Good Bye, Entrepreneurship: Older Companies Surviving, Newer Businesses Struggling

BN-DY655_entrye_G_20140804105801Editor’s Note: More businesses are failing than starting up. That’s not a good sign.

Not only is the American population aging, businesses in the U.S. also are growing older.

Older firms are increasingly controlling the largest market share in different sectors of the economy, according to a paper by the Brooking Institution’s Robert E. Litan and Ennsyte Economics’s Ian Hathaway. By 2011, the portion of U.S. businesses aged at least 16 years reached 34%, compared to 23% in 1992. Moreover, those mature companies went from employing only 60% of private-sector workers in 1992 to employing nearly three quarters of the private-sector labor force in 2011.

The report attributes this trend to declining entrepreneurship, among other reasons. The rate of new business creation in the U.S. has been constantly shrinking in the past three decades. “The decline in new firm formation rates had occurred in every U.S. state and nearly every metropolitan area, in each broad industry group, and in all firm size classes,” the authors explain.

This article continues at Blogs.wsj.com

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