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Number of job seekers launching businesses hits four-year high

January 26, 2010 | 12:09 pm

The number of job seekers starting up their own businesses hit a four-year high in 2009, according to a report today.

The percentage of unemployed people becoming entrepreneurs soared 69% to 8.6% from a record low of 5.1% in 2008, according to data from Chicago-based outplacement consultancy Challenger, Gray & Christmas.
The highest level of self-employed jobless recorded by the group’s Job Market Index, a quarterly survey of 3,000 job hunters, was the 9.6% noted in 2002.

“Rather than endure several more months of unemployment, as employers slowly move toward renewed hiring, many job seekers are opting to exit the labor pool and start their own firms,” said Chief Executive John A. Challenger in a statement. “The start-up rate might have been even higher if banks had loosened their lending standards.”

After the economy first showed hints of rebounding in the second quarter, entrepreneurship surged in the third quarter. In that period, 11.8% of job seekers launched their own firms, the highest quarterly figure since the second quarter of 2005.

The rate fell to 7.3% in the last quarter of the year. The percentage from the fourth quarter from 1999 to 2009 averaged 6.4%, compared to the 8.3% average from the first three quarters.

The biggest gains in unemployed self-starters comes in the 55-and-older age bracket, where experience, business connections and communications skills are well-honed, according to Challenger. While 93,000 people ages 55 to 64 became entrepreneurs in 2009, 213,000 people ages 65 and older also joined the ranks – a whopping 29.3% boost.

The number of job hunters ages 35 to 44 who started their own businesses dropped by 70,000, while the 16-to-19 age bracket plunged 38.8%, or by 19,000 people. With 2.4 million people, the 45-to-54 age category still had the most entrepreneurs, despite shrinking by 60,000.

“Entrepreneurship used to be thought of as a young person’s endeavor, as it requires a significant amount of energy and drive,” Challenger said. “In fact, seasoned professional have a decided advantage over their younger counterparts.”

-- Tiffany Hsu