Is the American Dream Dead for Entrepreneurs?
By: Jason Branin
The image of a scrappy entrepreneur launching a business from a garage and turning it into a world-changing enterprise has long symbolized the American Dream. From Steve Jobs and Jeff Bezos to everyday small business owners chasing independence and prosperity, entrepreneurship has been central to America’s identity. But in recent years, something has shifted. Business formation in the United States is faltering, and many would-be founders are staying on the sidelines. As economic headwinds intensify and regulatory burdens mount, a growing question looms: Is the American Dream dying for entrepreneurs?
Entrepreneurship has always carried risk, but the hurdles in 2025 look increasingly insurmountable. Instead of focusing on customers and products, today’s founders are often buried under paperwork, legal complexity, and rising costs. Government red tape has become more than a nuisance—it’s a barrier to entry. For some, it feels like the system is rigged against small business and startups, favoring entrenched corporations with armies of lawyers and lobbyists. The consequences aren’t just economic; they’re cultural. When entrepreneurship fades, so too does the spirit of innovation, independence, and upward mobility that defines the American ethos.
The Regulatory Stranglehold
One of the clearest signals of entrepreneurship’s struggle is the weight of regulation on new businesses. Across federal, state, and local levels, the regulatory landscape has grown so complex that many entrepreneurs need legal counsel before opening a simple coffee shop. Licensing requirements, zoning laws, environmental regulations, labor compliance, insurance mandates—the list goes on. In some states, starting a nail salon or food truck can require dozens of permits, inspections, and hours of paperwork.
This red tape doesn’t just slow progress; it kills momentum. Entrepreneurs must now navigate a maze that often feels designed for them to fail. While regulations are often well-intentioned—aimed at protecting consumers, workers, or the environment—their cumulative effect is suffocating. Large companies can absorb these costs as part of doing business. Startups and small businesses cannot.
And the regulatory environment isn’t static; it’s expanding. New laws around data privacy, AI, cybersecurity, and ESG compliance are hitting even the smallest firms. What used to be an afterthought—filing for an LLC and opening shop—is now a bureaucratic marathon. For would-be founders without legal expertise or financial backing, these rules can be dealbreakers.
The Taxation Tipping Point
Layered atop regulation is a tax code that increasingly penalizes small business activity. While corporations benefit from global tax arbitrage and offshore havens, many entrepreneurs are taxed as individuals under pass-through structures like LLCs or S-Corps—often facing higher effective rates. In high-tax states like California and New York, combined federal and state tax rates can approach or exceed 50% for successful entrepreneurs.
Even before profits are made, taxation begins. Incorporation fees, business license renewals, payroll taxes, and local levies pile up. For a business with just a few employees, complying with employment taxes, healthcare mandates, and unemployment insurance can be prohibitively expensive.
Contrast this with the startup-friendly ecosystems abroad. Countries like Estonia and Singapore offer streamlined tax structures, digital-first bureaucracy, and generous incentives for founders. In America, by contrast, complexity is the default. Tax incentives are often reserved for large firms with specialized accountants who can navigate the code’s intricacies. For everyone else, the costs are front-loaded and daunting.
The Rising Cost of Entry
Starting a business has always required grit and some capital, but the price tag in 2025 is steeper than ever. Commercial rent in major cities has rebounded from pandemic lows, driving up overhead costs. Health insurance premiums remain stubbornly high, making it hard for small businesses to compete for talent. And inflation has made everything—supplies, utilities, labor—more expensive.
Add to this the modern expectations of customers: sleek digital experiences, fast delivery, 24/7 support. Today’s customers demand the convenience of Amazon and the design of Apple, even from local boutiques. That means startups now need to invest in software, marketing, and logistics from day one. Bootstrapping a business in a garage isn’t just romanticized—it’s nearly impossible without significant savings or outside investment.
And capital is harder to come by. Banks have tightened lending standards, especially for early-stage businesses without assets or a proven track record. Venture capital has become concentrated in a few coastal hubs, often focusing on scalable tech rather than traditional businesses. For Main Street entrepreneurs, the funding pool is shallow and drying up.
A Generational Shift in Values
Beyond economics and policy, there’s a deeper cultural question at play: Are younger Americans still drawn to entrepreneurship?
For decades, the promise of entrepreneurship was freedom—freedom from the boss, from the 9-to-5 grind, from stagnation. But for Millennials and Gen Z, who came of age during financial crises, pandemics, and political turmoil, risk often feels less like an opportunity and more like a threat.
