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"Peak Dream" - The Death Of The Young American Entrepreneur
Despite the anecdotal evidence plastered daily on financial media channels of a scruffy, young, upstart working from his parents' basement and creating the next great social, mobile, analytics, cloud app worth a cajillion dollars, from nothing but tween eyeballs, the sad reality is the 'American Dream' for young Americans is over. As The WSJ reports, the share of people under age 30 who own private businesses has reached a 24-year-low, according to new data reflecting a generation struggling to find a spot in the workforce. While there are numerous possible reasons, one professors worries about the systemic aspect as "the fear of failure is the measure we should be most concerned about."
Overall, the U.S. “startup rate”—new firms as a portion of all firms—fell by nearly half between 1978 and 2011, and as The Wall Street Journal reports, the share of people under age 30 who own private businesses has reached a 24-year-low, according to new data...
Roughly 3.6% of households headed by adults younger than 30 owned stakes in private companies, according to an analysis by The Wall Street Journal of recently released Federal Reserve data from 2013. That compares with 10.6% in 1989—when the central bank began collecting standard data on Americans’ incomes and net worth—and 6.1% in 2010.
The Journal’s findings run counter to the widely held stereotype of 20-somethings as entrepreneurial risk-takers.
...
The proportion of young adults who start a business each month dropped in 2013 to its lowest level in at least 17 years, according to the Ewing Marion Kauffman Foundation, a Kansas City, Mo., nonprofit that focuses on entrepreneurship. People ages 20 to 34 accounted for 22.7% of new entrepreneurs in 2013, down from 26.4% in 2003, it found.
The plunge in business ownership captured in the Fed survey is an “interesting and worrisome finding,” said John Davis, faculty chair of the Families in Business Program at Harvard Business School. If the trend continues, he said, the U.S. economy could become less vibrant.
“We need startups not only for employment, but also for ideas,” Mr. Davis said. “It’s part of the vitality of this country to have people starting new businesses and trying new things.”
Costs are one part of it...
The costs of operating many types of small businesses have come down in the past decade, with the greater use of technologies that reduce labor costs. But young entrepreneurs face formidable financial hurdles.
The average net worth of households under 30 has fallen 48% since 2007 to $44,354. More than half of 18-to-29-year-olds reported one or more financial problems in the past year, a 2014 Pew Research Center survey found.
Their poorer financial condition hurts young graduates’ ability to tap their own savings, draw equity from a home or obtain bank loans to cover their startup or ongoing business costs, said Karen Mills, a senior fellow at Harvard Business School and a former head of the U.S. Small Business Administration, which sponsors programs to help small firms obtain financing.
But there is a bigger concern...
The decline in business ownership among young graduates also reflects a relatively low appetite for risk. Young people have less confidence, said Donna Kelley, a professor at Babson College. In an annual survey she oversees, more than 41% of 25-to-34-year-old Americans who saw an opportunity to start a business said fear of failure would keep them from doing so, up from 23.9% in 2001. “The fear of failure is the measure we should be most concerned about,” she said.
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The core risk-taking backbone of America is being crushed under the weight of student debt, regulation, and short-memories of their parents suffering in the last 2 decades as 'wealth' has been eviscerated twice thanks to Federal reserve boom-bust cycles.
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Why take risks? Why bother, when work is punished?
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Exactly, the big money spends money to legislate up and coming businesses out of business...
The only way you can profit is by violating regulations and cutting corners (in terms of compliance).
We own a construction company, my employees need around 10 certificate cards (cost about 30$ each) from the FDNY just to transport one gallon of gasoline from the gas station to the generator we operate on the job-site.
And the questions on the tests to get these cards are bullshit, like "what the most popular sports teams are in this stadium" etc... meaningless questions.... and these cards constantly expire and need to be renewed.
And thats just one criteria, we have binders of "cards, certificates, licenses, permits" god knows what else, we have all t his shit and im sure somewhere out there we are missing something we supposedly "need" in order to work "by the book".
