More people are starting their own businesses now than ever before, and maybe that’s because the opportunity cost — what you have to give up in exchange for starting a business — has never been lower.
Total business start-up applications last year hit a record high of 5.5 million, according to data released by the U.S. Census Bureau earlier this month.
That’s 500,000 more applications than were submitted in 2022.
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The startup boom remains strong, with more than 1.7 million new business applications filed from January through April, according to Census Bureau data for the first four months of the year.
Why are more people applying to start new businesses?
Professor Angela Lee of Columbia Business School said: entrepreneur This may be because “there have been unprecedented numbers of layoffs from large technology companies in recent years, freeing up a lot of talent to pursue entrepreneurial ventures.”
Columbia Business School professor Angela Lee (left) and Plum Alley Investments co-founder Andrea Turner Moffitt (right) Photo by Monica Schipper/Courtesy of Getty Images
“Entrepreneurship has historically been countercyclical because the opportunity cost of starting a business goes down during economic downturns,” said Lee, the director of the Eugene Lang Entrepreneurship Center.
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Big tech companies have been laying off record numbers of employees in recent years.
Tech industry layoffs last year affected 263,180 employees worldwide, according to research firm Layoffs.fyi.
Amazon laid off the most employees last year (27,410), but Meta (21,000), Google (12,115) and Microsoft (11,158) also reported record employee numbers.
According to the latest U.S. Bureau of Labor Statistics employment report, the U.S. unemployment rate has remained stable in the 3.7% to 3.9% range over the past nine months.
Related: The April Employment Situation report showed that employers are hiring less and employee wage growth is slowing.
