The Declining Role of Start-Ups May 2, 2012, 3:42 pm Business leaders and politicians often laud the United States for its entrepreneurial culture, but the pace of start-up activity has been declining since the 1980s, a decline that - not surprisingly - accelerated during the most recent recession and its aftermath. A new report from the Ewing Marion Kauffman Foundation, using data from the Census Bureau's Business Dynamics Statistics, shows that the number of start-ups in a given year declined from about 12 percent of all companies in the 1980s to less than 8 percent in 2010, the lowest point on record. The share of young businesses - defined as those started within the last five years - as a total of all companies also declined, to 35 percent in 2010, from 50 percent in the early 1980s. Such a decline can have a direct effect on the labor market, as new companies typically create jobs (although an increasing number are sole proprietorships). Between March 2009 and March 2010, 394,000 start-ups created 2.3 million jobs, compared to a net loss of 1.8 million jobs from all private sector employers over the same period. The Kauffman report did not address the underlying causes of the slowdown in the birth of new businesses, but suggested that the patterns "raise questions about whether the United States is becoming less entrepreneurial given the lower pace of start-ups and the smaller share of activity accounted for by young firms."