Startup Numbers at All-Time Low

Despite recent gains in unemployment numbers, startup entrepreneurship is at a record low.

According to a quarterly survey from Challenger, Gray & Christmas, 2011 had the lowest startup rate in the 11 years since the survey began. Over the last two quarters of last year, on average just 3.2% of jobless managers and executives decided to start their own businesses, down by nearly half from the same period in 2010. The first two quarters of the year, 3.3% pursued entrepreneurship.

The start-up rate hit an all-time low in the first quarter of the year, at 2.5%, the survey found. The survey is based on 3,000 job seekers re-entering the workforce across the country, and tends to skew toward more "experienced, managerial and executive level" job seekers.

“While big business definitely began to reap the benefits of the recovery in 2011, conditions were not nearly as fruitful for existing small business, let alone those attempting to get up off the ground. Credit was still very difficult to come by and demand for products and services remained soft. Basically, it was not a very inviting environment for would-be entrepreneurs,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

The survey compares 2011's rates to the 2001 collapse. Even in that environment, an average of 8% of job seekers still pursued entrepreneurship. Over the past two years, the average rate for startups is 3.9%, less than half of that 2001 average, the survey said.

The number of Americans who are self-employed fell by 172,000 in 2011 to 8,587,000 in December of 2011, according to the U.S. Bureau of Labor Statistics. This number is more than 1 million less than the peak of 9,973,000 self-employed Americans in December 2006.