Millennials have recently developed a reputation as the entrepreneurial generation, thanks in part to a study funded by GoDaddy that suggested more millennials own businesses and express a greater desire to be self-employed than previous generations.
Academia was very quick to fact check this assertion, and many studies contradicting this hopeful claim have since emerged. One study even went so far as to call millennials the generation of un-entrepreneurs, despite being more educated on average than prior generations.
Here at the Suru Institute, we conducted our own analysis. Our findings somewhat support to the claim that millennials are less entrepreneurial than previous generations when they were the same age, but we find that older groups in today’s society are also less entrepreneurial than their counterparts from previous generations. We also argue that the situation is not as gloomy as many others have claimed.
Methodology
Using data from the IPUMS Community Population Survey (CPS), we divide cases into three groups separated by 15-year intervals. The first includes 2019 data. We chose to analyze this year because it was the most recent year before the COVID-19 pandemic hit. We further divided the 2019 sample into “Millennials,” who we define as individuals between 25 and 40 years of age, and “non-Millennials,” who included everybody older. For the other two groups, we used 2004 and 1989 data. We compared the probability of being self-employed for 25–40-year-olds in 2019 to that of the same age group in 2004 and 1989. Likewise, we compare the probability of being self-employed for “non-Millennials” in 2019 to individuals of the same age range in previous cohorts.
Following the methodology commonly used in labor market studies, we limited our sample to heads of household and to individuals between the ages of 25 and 54, which is considered prime working age. Thus, the older groups in each year included individuals between 41 and 54 years old.
Results
Figure 1 shows that the proportion of self-employed 25–40-year-olds declined from 1989 to 2004 and then again from 2004 to 2019. In this way, our findings offer modest support to academic studies suggesting that millennials are less entrepreneurial than previous generations when they were the same age. It is worth mentioning that this outcome is based on which occupation the respondents claimed were their primary sources of income. This does not capture the self-employed who have multiple jobs and earn most of their living from another form of employment.
Figure 2 suggests that the same downward trend in entrepreneurship is also taking place among older citizens of prime working age. That is, the “non-Millennials” in 2019, which consist mostly of Generation X, also were less likely to be self-employed than 41–54-year-olds in 2004 and 1989.
These findings suggest that lower levels of self-employment among Millennials is not necessarily indicative of lower motivation or desire among that generation in particular. Instead, it suggests that something about the economy in general has changed to make all age groups less likely to become entrepreneurs.
Fashionable though it is to blame Millennials for the bulk of society’s problems, the real cause is likely more complex and may possibly have to do with changes in taxation, regulation, or economic structure over time. If we want to argue that fewer Millennial entrepreneurs is a social problem, we need to direct our attention toward macro level causes such as these to find the solution.
Main image by Diego PH via Unsplash
About the Author
Scott Tuttle is the founder and president of the Suru Institute. He is also a doctoral candidate in the sociology program at the University of Kansas, where his research areas primarily include immigration, labor markets, and racial inequalities. He previously earned his master’s degree in rural sociology from the University of Missouri in 2012 and his bachelor’s degree in psychology from Missouri State University in 2007. He served in the U.S. Peace Corps (2008-2010) in Niger, West Africa, and also lived in Mexico for two years, working as an English teacher (2013-2015).