Despite Pitfalls Entrepreneurs are Driving the U.S. Economy

Tiffany Sanchez, a young entrepreneur, runs an online jewelry business through Etsy. (Photo: Tiffany Sanchez)

By Elsie Boskamp & Jordan Bowman

New York fell two positions in the ranking of state entrepreneurs in the Kauffman Index released in 2015 and was ranked 11th in the country with regard to the rate of new entrepreneurs. Experts however, say opportunities for new businesses continue to be high.

“There is great room for optimism – it’s easy to start a business in the U.S. and it’s a very healthy environment for new businesses,” Manjari Raman, the program director and senior researcher for the U.S. Competitiveness Project at Harvard Business School, said. “Entrepreneurship has always been one of the key things that Harvard Business School alumni believe is an area where the U.S. is strong and the U.S. is improving.”

In the report, The Challenge of Shared Prosperity, Harvard Business School determined that American business environments, and opportunities for entrepreneurship, are more advanced than that of other modern economies.

“The U.S. seems to have very strong entrepreneurial performance when compared to the rest of the world,” Arnobio Morelix, an economic research analyst at the Kauffman Foundation, said.

The country ranks first in the Global Entrepreneurship and Development Institute data, and has a higher rate of entrepreneurship in people aged 18 to 24 compared to international amounts, according to the Global Entrepreneurship Monitor’s U.S. report.

Although, globally, youth entrepreneurship has decreased over the past 20 years, studies by the Global Entrepreneurship Monitor reveal that “youth are 1.6 times more likely to want to start a business than are adults.”

“At the end of the day, we’ll probably never know what ‘exactly’ fosters youth entrepreneurship because each young person is shaped by different forces,” G. John Geldhof, an assistant professor of psychology at Oregon State University, and a co-author of various research studies on youth entrepreneurship and development, said.

“If I had to draw a generalization, though, I’d say youth entrepreneurship is fostered when a young person develops in a context that supports and models entrepreneurial behaviors, and when the strengths of the young person align with the problems presented by his or her surroundings,” Geldhof said.

In recent years, some problems, including high taxes and healthcare costs and a lack of funding and labor, have put large burdens on new entrepreneurs, but researchers at Harvard predict that new businesses will continue to emerge from well-educated and networked people who use the internet and new technologies to their advantage.

“Entrepreneurship has traditionally been seen as a pathway to realizing the whole concept of the American dream,” Raman said.  “A majority of the jobs in the U.S., in one way or another, started off as small entrepreneurial enterprises.”