The percentage of job seekers who chose to start a new business in the first quarter of this year was the highest since the fourth quarter of 2013. Nearly 8% of Americans looking for a job started their own businesses last quarter.
That’s a dramatic increase from the 5% who started their own businesses in the fourth quarter of last year. For all of 2017, only 5.1% of U.S. job seekers started their own businesses, down from 6.1% in 2016.
The data were reported Tuesday morning by outplacement firm Challenger, Gray & Christmas.
Company Vice-President Andrew Challenger commented:
We tend to see an increase in start-up activity when confidence is high. The current job market is such that a failed venture does not necessarily spell total joblessness for the entrepreneur, as companies are scrambling for talent.
Those with long memories will recall a similar spate of new business start-ups in 2009 when the financial crisis drove many Americans to go into business for themselves because unemployment was so high. The current surge in new businesses may be taking place for exactly the opposite reason.
In addition to a greater willingness to take risks, new businesses have more access to small business loans. Challenger, Gray noted that new loans totaling over $8 billion have been made so far in 2018, compared to just $4.5 billion in 2017. New loans have not topped $5 billion in the past five years.
Challenger also notes that more than 88% of new businesses begun last quarter were started by people over the age of 40. He commented:
Older job seekers draw on the breadth of their experience, institutional knowledge, and networks to embark on new ventures. For those who may want to start winding down their careers, contract or consulting work allows for greater freedom in selecting projects and setting work schedules.
Another reason for the surge may be the pass-through provision of the new tax law that allows business owners to reduce their taxes by deducting 20% of qualified business income before calculating an individual’s adjusted gross income. The tax savings could be significant, depending on the size of the business.
24/7 Wall St.The #1 Thing to Do Before You Claim Social Security (Sponsor)
Choosing the right (or wrong) time to claim Social Security can dramatically change your retirement. So, before making one of the biggest decisions of your financial life, it’s a smart idea to get an extra set of eyes on your complete financial situation.
A financial advisor can help you decide the right Social Security option for you and your family. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.
Click here to match with up to 3 financial pros who would be excited to help you optimize your Social Security outcomes.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