All this shit is BULLSHIT, its pretty much just forcing us to give every department in govt 300$ a year for the hell of it.... everyone in govt just wants a cut of our business.... and they are willing to cause us problems and delays to get it.
The basic attitude of the head people in govt is that "you are a contractor, no matter what we do to you, you will find a way to make money". . . . and then when you refuse to do the work for their departments "budget" they look at you in shock.
The city treats contractors with a bit of discontempt, they want you to do the work for free almost, and they want the world promissed to them (depending on the department), there are a few city agencies that "get it" and work with you.
The retail computer sales business I started in 1978 that ran for 17 years could not be done in today’s government control freak environment. The choices that were open to me as a businessman back then have been shut down with the “everybody gets theirs upfront” attitude. The sacrifice that I and my employees made back then in the first three years, when the start up costs was the heaviest, cannot be done today.
In 1978 health and dental costs of the business were borne by spouses and parents in the first 3-4 years. The retail sales in that start-up period were not large enough when combined with tight margins to allow for these benefits. It was tough to just pay minimum wages in 1978. In slow periods I often did not get a pay check. Minimum wage levels of 15% back then would have killed the business; The business had no leverage in “moving computer prices” to pay for a “living wage".
Those employees that stuck with me profited. Once sales grew to a stable acceptable level I had regular paychecks, we all gained medical insurance, employee wages doubled, time off increased and we started medical/dental flexible spending accounts. Any employer in their right mind is going to do this rather than risk losing people who make you profitable.
But today we hear “…employers are villains who steal from their employees…so big government must mandate how all employers run their businesses…” Until this attitude changes the American dream is dead…
Its the Atlas Shrugged scenario.
"Profit is not fair"
"Employees are slaves to the emplyer"
"You didn't build that"
"Your Rearden Metal is not safe, the govt demands you hand over the patents because its not fair that you can make a better product than the other steel producers"
Society is heading for collapse, the only numbers that look good are the govt cooked numbers and central banked inflated assets.... a stock market will rise perpetually when the primary buyers are corporations being funneled counterfeit federal reserve cash fresh off the digital printing press.... meanwhile retail participation in the markets its almost non-existent!
So Dear Pragmatist,
Did either you or Ayn Rand get China to remove barriers to the US financial sector?
Narcissistic ideologues are very dangerous people.
Did you?
With what? I wasn't old enough to vote when Clinton was elected into office. I didn't vote for Bush or Obama. Ron paul's Golden Loopholes are not going to enable me access to get this done.
Dipshit, where do I get the money to lobby your corrupt INCOMPETANT WHITE BABY BOOMER TRASH with? Stupid. Apparently you're the delusional one taking out free loans from the Mudurabah.
Libertarians = the same fucking incompetant useless idiots as the republicans and democrats.
DUDE, START WITH A LUDE AND PROGRESS QUICKLY TO GALLONS OF PEPTO...
If that hits zero, you live in an Idiocracy world where the only store down the block is a big box store that employs your entire town like a walmart plantation.
http://www.standupamericaus.org/sua/wp-content/uploads/2013/06/Idiocracy...
Private ownership of business has to be constantly rising or you WILL endup with a collapse scenario, a society can not operate for long without private enterprise.
Not according to Hillary: https://www.youtube.com/watch?v=PyUoCiWsTfI
In 1987 I got my MBA. The market crashed, there were no jobs. But my education only cost me $18k. My school loan was $125 a month. I had no downside risk, I could start a business. I did and after years of relentless work was able to cash out. How the hell can this be done today. Just the cost of an education and the loans stop anyone dead in their tracks. The fear of having this debt hang over ones head for eternity kills the entrepreneurs drive and motivation. Over the last twenty years young people gave been conditioned to believe that only businesses funded by VCs are successful. What a crock of shit....most business are started the old fashioned way...lots of freaken hard work and effort....a bit of luck....and doing what ever is required to succeed. I tell young people today...if you want to succeed stop paying your school loan, buy an one way airline ticket to Asia or South America, and start a business. Work hard....spend wisely....live small....and when you reach your goals and achieve the financial success you set out for.....then negotiate to pay back your loan to "uncle sugar"...that is if you ever plan on moving back. My guess is most never will move back. Opportunity in Amerika was taken from its youth by derivative wielding bankers and corrupt politicians who bend over for ever dropping dollars. These politicians will take it in the Arse for all long as the FED prints USD.....and will continue with what ever currency follows...
