Atlanta ranked second among top metro areas last year in the creation of new businesses, although the rate fell from 2010, according to a new study by a group promoting entrepreneurship.
Each month, an average of 500 out of every 100,000 adults aged 20 to 64 started a business that they spent at least 15 hours on, the Ewing Marion Kauffman Foundation found. Only Los Angeles had a higher rate.
Metro Atlanta also was second in 2010, when 580 out of 100,000 adults started a business, the study said.
In Georgia, 350 of every 100,000 adults started a new businesses monthly in 2011, placing the state outside the top 10. Arizona was first with 520 startups per 100,000. Last year, Georgia led the nation with 510.
“Georgia may have dropped because the economy is doing better, so less people are forced to start businesses instead of getting jobs,” study author Rob Fairlie said. “The same is (true) for Atlanta.”
He said metro Atlanta might still be ranked relatively high because the local labor market “is not doing well relatively to other (metro areas).”
The study’s numbers are taken from the Current Population Survey conducted by the U.S. Bureau of the Census and the Bureau of Labor Statistics. Survey respondents who start a new business that is their main job are counted.
Robert Litan, vice president of research and policy at Kauffman, a private, nonpartisan foundation, said startup founders were more likely to operate by themselves and not hire employees.
“Economic uncertainty likely has made (entrepreneurs) more cautious,” Litan said, “and they prefer to start sole proprietorships rather than more costly employer firms. This jobless entrepreneurship trend negatively affects job creation and the larger economic recovery.”
The study does not address the success or failure rate of the new businesses it measures.
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