Kauffman Index of Entrepreneurial Activity, National Report 1996-2005

Abstract

The Kauffman Index of Entrepreneurial Activity, introduced in 2005, captures the dynamic nature of business creation in the United States. Presenting the percent of the population of adult non-business owners who start a business each month, the Kauffman Index confirms the relative steadiness of the national interest in business creation and suggests that American optimism continually fuels new start-ups. This measure of the rate of business creation at the individual owner level captures all new businesses – even those that fail after the first month. It includes both businesses with employees and those without, businesses that are incorporated and those that are not, and all industries, from construction to high-tech.

While estimates from the Bureau of Labor Statistics indicate that more than ten percent of the U.S. workforce is self-employed business owners, government sources do not report the rate of business creation or entrepreneurial activity on a regular basis. The Kauffman Index uses matched data from the 1996-2005 Current Population Survey (CPS) to examine changes in the rate of entrepreneurial activity in the United States over the last decade. New CPS data available for 2005 and a refined definition of the Kauffman Index allow for an updated report this year, with consideration of trends over the 1996-2005 period and separate estimates for specific demographic groups.

Keywords: entrepreneurship, index, Kauffman Foundation, KIEA, Current Population Survey