Decreasing Entrepreneurialism Among Young People – What Cultural Factors are Contributing?
The economy has experienced a curious phenomenon over the past several decades. While job security continues to increase, entrepreneurialism is decreasing. In fact, over the past 40 years, the rate of new businesses as a percentage of all U.S. companies has fallen by 29%. The drop in entrepreneurial activity is even more severe among young people. While in 1996, those under 35 launched 35% of all startups, by 2014 that number was down to only 18%.
Several factors have been cited for why this may be occurring. One of the most widely cited factors is of course student debt. Capital is of course a vitally important factor when it comes to startups and when you have to pay off an average of $30,000 immediately after school, it can be quite difficult to scrounge together the funds for your new venture. There is no doubt student debt plays a role in the entrepreneurial decrease among young people. There are obvious structural issues in our economy that need to be repaired to increase entrepreneurial activity.
However, as an anthropologist and a millennial, I also wonder what cultural factors might also be playing a role. For one, it seems as if a growing fear of failure may be a contributing factor. All through their schooling, Millennials and Gen Z are often raised on the notion that their entire future depends on them constantly succeeding and never, ever falling below a perfect grade point average. Failure, to varying extents, is guaranteed for an entrepreneur. Without those coping skills, one simply cannot be an entrepreneur. Anxiety among millennials is much higher than any other generation. About a third of millennials are classified with general anxiety and according to the American College Health Association 61% of college students experience frequent anxiety. Anxiety is fear of the future. To be an entrepreneur, one really cannot have fear of the future. One must be able to leap into the unknown.
Another potential factor that may be playing a role is technology and isolation. Various studies have pointed to decreased social skills—and even less desire to be social—among those who have been raised on screens. Being able to foster connections is of course another critical aspect to entrepreneurialism. Much of entrepreneurialism is simply happenstance. Without connections, happenstance cannot occur.