Makin' Money

Remember, older entrepreneurs start companies, too

Chris Farrell May 11, 2012

Entrepreneurship and youth seem synonymous. Think Facebook and Twitter. The popular image of older folks seems to be that they’re set in their ways, unwilling to challenge the established order, showing little interest in the latest technologies and organizational ideas. The stereotype is wrong, I note in this Bloomberg Businessweek story:

Although new business formation by the 55- to 64-year-old age group declined in 2011, its share of entrepreneurs is up sharply over the past 15 years — from 14.3 percent in 1996 to 20.9 percent in 2011. Business creation was lowest among the youngest age group, 20 to 34, over the same period, according to economist Robert W. Fairlie in the Kauffman Index of Entrepreneurial Activity, 1996-2011. Other data sets come up with a similar story. For example, looking at 2003 Census data, those 65 and older had a total self-employment rate of 26.9 percent, calculates Edward G. Rogoff, economist at Baruch College, City University of New York. The comparable figure for those 25 to 34 years of age is 7.2 percent.

Numbers like these convince Dane Stangler, researcher at the Kauffman Foundation, that U.S. could be on the “cusp of an entrepreneurship boom — not in spite of an aging population but because of it.” Adds Ting Zhang, economist at the Jacob France Institute in the Merrick School of Business at the University of Baltimore: “Older people with experience have an entrepreneurial edge in a knowledge-based economy.”

It’s also intriguing to note that small-business creation jumps in the year when people qualify for Medicare. They don’t have to worry about their health coverage anymore. My guess with the aging of the baby boom generation is “you ain’t seen nothin’ yet” when it comes to starting new businesses.

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