When you think “entrepreneur,” who comes to mind?
For many, the word conjures images of Mark Zuckerberg, Evan Spiegel and Elizabeth Holmes, high-profile millennials who launched their companies in their teens or early 20s.
But are these young founders emblematic of their generation as a whole? A recent study by the Small Business Administration’s Office of Advocacy suggests that despite the much-publicized number of young people dropping out of college to start their own businesses, fewer millennials are actually choosing an entrepreneurial path than in previous generations.
For example, in 2014 — according to data from the U.S. Census — less than 2 percent of millennials said they were self-employed. That’s less than a third of the rates of entrepreneurship among generation X (7.6 percent) and baby boomers (8.3 percent). As the study is careful to point out, part of this discrepancy can be attributed to millennials’ youth. In general, older, more established and connected individuals are more likely to start their own business than younger ones, with self-employment rates peaking at 53.
The age factor doesn’t explain away everything, however. At age 30, 6.7 percent of baby boomers (those born between 1944 to 1962) were self-employed. For generation X (those born from 1963 to 1981), that rate crept down slightly to 5.4 percent.
And then we have those pesky millennials. At age 30, only 4 percent report being self-employed. In fact, when it comes to entrepreneurship, rates are noticeably slumping across the board — except for those 50 and over, the only demographic to see a slight uptick in self-employed rates from 1988 to 2014.
So what gives? Why aren’t more millennials following in the path of the Zuck? There are multiple compelling possible reasons, including the hypothesis that after entering the job market during the financial crisis, millennials are more risk averse than previous generations. And while millennials are better educated than those that came before, they are also strapped with higher amounts of college debt, which makes borrowing more money to start a venture more difficult.
Considering all these factors, it’s not fair to blame millennials for failing to start businesses at rates enjoyed by previous generations. Despite their entitled reputation, in many ways millennials were handed a raw deal. Still, declining rates in self-employment in the demographic is a problem, not just for millennials but for future demographics (sorry, generation Z). Entrepreneurs, after all, create jobs.
Just ask Mark Zuckerberg. Last we checked, Facebook’s full-time employee count was north of 12,500.