If you’ve noticed a trend among your colleagues to quit their jobs and start their own companies, you’re not alone. More and more young Americans are owning businesses, especially in certain regions of the country.
Traditionally, older Americans are more likely to own a business due to their greater experience, financial resources, and professional networks. But entrepreneurship is attracting more and more young Americans, who now see it as a viable career path. Young adults may have less capital, but they often have fewer financial obligations such as mortgages and household expenses, making them more likely to take the risks of starting a business. Additionally, their skills and interests tend to align well with new opportunities in the digital economy, which often require lower start-up costs.
Over the past few years, changes in the economy and workforce have accelerated new business applications to record levels, reflecting increased entrepreneurial interest among young workers. According to recent U.S. Census Bureau data, nearly three in 10 business owners in the United States are under the age of 40, and just over 6% of workers under the age of 40 currently run their own businesses.
Youth business ownership
Business ownership among Americans under 40 is at its highest in 20 years
Source: Simply Business analysis of U.S. Census Bureau data | Image credit: Simply Business
The rise in entrepreneurship among America’s youth represents a reversal of trends seen since the early 2000s and after the Great Recession. From 2001 to 2015, the percentage of business owners under the age of 40 fell from 30.7% to 25.3%.
Part of the decline was caused by the aging of the nation’s workforce. As older generations continued to work longer, the proportion of younger workers naturally declined, even though the overall number of managers remained relatively stable.
Another factor is that business ownership among young people is particularly sensitive to macroeconomic conditions. Leading up to the Great Recession, the percentage of workers under 40 who owned a business increased, reaching 6.4% in 2004 and 2005. However, as the economy slowed and entered a recession, young business ownership rates declined, reaching a low of 5.2% by 2004. 2015.
However, since 2015, both the percentage of business owners under the age of 40 and the percentage of business owners who are young workers have risen sharply. In 2023, business owners under the age of 40 will account for 29.3% of all business owners, and young workers will account for 6.4% of business owners, the highest level in about 20 years. This resurgence coincides with economic growth, increased opportunities for self-employment, and the rise of digital platforms that have lowered the barriers to entrepreneurship, especially for young people.
Most popular industries for young business owners
Business owners under 40 are concentrated in digital and creative fields
Source: Simply Business analysis of U.S. Census Bureau data | Image credit: Simply Business
Since 2018, the proportion of business owners under the age of 40 has increased in almost every sector, with digital and creative fields remaining especially popular among young entrepreneurs. In the information sector, which includes software development, digital publishing, and internet services, almost half (45.3%) of executives are now under 40 years old, up from 37.9% in 2018. Similarly, young people are active in the arts, entertainment, and recreation industry. Business ownership rose from 33.4% to 38.5%, highlighting the strong appeal of creative fields to young workers.
In contrast, certain industries with high barriers to entry, such as licensing requirements, high start-up capital, and high operating costs, remain not popular choices for young business owners. Sectors such as wholesale trade, finance and insurance, professional services, and healthcare have the lowest percentage of owners under 40. In addition to having a high cost of entry, these fields tend to be more traditionally operated and have fewer opportunities for flexible, online-driven work. This model is now supported by many young workers.
Young business owners by state and city
Young business owners are concentrated in the Mountain West, Midwest, and parts of the South.
Source: Simply Business analysis of U.S. Census Bureau data | Image credit: Simply Business
Young business owners are concentrated in the Mountain West, Midwest, and South, with states like Utah, North Dakota, and Wyoming leading the way. Utah tops the list with 37.3% of business owners under the age of 40, followed by North Dakota at 35.1% and Wyoming at 34.4%. Oklahoma and Texas also rank highly, with 33.6% and 33.5% of business owners under the age of 40, respectively.
Many of these states have benefited from a lower cost of living and have recently grown young populations, creating favorable conditions for young entrepreneurs. In contrast, the Northeast, which has higher costs and fewer young workers, reports some of the lowest levels of young business ownership in the nation. The five states with the lowest percentage of business owners under 40 are all in New England.
This pattern is also reflected in metropolitan areas. Among metropolitan areas, Birmingham, Alabama has the highest concentration of young business owners at 37.1%, followed by Fresno, California (36.8%) and Austin, Texas (36.4%). Other cities with higher percentages of young business owners include Oklahoma City, Oklahoma, and Grand Rapids, Michigan, each at 35.2%. Conversely, major cities in the Northeast, including Hartford, CT; Washington, DC; Boston, Massachusetts. In Baltimore, Maryland, all are reported to be less than 25%.
For young people looking to become their own boss, this report highlights the cities and sectors where their peers are succeeding. Digital and creative industries with lower barriers to entry tend to attract more young entrepreneurs, especially in affordable cities in the South, who are looking to invest more in their businesses than just making ends meet. You can make an investment. These insights reveal where young executives are thriving and suggest where similar opportunities exist.
Here is a summary of the data for Texas:
Percentage of all workers under the age of 40: 33.5% Percentage of all workers under the age of 40: 48.6% Percentage of employers among workers under the age of 40: 7.3% Percentage of employers among all workers :10.6% 40 people: 567,438 people Total employers: 1,696,219 people Total employees under 40 years old: 7,779,449 Total number of employees: 16,017,619
For your reference, here are the stats for the entire US:
Percentage of all workers under the age of 40: 29.3% Percentage of all workers under the age of 40: 46.3% Percentage of employers among workers under the age of 40: 6.4% Percentage of employers among all workers : 10.2% Under 40 years old: 5,271,643 people Total employers: 17,991,919 people Total employees under 40 years old: 81,891,336 Total number of employees: 176,873,526
For more information, detailed methodology, and complete results, see Simply Business’ Cities with the Most Business Owners Under 40.
