There are a number of societal trends working against Millennials which may hinder entrepreneurship. Here's what they're facing.
Millennials are growing up. By 2020, it is expected that 50 percent of the workforce will be powered by Millennials.
By 2025, Millennials will make up as much as 75 percent of the global workforce.
The Millennial workforce is a bit different. Mobility, flexibility and entrepreneurship is on the minds of many of these young adults.
According to a study by Bentley University, an astonishing 66 percent of Millennials want to start their own business.
And 37 percent of Millennials would like to work alone.
Entrepreneurship is powerful. Entrepreneurship drives growth, wealth and innovation. But entrepreneurship isn’t easy.
Today there are a number of societal trends working against Millennials which may hinder entrepreneurship. What exactly?
Read ahead to find out.
Student Loan Debt
Pursuing an entrepreneurial path requires a degree of financial stability. American Student Assistance reports that 47 percent of student loan borrowers indicated that student debt was impacting their ability to start a small business.
Unfortunately, the Millennial generation is saddled with more student loan debt than any generation in history. In fact, 70 percent of college graduates are leaving campus with student debt.
On average, the class of 2016 is expected to leave campus with $30,000 in student debt. And the aggregate amount of outstanding student loan debt in the United States has soared by more than 400 percent.
There are currently more than 43 million Americans holding an estimated $1.2 trillion in debt. And many of these Americans struggle to understand the basis behind their debt.
So what? Well, hefty student loan payments may hinder many Millennials from actually starting their own business.
Small business and startups offer little job and income security. Overhanging debt may scare some entrepreneurial minded Millennials from making the jump.
Millennials should consider forgiveness, income-based repayment, and even student loan refinancing, Public Service Loan Forgiveness is available to federal student loan borrowers who are currently employeed public service fields.
Income-based repayment is available to all federal student loan borrowers. You can cap your monthly student loan payment to 10 percent of your monthly discretionary income.
Refinancing is available for both private and federal student loan borrowers. The current low interest rate environment has pushed student loan refinancing interest rates to 2 percent for very credit-worthy individuals.
Lastly, forbearance can be used as a temporary solution for federal student loan borrowers who may run into financial problems.
Related Article: Millennial Time: Youth-enize Your Business Before It's Euthanized
Learn to Code
It is arguably cheaper to start a business today than ever before. More often, new startups are technology based.
Many technology startups don’t require significant upfront capital. For as little as $100, virtually anyone can buy a domain name and a 12-month hosting package.
However, the National Student Clearinghouse reports that in the U.S., 40 percent of bachelor's degrees earned by men and 29 percent earned by women are now in STEM (Science, Technology, Engineering and Math) fields.
It is no secret that the demand for STEM skills is on a dramatic rise. While a college degree is not a necessary requirement for starting a business, STEM skills will increasingly become a necessary tool.
Millennials lacking technology talent or resources will be facing an increasingly uphill battle against entrepreneurship.
Many Millennials should consider enrolling in a coding bootcamp, or online course.
Codeacademy offers entry level instructional courses in PHP, HTML, Python, Ruby, and more. Codeacaedmy is a non-profit, and all the courses offered are free.
Another option, Coding Dojo, offers 14-week online and on-site coding courses. You might not be an expert, but you can learn the basics for a very low financial investment.
Corporate Tax Rates
According to 2014 data released by the United States Office for Economic Cooperation and Development (OECD), the combined federal and state statutory corporate tax rate for the U.S. is 39.1 percent.
In contrast, the average combined federal and state tax rate of the other 33 members of the OECD is only 24.8 percent.
And on a GDP weight adjusted basis, the average combined federal and state tax rate of the other 33 members of the OECD is 10.8 percent lower than the U.S.
Starting a business isn’t an easy decision. Significantly higher tax rates in the U.S. will put Millennials at a global disadvantage.
Taxes hinder growth and ultimately act as a discouraging factor. If you lower the expected return of starting a business, the incentive to actually go and start a business will decline.
It is exciting to see so many Millennials determined to start a business. As a country, we need to embrace and harness this energy. By helping graduates repay student debt, we can remove a significant barrier to entry.
More income-based repayment options should help comfort Millennials weighed down by student debt.
Until then, Millennials should look into the current forgiveness, income-driven repayment, refinancing, and forbearance options.
Greater focus on STEM at the college level will give more Millennials the tools they need to succeed.
Related Article: Always Be Creating: How Successful Entrepreneurs Get Inspired
Coding courses and bootcamps may be extremely helpful for Millennials looking to start a technology focused company.
While you won't be a coding expert, you can learn a basic skillset. Lower corporate tax rates would also incentivize more Millennials to take action.