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Why Entrepreneurship Is Declining

Why Entrepreneurship Is Declining
Photograph by Thomas Barwick/Stone/Getty Images

The startup rate for new businesses declined in 2011 and new entrepreneurs were more likely to go it alone than hire employees, new data from the Kauffman Index of Entrepreneurial Activity show. The annual survey, released this week by the private, nonpartisan Ewing Marion Kauffman Foundation, showed a 5.9 percent drop from 2010 to 2011, with approximately 543,000 new businesses created in the U.S. each month last year. Even with the drop, the level of entrepreneurship in 2011 is among the highest during the past 16 years. I spoke recently with Kauffman researcher E.J. Reedy, who worked on the study. Edited excerpts of our conversation follow.

Your data show a decline in the startup rate in 2011 but it’s still elevated compared to what it was before the recession, is that right?