Fewer Students Plan to Become Business Owners

Scott Shane

Monday, March 17th, 2014

College students are more concerned with making money now than they were before the start of the Great Recession, research by the Cooperative Institutional Research Program (CIRP) at UCLA, reveals.

Maybe that’s self-evident.

But here’s a more surprising finding: The fraction of students intending to become business owners has also declined since 2007. That’s troubling because Americans have generally believed that business ownership is an important path to financial success.

Between 2007 and 2012, the fraction of incoming college freshmen who consider “being very well off financially” to be an “essential” or “very important” goal rose from 74.4 percent to 81 percent, the “American Freshman” reveals.

The surveys show that the share of students reporting “business owner” as their probable career declined 24 percent between 2007 and 2009 as the economy sank under the weight of the financial crisis and Great Recession. The fraction has risen modestly since the economic recovery began, but its 2012 level was 15 percent below the 2007 mark.

Business ownership was not the only career objective to take a hit in recent years. Between 2007 and 2012, the fraction of students planning to become architects or urban planners dropped 44 percent; the portion intending to become secondary school teachers declined 40 percent; the slice planning to be elementary school teachers slid 34 percent; the portion aiming to become foreign service workers dropped 30 percent; the slice intending to become business executives slid 22 percent; and the fraction planning to become lawyer or judges went down by 19 percent.

As students shifted their career plans in response to the weak economy, plans for other occupations increased. The share of students reporting military service as their probable career rose 50 percent; the fraction indicating nursing increased 40 percent; the share planning engineering went up 39 percent; the fraction aiming to become physical, occupational and speech therapists rose 38 percent; the portion planning to become social, welfare or recreational workers increased 30 percent; the fraction intending to be computer programmers or analysts rose 18 percent; and the fraction aiming to be scientific researchers went up 16 percent.

The drop in the share of students intending to become business owners was much larger among men than women. According to the CIRP surveys, the percentage of male incoming students intending to become business owners declined from 5 percent in 2007 to 4.1 percent in 2012. By contrast, the share of female students planning to be in business for themselves slipped from 2 percent in 2007 to 1.9 percent in 2012.

The declines were present at most, but not all, types of academic institutions. A smaller fraction of students indicated that business owner was their probable career in 2012 than in 2007 at public four-year colleges; non-sectarian private four-year colleges; non-Catholic, religiously-affiliated four-year colleges; public universities; and historically Black colleges. However, the fraction of incoming freshmen at Catholic four-year colleges intending to become business owners rose from 3.0 to 3.2 percent between 2007 and 2012, while at private universities, the share of students planning a business ownership career rose from 2.9 percent in 2007 to 4 percent in 2012.

Courtesy: Small Biz Trends

About Scott Shane

Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University.