The United States has a startup problem—one that encompasses the number of new firms being born, where those births take place and the demographics of who gets to participate in the startup economy.

First, the numbers. Recently released data from the Census Bureau show that startups remain hovering near all-time lows when it comes to their share of both the U.S. business community and total employment. And, the total number of new firms launched each year has fallen as well—even as the economy grows larger and larger. Only 404,000 new firms were created in 2014, compared to an annual average of 498,000 from 1977 to 2008. To put that into perspective, in 1977 the U.S. economy generated 95 startups per $1 billion of GDP. By 2014, that ratio had fallen to only 25 startups.

By: John Lettieri, Kauffman Foundation

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