Many younger Americans carry substantial student debt and face daunting housing markets. The idea of risking it all to launch a business can seem reckless when basic financial stability feels out of reach. It’s no wonder that many opt for the relative security of salaried tech jobs, remote freelancing, or side hustles rather than launching full-fledged companies.
Social values have shifted too. Where previous generations prized independence, hustle, and the “self-made” narrative, younger workers are more likely to prioritize work-life balance, mental health, and social purpose. That’s not a negative development—but it does affect the entrepreneurial drive. The grind culture that once defined startups is now met with skepticism, if not outright rejection.
The allure of the American Dream has also been tainted by cynicism. Many Gen Zers and Millennials see the system as rigged in favor of the wealthy, with social mobility declining and institutional trust eroding. In that context, entrepreneurship isn’t seen as a ladder to prosperity—it’s seen as a trap, or worse, a myth.
The Cost of Complacency
If entrepreneurship continues to decline, the consequences for the U.S. economy will be profound. Small businesses account for nearly half of private-sector employment and drive a disproportionate share of job creation and innovation. A decline in entrepreneurship means fewer new jobs, slower wage growth, and less competition—which ultimately leads to higher prices and lower consumer choice.
There’s also a long-term strategic cost. America’s economic edge has long rested on its capacity to incubate world-changing companies—Apple, Google, Tesla, and countless others. If the next generation of visionaries is stifled before they even start, the U.S. risks ceding its innovation leadership to countries that are more supportive of risk-takers.
And entrepreneurship is more than economics. It’s cultural capital. It represents resilience, ambition, creativity, and optimism. A society that loses its entrepreneurs loses its sense of possibility. It becomes stagnant, fearful, and risk-averse. That’s not the America that built the modern world.
How to Reignite the Entrepreneurial Spirit
All is not lost. The entrepreneurial flame still flickers—it just needs oxygen. There are concrete policy steps that can help restore entrepreneurship as a viable and attractive path.
First, streamline regulation. This doesn’t mean eliminating oversight, but making it navigable. Governments should build digital-first portals that consolidate permits, taxes, and licensing into a single interface. Agencies should focus on education and support, not just enforcement. And rules should be tailored to business size—what makes sense for Amazon shouldn’t apply equally to a local bakery.
Second, reform the tax code. Lowering the tax burden on small businesses and simplifying compliance could unleash a new wave of founders. Offer startup tax holidays for the first two years of operation, and expand deductions for early-stage investment. Capital gains tax relief for small business owners who reinvest in new ventures could also encourage long-term entrepreneurial ecosystems.
Third, boost access to capital. Create federally backed micro-loan programs specifically for first-time entrepreneurs. Expand community banks’ ability to lend to startups and simplify SBA loan processes. Public-private partnerships can also play a role in funding local business incubators and coworking spaces.
Fourth, invest in entrepreneurship education. From high school to college, young people should be exposed to entrepreneurship not just as a concept, but as a practiced skill. Real-world startup labs, mentorship programs, and experiential learning can demystify business formation and spark interest. If entrepreneurship becomes as celebrated as sports or STEM, more students will consider it a viable future.
Fifth, build a new narrative. The image of entrepreneurship needs updating. It’s not just about tech bros chasing unicorns or boomers starting restaurants—it’s about creators, makers, freelancers, and founders of all stripes. Whether it’s a Gen Z creator monetizing their audience or a first-generation immigrant launching a logistics startup, the face of American entrepreneurship is more diverse than ever. That story needs to be told.
Conclusion: Reviving the Dream
The American Dream isn’t dead—but it’s on life support for many aspiring entrepreneurs. Economic conditions, policy missteps, and cultural shifts have combined to create a hostile environment for risk-takers. But if the United States is serious about economic renewal and innovation leadership, revitalizing entrepreneurship must be a top priority.
That means rethinking how we regulate, tax, educate, and finance the next generation of builders. It also means restoring faith in the promise that hard work, creativity, and courage can still lead to something extraordinary.
Entrepreneurship is more than an economic engine—it’s a declaration of agency. It says: I will not wait for permission. I will create my own future. If that spirit fades, so too does the promise of America. But with the right policies, the right leadership, and the right cultural shift, the dream can be revived. And it must be—because America doesn’t just need entrepreneurs. It was built by them.