Despite tech savvy and higher levels of education than prior generations, mounting student debt levels are beginning to drag down younger Americans' start-up ambitions, according to a new report.
"Saddled with student loan debt, millennials can't afford to be entrepreneurs," according to 2015 state of entrepreneurship report from the Kauffman Foundation, a nonprofit devoted to studying entrepreneurship.
Start-up rates among Americans ages 20 to 34 peaked at 35 percent in 1996 and has since declined to 23 percent in 2013, according to Kauffman.
In addition to the annual summary, Kauffman's monthly readings on entrepreneurial activity show a decline among millennials. Young adults launched about 40,000 fewer new businesses a month in 2013 compared to 1996.
The Kauffman report is among a growing pool of sometimes conflicting data about the future of millennials and start-up activity. While Silicon Valley is hot with start-ups, battling it out for top talent, Kauffman's report offers some skepticism about young adults and their impact on business creation.
For example, a separate report by Babson College on global entrepreneurship, found that more young people ages 25 to 34 are starting businesses. The report, released this month, found that 18 percent of young Americans were starting new businesses last year, higher than 15 percent in 2013. In contrast to other studies, Babson researchers monitor individuals starting companies while they're still employed, which may account for some of the discrepancy.
The Kauffman report also raises questions about the ripple effects of younger workers. For example, despite expressing strong interest in start-ups, millennials have created fewer businesses since they entered the workforce in the early 2000s. The nonprofit also says its unclear if the explosion of college start-up programs—a growing cottage industry on campuses—will actually translate to business creation.
Given shifts among younger workers, the concern now is whether entrepreneurship rates in total (including older workers) will continue to recover from the recession lows or plateau to a kind of "new normal" of lower entrepreneurship activity.