Chicago tied for the third-lowest rate of entrepreneurship among major US cities

As the Detroit bankruptcy unfolds, the attention has started to shift to other big cities such as Chicago. Detroit and Chicago differ in countless ways, but regardless of the disparities, one unfortunate characteristic is shared by both: they’ve been successful in scaring away entrepreneurs. Between 2010 and 2012, Detroit was tied with Philadelphia for dead...

As the Detroit bankruptcy unfolds, the attention has started to shift to other big cities such as Chicago. Detroit and Chicago differ in countless ways, but regardless of the disparities, one unfortunate characteristic is shared by both: they’ve been successful in scaring away entrepreneurs.

Between 2010 and 2012, Detroit was tied with Philadelphia for dead last in entrepreneurship among the nation’s largest metropolitan statistical areas, according to the Kauffman Index of Entrepreneurial Activity. Both cities had only 190 entrepreneurs per 100,000 people. And Chicago followed closely with 240 entrepreneurs per 100,000 people.

In 2012, Chicago’s rate of entrepreneurship was 230 per 100,000 people, and the city was tied for the third-lowest rate with Philadelphia and Washington, DC.

The Kauffman index is essentially a measure of entrepreneurs voting with their feet about where they want to pursue their dreams. And the above numbers show that they’re voting against Chicago and Detroit.

Detroit learned the hard way that a city will never prosper without a business climate that’s friendly to entrepreneurs. But now the city is trying to rebuild by looking to attract young entrepreneurs. As my colleague and native Detroiter, Paul Kersey, recently wrote:

There have been a string of new developments around Grand Circus Park and Campus Martius, anchored by Comerica Park (home of the defending American League Champion Detroit Tigers), as well as a new office building that houses software design company Compuware. Quicken Loans has also invested heavily in downtown real estate.

Detroit is counting on building a more dynamic downtown by focusing on tech startups and other businesses that will grow and create jobs.

Unfortunately, Chicago still focuses on an outdated “smokestack chasing” business model, doling out corporate welfare to attract large companies at the expense of small businesses. Guess who has to foot the annual $100 million tab for the handouts given to CME and Sears? It’s no wonder entrepreneurs aren’t choosing Chicago when taxpayers and businesses are forced to pick up the tab for politician-favored companies.