About a month ago I talked with my cousin who still runs a small business in sheet metal. I asked him point blank “…how are small businesses going to survive with all this government intervention…” He thought for a minute and said “…people are going to do what they can to survive. For many today its black market activities. In the black market there are no invoices or pay records to tax. We do more and more of it because we have to get the work done. I see guys all the time say ‘pay me cash and I will do it for 30% less’ …what do you think I’m going to do kill my pay check. Nope it does not work that way. So I to take cash from jobs and use it to pay the 30% less guy…”
The black market economy is the only economy keeping food in peoples bellies in this country, if we ever created a cash-less credit based society where cash was completely removed from circulation, you would have an economic crisis every weekend until the system froze and came to a stand-still.
Even in a cashless society people will find a way to barter to get what they need.
I live in a college town in California. When talking to these kids you quickly see why we are tucked. They don't believe that if you work hard that you can become successful. They have the mentality of the min wage crowd who thinks they should be paid $15/hr for doing a basic job like busing tables or food prep.
They have no idea what it takes to run a business whatsoever. Hell they can't even see when one of their friends who has an idea, pursues it and starts her own juice business. It took her some time but she built up a clientel and is doing better. This generation expects everything to be handed to them.
It's a generation that doesn't know how to deal with failure but wants all the success. This is what happens when you raise a few generations of children without a father in the home.
We are a generation raised by women. I think a woman for president is the last thing we need now.
For almost two decades prominent scientists and sociologists have dissected the single-parent theory, and found that while it does produce more narcissists, the mother is invariably forced into a position of good cop, bad cop. Thus, the children are actually more resentful of their mothers than the normative study components with two household parental figures. So the back half of your post is not right.
The first half is relatively true. I would emphasize the fact that this current generation has almost endless computing power at its fingertips, yet barely any of them know how it works. Talk about technological impotence, that's the bane of these kids.
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I hear what you are saying but there is one thing that never really gets discussed in the single parent debate, or at least I've haven't read it.
What I'm referring to is the life lessons that are not taught by the parents.
Teaching you about life's pitfalls and how to navigate them. How to overcome and perservere. About trust, friends, women or money or any of the other things that we will encounter in life.
To be honest I learned more about life and myself in the past 10 years then anything I learned from my parents. I was lucky to have mathematical and reading comprehension as a built in skill, I just understood them.
Most kids don't and are frustrated because not only are they not taught by their parents but depending on where they are when the hit first grade contributes to that frustration.
Parents are too busy working two jobs and having careers that they are forgetting their children in the process. When you grow up without any real grounded relationship with your parents you can tend to be resentful. To a child it appears as though having a fancy house and nice cars are more important than the child. This may add to that resentment.
Other resentments about the mother tend to come from poorer families where the mother is just having kids to get a bigger welfare check and not because the kid was loved. One mother with 6 kids from 3-6 fathers doesn't paint the mother in a good way.
Especially in the black community. Why do you think in all those rap songs the women are referred to as Ho's? Maybe they view their mothers as prostitutes for having more kids jut to get a check.
I grew up with both parents. They're still in their first marraige.
I learned all of what you posted from a coach. IN SPORTS. SPORTS = last thriving sector in the US before the boomer garbage trashes that too. Not my asshole parents.
Excuse some of us for picking up where parents fucked up. And yes parents do fuck up. it's the trend, the draft dodging BABY boomers are too scared to defy trends because they were told by teh Beatle madia MSM that they were supposed to hate themselves, do drugs and thrive on negativity. Which is all they accomplished. Except for Steve Jobs to an exten.
But according to you, bad parents are all we get?
