WASHINGTON—For many Americans and immigrants arriving at our shores, the dream of America is most of all the opportunity of starting one’s own business. From the nation’s perspective, the benefits are undeniable—entrepreneurs expand the economy, creating new jobs and wealth.
People over 50 can start businesses. This growing subpopulation should be encouraged to continue to work and put off retirement a little longer, according to policy experts.
According to one participant at “National Conference on the Entrepreneur Imperative (NCEI) for Engaging People 50 and Older,” entrepreneurship is not just for the young. Sixteen nationally recognized experts on entrepreneurship and aging provided the latest global and U.S. data on trends and studies at the conference at the National Press Club on Nov. 7.
Seniors Can Help Cure Unemployment
With the slow recovery from the Great Recession (officially from Dec. 2007 to June 2009), anemic growth, and unemployment still hovering just above 7 percent, more senior entrepreneurs may be the solution, or part of the solution, to boost economic growth.
Advocating senior entrepreneurship was William Zinke, president, Center for Productive Longevity (CPL), based in Boulder, Colo. Zinke said Americans overwhelmingly believe “entrepreneurship is a fundamental driver of economic growth now and in the future.”
Zinke and several other participants noted that the United States has shifted from industrial to a knowledge-based economy, where physical strength has become relatively less important than mental faculties. People are healthier, living longer, and can work “beyond the traditional retirement age of 65 established in 1935 by the Social Security Act,” according to the press release of the CPL for this event.
CPL hopes to build a national momentum to substantially increase entrepreneurship among people over 50. Zinke said he believes that “entrepreneurship will not only provide jobs for people over 50, but also increase employment and economic growth on the national level.”
Tougher Jobs Picture
Older workers have generally had a harder time than younger workers from the recession. For people 65 and over, unemployment is less at 5.7 percent but well above previous recessions, including the 1981 recession when the figure for this group was 4.3 percent, said Dr. Ting Zhang, assistant professor at the University of Baltimore.
Dr. Zhang said that older wage and salary employees are more likely to be laid off, take longer to find a new job, and have poorer prospects for finding another job. Consequently, seniors who become self-employed could benefit themselves while increasing employment and economic growth nationally.
Sergio Arzeni said, “Many older people want to remain economically active.” Arzeni is director of the OECD (Organization for Economic Cooperation and Development). Entrepreneurship could help prolong the working lives of seniors, he said.
However, the obstacles are many. An older individual may already be retired or home-based and lack networks. He or she may lack entrepreneurial skills or have outdated skill sets.
Public policy can increase awareness, improve access to skills and to capital, Arzeni said.
“Entrepreneurship is not age-specific; it attracts everyone from youth to seniors,” stated the Global Entrepreneurship Monitor United States 2012. But there are significant age differences. Older entrepreneurs tend to be established, with businesses they have built over their lifetimes, compared to younger entrepreneurs, according to GEM.
GEM data provides the most comprehensive source for understanding entrepreneurship globally. Donna Kelley, professor of entrepreneurship, Babson College in Massachusetts, and an author of the GEM study, said it is the largest data source on entrepreneurship. About 200,000 people were surveyed in 100 economies over 15 years.
Workforce participation rates vary by age. Worldwide, about four out of five persons in the 24-54 age group are in the workforce compared to less than one in five in the over 65 age group.
Among those participating in the workforce, 19 percent of the 65 and older seniors are engaged in entrepreneurial activity compared to 15 percent for the mid-career age, 45-54.
Older entrepreneurs have some advantages: experience, networks, financial assets, but typically have disadvantages of declining health, age discrimination, “less ability to ‘bet the ranch,’” and “less expertise with newer technologies,” said Kelley.
Kelley emphasized that the 45+ population in the U.S. compared to younger age groups is more likely to see opportunities. The GEM data also show that older entrepreneurs have less fear of failure. For late career and seniors (55+), only 20 percent worry about failure compared to almost one-third of younger age groups, 18-44.
Dr. Ralph Sorenson, president emeritus of Babson College in Massachusetts, said that start-ups have been the source of most new “net jobs” in the United States. Sorenson displayed a chart which showed established firms tend to shed jobs while the startups tend to add jobs.
Sorenson, who founded Babson College’s Center for Entrepreneurship, displayed a list of the top 30 business founder job creators. It totaled to 2,081,000 new jobs. Number one for creating new jobs was Home Depot, which employs 193,000. Number two is Best Buy at 180,000. Number three is Starbucks at 142,000.
However, Sorenson warned, “Only one or two out of 10 innovative start-ups truly succeed.”
The capital needed to start an enterprise average to just under $22,000, according to Sorenson. Seniors over 65 among the age groups are most likely to use personal and family savings, he said.
Sorenson said that there is a “huge opportunity” for the baby boomers to bring entrepreneurial thinking and action to the Not-For-Profits, such as churches, charities, and arts organizations.