The Strategist

Americans file record number of applications to start new companies during the pandemic

08/20/2021 - 08:27

The number of applications for new companies in the U.S. has risen to a record high after decades of declining entrepreneurial activity.
The coronavirus pandemic appears to have triggered a wave of entrepreneurial activity in the United States, which has seen a decline in startups for decades. The New York Times reported this, citing data from the U.S. Census Bureau.

Last year, Americans filed papers to create 4.3 million businesses, the NYT notes, citing the agency. This is 24% more than a year earlier, the newspaper points out. What's more, it's the highest number in the decade and a half in which authorities have tracked the data. This year the number of applications may be even higher, the newspaper said.

Meanwhile, entrepreneurial activity in the country has been declining for the past 40 years, the NYT points out: in 1980, new business in the U.S. accounted for 12% of employers, and in 2018 - only for 8%. The decline worried economists because startups are a key source of jobs, innovation and economic sustainability, the paper stresses. 

The growth was likely triggered, at least in part, by the layoffs of millions of people in the early stages of the pandemic, the NYT writes. About 30 percent of new entrepreneurs last year were unemployed when they started their businesses, the newspaper notes, citing data from the Kauffman Foundation. That's about double the pre-pandemic rate. Many entrepreneurs also say the pandemic has forced them to rethink life and consider a different path.