You find what you're looking for. You must think that the only minorities are black and brown too. California is one of the most violent states thanks to the boomer garbage drug crap and the realtors really mugged people with that garbage ponzi scheme, these students actually get it. 98% of a recent Navy NON OFFICER bootcamp grads have college degrees.
Back in the day, anyone with residency in California could easily take classes at a community college for like- $11/credit hour. Not any more.
So mind you, living in a deserted college town in CA with no opportunities so you're dealing with the more affluent kids to begin with.
The only people I know who are able to start a company are boomers, the ones who aren't doing excessive meth and flipping real estate with krap loans. And they are THE laziest msot incompetant s***s whocome up with THE worst ideas. Or the ugly white threatened boomer garbage who makes up the majroity set up all of this red tape to Venture Capital and the like to block growth.
And you have NO idea what it takes to get a loan to start up a company. NO CLUE.
I was just interviewing for an internship for Private Equity. You know, the UNPAID internship in a violent overpriced shithole called the U.S. They and many others spend their entire days coming up with financial models to see if they fit the manager's objective. They can go through hundreds, no THOUSANDS of company's financials and pick 3 out of the ENTIRE year. In your ugly Duhmerican system, Wall Streeters who destroy wealth and value take home 6-7 figures a year. A qualified person grabbing funds for equity is getting shit. $35,000/year IF they get paid - and they are the kids from known institutions. Oh btw, they're asian you racist stupid shitbag.
Their investors are really hungry for a company to fall in love with. They do this with employees- it's a zero sum game and only a few affluent can afford to get it. That's BEFORE we get into what it takes to get a BANK ("debt") loan. You know, those unsecured notes, revolving lines of credit, bank debt and the like. Companies like Merrill Lynch and BNP Paribas were underwriting CHINESE companies. IN CHINA. NOT THE U.S.
After the subprime collapse, it was literally impossible to get a bank loan from the bailed out bank holding companies. They don't hand out loans like they do candy, this is the US quantitative easing. Not the Quantitative Easing during the 19th century with the Bank of England.
I agree with the other poster. A lot of these "bank of alimony slut moms" are horrible. They get their kids jobs through connections. Out here, it's only nepotism-not qualifications. These women care NOTHING about what's going on outside of themselves let alone how busienss and economics works.
ie. Alimony slut mom has asshole son who flunked out of an easy university, too stupid to spell his own name correctly and gets fired from XXX firm for stealing. So she just gets him a job at XYZ bank that puts everyone else under scrutiny for a background check but he gets the job! Oh btw, he's white but it would've happened to a latino too.
The dads are the ones giving kids advice on how to handle layoffs, who they want to meet, what to wear to an interview, what to carry your resume in--- and I only know this becasue my biological parents are still in their first marraige. The smart kids are the ones that hate their selfish mothers- I do (and yes my parents are STILL together). The idiots are the ones who succumb to mummy's inferiority complex and THEY are scary. They are the ones who have these unrealistic expectations of life, marraige, kids, etc. But shockwaves of warnings preceed their introduction, you will always know who they are.
As for you white loser. You live in a college town. How many classes have YOU taken? I put up with a move to LA because it has 9 GOOD universities. THe boomer utopia shits fucked up the areas around the college campus for the same reason they implemented the "overrepresented minority clause"--- its because tehy chose to be stupid and they're now threatened. Thats' THEIR Fault.
BTW, you act as if EVERy last student can afford or qualify for admissions.
Man you are STUPID. You're a fucking idiot. Here the US really needs to set itself up for success in the global market and you're putting the victims down.
Why do you exist?
We have an angry boy here, where is the acceptance of your own actions? Micro and macro or perhaps better said inactions?
If you were writing in 1870 you would be whining about impossible odds rather than turning your energy to overcoming and prospering despite said impossible odds. History is a good teacher for those who will learn.
Barnaby said it well; Entrepreneuring is hard.
onward
I am a white Baby-boomer and I find your post offensive.
I agree.
If you look at the woman who the Progressives are likely going to choose for the Democratic cadidate for 2016, she is on record as saying that businesses do not create jobs; government does.
https://www.youtube.com/watch?v=RXTVZoYGU4Q
Entrepreneuring is hard.
