C’mon, Millennials! The economy needs you.
Just when there were signs young Americans are finally moving out of Mom and Dad’s basement, analysis from The Wall Street Journal found the share of those under the age of 30 who own a private business is at a 24-year low. The analysis is based on recently released data from the Federal Reserve.
So forget that image of Mark Zuckerberg clones in hoodie sweatshirts taking simple ideas and turning them into multi-billion dollar enterprises. "It is surprising," says Yahoo Finance Editor-in-Chief Aaron Task. “It definitely runs counter to the media narrative…that [young people] don’t want to work for big corporations, that they’re going to go out and start their own thing.”
Just 3.6% of households headed by Americans under age 30 own stakes in a business. That's down from 6.1% in 2010 and 10.6% in 1989. However, the number of new U.S. businesses also fell in the first quarter of 2014, according to The Wall Street Journal analysis and U.S. Labor Department data. “American entrepreneurship is starting to fade,” says Task. “That’s a problem because that’s where a lot of jobs are created. That’s where all that innovation comes from.”
What’s standing in the way for many young people is a fear of failure. According to a survey out of Babson College last year, more than 40% of 25-to-34-year-olds who saw an opportunity to start a new business said fear of failing at it would hold them back from the entrepreneur route. That number is up from 23.9% in 2001.
Task says it's fallout from "helicopter parenting" where everyone got a trophy for just trying. And it didn’t matter how well you did. "The Mark Zuckerbergs of the world and the Evan Spiegels of the world, they are the rare exceptions. But it’s not [because] they are the rare exceptions that they are so successful. It’s that they're the rare exceptions that they are trying.”
The ballooning student loan debt that continues to drag on this generation could also be holding back Millennials. Nearly 70% of 2013 college graduates finished school with an average of more than $28,000 in debt. That’s prevented many young people from forming households. However, the number of young adults living at home with their parents has leveled off in recent months-- thanks to an improving job market-- and is now dropping slightly, according to Goldman Sachs Global Investment Research’s analysis of Department of Commerce and Department of Labor data.
Could entrepreneurship among young people see a turnaround too? The climate may be right for young people to start a business before they have spouses, kids, mortgages, and car payments. But they have to be willing to take the risk. “You have to fail to be an entrepreneur," Task says. "Every great entrepreneur has had multiple failures before they find their successes so the fact that they are afraid to try is really disturbing.”
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