While the national entrepreneurial activity rate has steadily declined since its peak in 2010, NC’s rate declined initially after 2010 but rose again from 2012-2013. Why is this? What makes us different? If NC’s economic health was inversely related to the entrepreneurship rate in NC, we might expect to see NC’s unemployment rate also rise in 2013. However, as shown in Figure 2, NC’s unemployment rate not only dropped in 2013—it was the 5th largest drop in the country, steadily dropping from its peak in 2010 (though it remains higher than the national average).
As seen in the chart up top, N.C. is not alone in opposing the national trend. When compared to nine peer states , five other states increased in entrepreneurial activity while their unemployment rates declined last year. But among these peer states, only Washington’s rate changes are comparable to NC’s.
So why did N.C.’s entrepreneurial activity rate rise in 2013 while its unemployment rate dropped?
Although I can’t be certain, here are my theories:
NC’s economy is still worse than the nation’s as a whole, and a rise in entrepreneurial activity is a remnant of the recession. N.C.’s unemployment rate has consistently been higher than the national average throughout and after the recession and is still 0.6% higher than the national average. If this is true, as unemployment drops and N.C.’s economy improves, we will likely see entrepreneurial activity decline as well. If this were true, we would also see a higher number of necessity entrepreneurs than opportunity entrepreneurs as poor economic conditions produce more of the former than the latter.
As time goes on, the noise in the data will even out and N.C.’s cyclical ups and downs in entrepreneurial activity will even out, looking more like the national averages. This would mean that 2013’s modest increase was just that, a modest increase that will go back down to normal numbers next year or soon after.
We’ve figured out something the others haven’t. You’d have to be living under a rock to not know that a lot of excitement and energy is coalescing around entrepreneurship in N.C. right now, as evidenced with the existence of this site, for example. Maybe N.C.’s numbers have more to do with this fact than anything else. In other words, maybe all that time and energy spent to create a supportive ecosystem for entrepreneurs and business owners by entrepreneurial and business support organizations like the SBTDCs, Groundwork Labs, the CED, American Underground, the local Chambers, and all the other economic development agencies is actually working.
The next few years of data will tell us which of these (or another completely different) theories is responsible for our rising entrepreneurial rates. But if the last possibility is true, then it’s only a matter of time before other states and countries figure this stuff out too. And they are—with accelerators and incubators popping up in nearly every geographic area and industry, Silicon Valley is no longer the only place for startups.
So we have a small window of time to become leaders in the field of entrepreneurism and entrepreneurial development. I humbly suggest we take this opportunity and go for it. But for now, entrepreneurs, you can rest assured you picked the right spot to build your business: something about our state is fostering your development and growth, and hopefully your success, too.