For decades, entrepreneurship has been disproportionately concentrated in populations of white men. According to the most recent Census data, released in September 2016, at the end of 2014 there were 5.4 million businesses, and only 17.5% of them qualified as minority-owned—even though African-American, Latino, Asian, and other minority populations represent more than 38% of our country. Women-owned businesses accounted for 19.4% of all businesses—even though women make up just over half of the country.
These figures are clearly imbalance, but there’s evidence that they’re improving—and will likely improve further as millennials start to become more involved in entrepreneurship.The Latest Startup Activity
Entrepreneurship grew in 2016, according to the much-anticipated annual report by the Kauffman Foundation. Over the past two years, the rate of entrepreneurship has increased nearly 15%, which translates to more than 550,000 new businesses for each month during that timeframe. But what’s really interesting is how many of those new businesses are being started by women and minority groups.
According to the report, 40.6% of new businesses are started by women—a huge improvement over the 19.4% average rate of women business owners. Latino-owned businesses are also on the rise, with Latino business owners accounting for 20.8% of all new entrepreneurs—more than double the rate back in 1996.
The rates of millennial entrepreneurship aren’t particularly high—in fact, entrepreneurship in age groups 20 to 34 and 35 to 44 has increased since 2015, but is still lower than the rate back in 1996—but still, it’s the millennial generation that’s starting to push for this level of diversity.
Millennials and Diversity
So why is the millennial generation, if their rates of entrepreneurship are lower than generations past, influencing such a major boom in women- and minority-owned startups?
- Millennials are diverse. Millennials illustrate the rising diversity of our country’s population overall. They’re the most diverse generation in history, with 43% of the millennial population being non-white. The rising trend of racial diversity overall naturally means more minority citizens are available to become business owners, and older, race-driven barriers to education and resources are fading away faster and faster.
- Millennials crave diversity. Millennials aren’t just diverse—they’re pushing for more diversity, in all applications. When evaluating potential employers, 47% of millennials believe a diversity and inclusion program is important—compared to only 33% of Gen Xers. And of course, millennials are a socially active, politically conscious generation that cares deeply about social justice and equality. These beliefs drive more women and minorities into the spotlight, and reward businesses started by women and minorities with more economic opportunities.
- Millennials think of diversity differently. Millennials are also inclined to think about diversity differently than their baby boomer predecessors. Previous generations are likely to think about strict, objective standards like demographic information and representation quotas, while millennials are more likely to think about identity preservation, and the incorporation of more unique ideas and perspectives in the workplace.
Why Does This Matter?
Already, millennials are the most represented generation in the workforce (at 53.6%), and that percentage is going to grow even further before it starts to decline. What they do and what they believe matters, as it’s going to drive the next few decades of business development.
Startups also matter. New startups account for at least 50% of all new jobs created, they drive innovation, and they contribute positively to local economies.
More diversity within startups, headed by the millennial generation, means we’re going to see more equal representation of communities and populations that previously had no voice in the world of entrepreneurship. Not only does it introduce more unique, culturally diverse ideas into the mainstream, it also provides more economic opportunities for underprivileged and unequally treated populations.
Over the course of a generation or two, even a single-digit-percentage uptick in minority entrepreneurship could repair some of the socioeconomic discrepancies between white and minority populations.
Hopefully, more millennials become interested in entrepreneurship, so they may become leaders in the business world and drive diversity at even higher levels. For now, we can enjoy the benefits of higher women and minority engagement as entrepreneurs, and look forward to even more increases in representation in the near future.