I'm an electrical engineer and people would be surprised at how little college knowledge helps one create an innovative product. College is a colossal hoax and Americans have been massively duped by the false aura of college aducations.
Most of the technical knowledge taught in college are technical constructs created by professors with little practical use. In fact most of the time applications to reality are entirely bypassed which makes me suspect the professor doesn't fully understand his subject matter and doesn't want to admit the construct is useless.
America the Innovation Nation is a collosal hoax and of course the massive burdon of taxes, social programs and regulation is the final insult.
Western "civilized" society is a massive hoax and the many inflated and bogus institutions and paradigms like college knowledge, the police and military, monopoly allopathic medicine, the massive welfare, regulatory and social state and many more deceptions and hoaxes are about to collapse with the devaluation of global fiat currencies.
The future belongs to the low cost producer of goods produced by independent, non-government or anarchy societies run by independent, extremely capable, healthy and courageous individuals using guns, shame and private contracts to interact.
Let the great culling of the masses begin.
see Anarchy by Anonymous for a vision of the future
https://www.youtube.com/watch?v=vpITUBX0FV4
I have run a small business with no employees for 17 years. It is next to impossible to hire people without being suffocated in "red tape". The environment here is the usa is very unfriendly to small businesses. Just to hire one employee forces you to deal with numerous state and federal agencies and deal with too much paperwork compliance. Under the present government regulations, it is better to just be a sole proprietor.
In the northeast especially in the state of NY and NYC it is worse than that Massachusetts and Connecticut also bad with all the taxes permits workers comp rates and commercial auto insurance. Most young people are just Corporate cog steeple they believe anything said by the uppity faculty of such schools like Boston University, Boston college and all of the UConns. All are now just hangouts for the very upper middle class and upper class
Your are most likely not reading this article and comments if:
your were born wealthy
already made a lot of money
have a comfortable corporate or government job.
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Having come from nothing and having "made good", please consider this:
The self-made person has to be focused on the ultimate goal - the acquisition and build-up of after-tax capital.
That buys you security and allows you to take on new risks. If you amass a huge fortune, what do you do:
Get better security by - buying Government - destroying competition - minimizing taxation - mining government dollars
There is one theme: Saving. Saving costs. Amassing cash. Avoiding debt.
In the beginning - when you have no money - you have to do almost everything yourself to save costs. Many are unwilling to get their hands dirty. Many want everything now and are in debt. You can not start a business and be burdened by debts from things not related to your business. Government and big business always has and will continue to hassle you. There are work-around solutions. You are going to be in some kind of service business. If you have a job, keep it. Set up something on the side and tell no one about it - most especially no one at work. Failure - no problem for a young person with no net worth. You can go bankrupt every 7 years and avoid personal bankruptcy by running everything through a LLC or Corp.
Plan your work. Work your plan. Good luck to all.
"If you amass a huge fortune, what do you do:
"Get better security by - buying Government - destroying competition - minimizing taxation - mining government dollars"
That's one aspect of the tragic flaw in this formula for success: as the ambition of the hard-working entrepreneur morphs into the greed of the successful player, it attacks and saps the very foundation that nurtured it.
The challenge: as the capitalist system as it has evolved and exists today implodes, how can it be renewed, how can the power of entrepreneurship be revived, without repeating this cycle?
So many if not most young people in the Boston area and the Uppity mestrowest suburbs mainly Brookline, Newton and Wellesley fit this description. Born wealthy and from old Money daddy either works for the state government or one of the schools that charge $60,000 a year they are set when they graduate. Daddy uses his connections. And for the tech jobs there is no shortages of H1bs from Asia.
Want Ad - Anyone know a Mech. engineer in MN who is conversant and entrepreneurial, I have cash work for them..
