Kauffman Index of Entrepreneurial Activity

Jerry Bowyer of NRO Fuzzcharts fame found something interesting:

President Bush’s economic policies have created an environment that is highly conducive to the prosperity of racial minorities. BuzzCharts knows this assertion might shock some people, even those who are supporters of President George W. Bush. The Bush administration clearly is better at helping African Americans and Latinos become more prosperous than it is at telling the country what it has done to make these minority groups more prosperous. BuzzCharts doesn’t do PR; we do data. And here’s what the data says: During the last five years of President Clinton’s term – as far back as the data for this analysis goes – entrepreneurial activity among blacks increased 0.02 percent. Since the beginning of the Bush presidency, it has increased 0.04 percent – twice the Clinton growth rate for the available data. Meanwhile, entrepreneurial activity among Latinos increased 0.1 percent during the last five years of Clinton’s term. Since Bush has taken office, entrepreneurial activity among Latinos has jumped 0.12 percent.

The problem with Mr. Bowyer is that he is incapable of honestly reporting on anything he reads. So let’s check with another source on what the Kaufman index data said versus Bowyer’s PR:

KANSAS CITY, Mo., Sept. 22, 2005 (PRIMEZONE) – More than half a million new businesses are started each month with the number of businesses started by immigrants and Latinos showing strong start-up activity and the rate for African-Americans growing, according to a new national assessment of entrepreneurial activity launched by the Ewing Marion Kauffman Foundation. The Kauffman Index of Entrepreneurial Activity is the first study to measure business start-up activity for the entire U.S. adult population at the individual owner level. The data are derived from the monthly Current Population Survey (CPS), a national population survey conducted by the U.S. Bureau of the Census and the Bureau of Labor Statistics.

Two especially surprising findings from the study are: (a) that the Latino rate of entrepreneurship increased from 0.38 percent in 1996 to 0.48 percent in 2004, which was higher than the white, non-Latino rate of 0.39 percent; and (b) that immigrants have substantially higher rates of entrepreneurship than native-born individuals. The average rate of entrepreneurship for immigrants was 0.46 percent compared to 0.35 percent for the native-born.

The Kauffman Index of Entrepreneurial Activity finds that over the period from 1996 to 2004, an average of 0.36 percent of the adult population created a new business each month, representing approximately 550,000 new businesses per month. The rate of overall entrepreneurship activity remained relatively constant over the period despite major changes in the economy, with the rate of business creation generally between 0.3 and 0.4 percent. The average rate of entrepreneurship was 0.36 percent in 1996, 0.35 percent in 2001, and rose to 0.4 percent in 2004. It is too early, however, to know whether the recent increase in the entrepreneurship is due to cyclical or structural factors … Entrepreneurship activity is much lower for African-Americans than other ethnic/racial groups; however, rates appear to be increasing. The average rate of entrepreneurship for blacks was 0.29 percent in 1996 and 0.35 percent in 2004.