California is among the nation's leaders in startup businesses, trailing only Georgia and neighboring Nevada, according to a new report released this week.
The news is outwardly encouraging. More people hung their shingles and started businesses in 2010 than at any time in more than a decade. But analysts locally and nationwide cautioned that high unemployment numbers are driving the trend, and that it is doing little to improve the jobless rate.
A Kauffman Foundation report released Monday showed that 470 of every 100,000 California adults started businesses each month in 2010.
Georgia and Nevada tied for first, with 510 adults per 100,000 creating businesses monthly last year. Louisiana and Colorado completed the top five, the report showed.
Nationally, the startup rate was the highest in 15 years. Americans created 565,000 businesses a month, according to the Kansas City-based Kauffman Foundation's annual Index of Entrepreneurial Activity.
But behind the numbers were thousands of out-of-work residents of job-starved states who started businesses to create their own jobs.
Not surprisingly, two of the hardest-hit states in the recession – California and Nevada - sat atop the list.
"They're trying their hand because they lost their jobs," Paula Lee, president of the Sacramento Valley chapter of the National Association of Women Business Owners, said of those who started businesses. "It's re-creating yourself. Unemployment brings that up one more step."
But startup owners are not bringing new employees into the fold, choosing to fly solo rather than open businesses that employ others.
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