An increase in entrepreneurship may be due to lower opportunity costs associated with starting a business. Data from the U.S. Census Bureau revealed that 1.7 million new business applications were filed in the first four months of this year, significantly higher than the 5 million filed in 2022.
One possible reason for this surge is the increase in layoffs from big tech companies, freeing up talented individuals to pursue entrepreneurial endeavors. According to Columbia Business School professor Angela Lee, entrepreneurship tends to rise during economic downturns, as the opportunity cost of starting a business decreases.
The current economic climate may also be fostering a rise in entrepreneurship as big tech companies have been laying off employees in record numbers, with over 263,000 employees globally impacted last year. Tech giants like Amazon, Meta, Google, and Microsoft led the way in contributing to these numbers. Despite stable unemployment rates in the U.S., there has been an increase in layoffs from big tech companies which could be leading to an increase in entrepreneurship as a viable option for those looking for a new path forward.
