Older Entrepreneurs Leading the Way
May 29, 2015
Entrepreneurial activity—a measure of a country's dynamism and indicator of economic opportunity—can enhance economic growth through a number of channels.
- Entrepreneurship fosters innovation through the development and marketability of advanced, often groundbreaking products and services.
- Small businesses tend to be more capital intensive than larger ones, which accelerates the adaptation and diffusion of new technologies and deepens an economy's capital base.
- Starting and running one's own business often allows entrepreneurs to better contribute their talent to economic activities over a longer, sustained period of time than in wage and salary employment.
Since the 1990s, entrepreneurship has become especially pronounced among older households, with heads of household age 50 and older. At the same time, entrepreneurship among younger households has fallen, slowing overall entrepreneurship in the United States.
- Entrepreneurship has fallen among households younger than 50 years from 1989 to 2013, while it increased for older households during that period. Older entrepreneurship growth appears to be especially noticeable when comparing the years post-1998 with prior years—up to and including 1998—as older entrepreneurship became more widespread in the later years than before.
- Wealth has particularly grown among the subset of households from which entrepreneurs are increasingly found—white, married, college educated and 50 years old and older.
- The share of older entrepreneurs with substantial capital income—income that is greater than $5,000 in 2013 dollars—has gone up since the mid-1990s.
Policymakers interested in promoting increased entrepreneurship among older households—where economic pressures have been very noticeable—could consequently pursue two separate but not mutually exclusive paths.
- They could find ways to build wealth on a broader base than has been the case in the past, especially by emphasizing asset building among people of color, single women, and younger households.
- They could develop ways for older households interested in pursuing entrepreneurship to diversify their incomes.
Source: Christian E. Weller, "What Data on Older Households Tell Us About Wealth Inequality and Entrepreneurship Growth," Center for American Progress, May 27, 2015.
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