entrepreneurship has hit a new low for most of us, but at least there’s a generation of ideas just like those waiting in the margins.
