NCPA - National Center for Policy Analysis

Baby-Boomer Retirements Will Impact Business Start-ups

March 14, 2000

The coming wave of retirements in the labor force will alter the nation's small business landscape, predicts a new study sponsored jointly by American Express, IBM and the advocacy group National Small Business United.

From 1996 to 2006, the population of 25- to 44-year-olds in the work force will decrease by nearly two million.

  • Since this age group is a primary source of new entrepreneurs, the result may be a temporary decline in the number of start-ups.
  • Although seniors may continue to work part time as consultants or in hobby-type businesses, they are not expected to launch enterprises utilizing employees.
  • The failure rate for new businesses is nine in 10 now, but more could close than open in coming years, simply because of demographics.
  • While venture capital is currently flooding into technology enterprises, the distribution of capital could equalize as technology matures and is more broadly dispersed among a range of business types.

Recruiting and retaining skilled workers will become an even greater challenge in the future. Small firms will have to increase training of their existing work force, hire a greater number of older workers and create more family-oriented policies geared to older workers, the report predicted.

Source: Eleena de Lisser, "Retiring Boomers to Cut Start-Up Launches, Study Says," Wall Street Journal, March 14, 2000.


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