California’s Entrepreneurship Among the Ruins

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

I’ve discussed California’s entrepreneurship and the current recession in several articles over the past year (here, here, & here).

This past week brings new data on business incorporations during the recession from Ms. Philly Crosby of the Secretary of State’s office. These data continue to show the strength of California’s entrepreneurs.

Below is a summary of the new business incorporations from 1999-2009.

New Business Incorporations in California: 1999-2009

Year    Number of Incorporations
1999    72,664
2000    97,955
2001    92,163
2002    101,080
2003    105,907
2004    116,210
2005    120,919
2006    119,769
2007    119,251
2008    106,206
2009    93,519
Source: California Secretary of State

The number of new business incorporations in 2009 was down from the previous 7 years, which were each above 100,000 incorporations. But the real story is not the decrease, but how high the number of incorporations continued to be. In the worst economic downturn since World War II, 93,519 businesses incorporated in 2009. Against all odds and probably against a good part of economic logic, 93,519 entrepreneurs committed to risking time and money to build a business.

Further, these business incorporation numbers do not tell the full story of California’s entrepreneurship. Many new businesses do not incorporate but operate legally as sole proprietorships.

California’s elected officials and aspiring elected officials in 2010 cannot run fast enough to hold conferences about job creation, or appoint task forces, or loudly proclaim how they are spending federal Stimulus funds. Several California mayors have appointed additional deputies whom they or the media call "job czars". As you can see, California’s entrepreneurs are the true "job czars."

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