Gen Z Business Filings Jump 66%, Bank of America Finds

New business applications filed by members of Generation Z jumped 66% in June compared with a year earlier, far outpacing every other generation, according to research from the Bank of America Institute.

The institute found that Gen Zers are contributing "disproportionately" to a broader surge in business formation. Americans filed more than 531,000 business applications in June, more than double the 2020 figure, according to the Federal Reserve Bank of St. Louis.

The trend is not confined to graduates of elite universities. Lower-income households now account for 25% of all new businesses getting off the ground, up from 20% in 2020, the Bank of America Institute found.

"In a lot of ways, I think entrepreneurship is democratizing right now," said Angela Lee, co-director of the Eugene Lang Entrepreneurship Center at Columbia Business School. "So I'm not at all surprised to see younger, lower-income founders start companies."

Scott Issen, CEO of Future Founders, a nonprofit that helps develop entrepreneurial skills, said demand for his group's services is surging. "Macroeconomically, I think there's less interest year over year for young people to work for others," he told CBS News. "They would prefer to be their own bosses and create their own opportunity."

AI lowers the cost of starting up

Experts credit part of the shift to artificial intelligence, which automates basic tasks and reduces startup costs. "The barriers to entry are getting much lower," said Lori Rosenkopf, a professor at the Wharton School of the University of Pennsylvania.

Lee said she paid roughly $15,000 for a single web developer when she launched her first company. "Now with AI, something that would have taken an app developer three months and $15,000, you can vibe code over the weekend," she said.

Melanie Herbert, 23, founded Sync Labs, a San Francisco health technology startup aimed at improving care for older Americans, while she was still a student at the University of Pennsylvania. Years of hospital treatment for a serious medical condition had drawn her to the field. "I feel like it's unfortunately a very neglected space where a lot of the technology and tools are really behind," she told CBS News.

Her company's technology draws together provider notes, staff observations and lab results, and can "ambiently listen" to staff meetings when activated to produce clinically backed recommendations. AI has been a "game changer" for daily operations, she said: "As a startup, time is everything."

A difficult job market may also be pushing young people to work for themselves. "There is a lot of job dislocation right now, and younger people are finding it hard to secure traditional employment given our current economic conditions," Rosenkopf said. A recent ZipRecruiter survey of 1,000 recruiters found 38% of employers have shifted basic data-processing tasks away from entry-level workers and onto AI.

Herbert said the job market was not her reason for starting the company, but that the search for work weighs on her friends. "Being in this generation, it's probably one of the most talked about things," she said.