The Mortgaged Future of the U.S.

In the article, “Don’t Blame Age for Declining U.S. Entrepreneurship,” Ben Casselman makes important observations: Overall U.S. entrepreneurship is declining and the average age of existing companies is getting older. He seems to believe that with the millennials turning 40 fairly soon, the recent trend will reverse itself. I beg to differ.

I think the rate of entrepreneurship may continue to decline for a variety of reasons, including governments’ direct (e.g., red tape) and indirect (e.g., restrictions on lending) intrusion into “free” enterprise. However, one of the biggest factors will be the overhang of debt. Today, 70% of college graduates leave school with debt from tuition loans. In addition, the relationship between debt and first job income has become intolerable. I borrowed my entire tuition for law school. When I graduated, my total debt was about 30% of my compensation during the first year after graduation. Today, a graduating student’s debt, assuming all tuition was borrowed, would exceed his or her first year’s pay. Those students who opt not to be entrepreneurs right away have a variety of excuses, but debt is their number one and growing excuse. Talk about stifling entrepreneurship!

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