As a small biz owner. Problem is too much government. The govn't is into everything and wants a piece of everything. It's the mafia with unelected bureaucrats acting as muscle. They you have ridiculous administration costs like health services accounts, a ridiculous tax code, ridiculous and conflicting laws at every level of government. Then you have tax exempt sycophants like Harvard who from one side of its mouth laments about the reduction of small business and from the other side of its mouth engages in competing tax exempt businesses using government/taxpayer money. Charities are one thing. Tax exempt businesses where a viable product or service is offered, all should have the same tax status.
Hard to Refute Jim Rickards in his Video on Project Prophesy on Moneymorning.com.
- Attack on US Treasuries, Fed Balance Sheet, Fed Reserves, Fed Liability
- Fall of US Petro Dollar
- China's Steal Gold Run (Buying)
- Coming China Collapse
- IMF Special Drawing Rights Plan to replace USD which is in Peril from Dollar Printing
Next Collapse will be Bail-Out by IMF.
But who Runs the IMF: Kings, Royalty, Dictators, Communists.
- $4.3 Trillion in unstable FED Liabilities with only $56 Billion in Capital Reserves
- Stock Market Capitalization is 203% of GDP, it was 183% prior to the 2008 Crisis, and it was 204% before the Dot Com Stock Crash... we are on the Verge of a Stock Market Crash since it is way above the actual Economy and what our Businesses are worth
- 1929 the Stock Market Capitalization to GDP was 87%
- Notional Value of Stock Derivatives is 10 Times the Value of actual Stocks at $710 Trillion Dollars
- Predicts Loss of $100 Trillion dollar in next crash since the last Crash was $60 Trillion
- 25 Year Depression IS NOW, 50 M on EBT Cards, Massive unemployment of 23%, ...next Banks Collapse, Hyper or Very High Inflation
- The Treasury & FED are Widening the San Andreas Fault Exponentially making the Earth Quake Bigger (Collapse)
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Yeah, this guy gives some interesting, supporting points. I don't know him, but like his Lay Out here.
By John Ficenec, Questor Editor
7:17PM GMT 02 Jan 2015
http://www.telegraph.co.uk/finance/economics/11322623/Ten-warning-signs-...
Small business is too much of a hassle for the meager profits accrued
today. Small business died when the BIG box cartel ate everyones' lunch en masse. The Walton family is the largest employer in the USA
and their exceptionalism created the current dependency/learned helplessness/hopelessness that twenty somethings are manifesting
in contemporary America. Peak dream died when Sam Walton open shop with the aim of stealing market share from everyone in the market. Sam Walton envisioned the market share of all small business owners in the future and simply extrapolated his wealth transfer scheme
on to his children. Sam Walton engineered the entire communist state of the United States of America in his own image of greed and control.
My guess is that many young people, while living at home, ARE actually starting new businesses.
Yes a few idiots are selling drugs, but I'm sure there are many that are working "under the table" doing yard-work, house-cleaning, grocery-shopping for older people, etc. and are being paid in cash.
The only down-side is that it's another good reason for the tax-collector to push for a cashless society.
The biggest part of the problem, in a single word?
I R S
The rest of the problem?
REGULATION (you know, what the left loves so much.)
Because what every would-be business owner really needs is an unpaid full time job filling out paperwork so that they MIGHT be able to have self-employed pay.
“The fear of failure is the measure we should be most concerned about,” - Translated : The fear of fear is what we should fear when we're afraid of fear
Is anyone surprised that America has become the Home of the Coward? Americans have been a fearful people for the last century; 'Red Menace', 'Hippies', 'Marijuana', 'Immigrants', 'Terrorists', 'Russia/China', 'Libertarians', 'Gays', 'Abortion', 'Sunshine', 'Fox News'. America will never run out of things to fear - it's much easier to decry something as evil/immoral/wrong and attack it than it is to have an uncomfortable discussion that actually addresses the issues involved. The welfare state is a natural end result of the American core principals of sloth, greed and ignorance.
I for one am enjoying the show that has been made of America's collapse (keep hiding in your basements kiddies) - Honestly hope you don't manage to fuck over the rest of the world too bad on the way down.
PS: As for my fear: American religious fundamentals (ie. Mormons)