Small Business Election Countdown: “Lost” Businesses Should Be Top Issue on Campaign Trail
By SBE Council at 31 October, 2016, 2:06 pm
by Raymond J. Keating-
If issues were playing a central role in this presidential campaign, then all of the candidates would be talking about the state of small business and how that relates to our economy.
Make no mistake, we continue to be stuck in a poor economy. That was reflected in the latest GDP data, and for the trend over the past nine years, as noted in SBE Council’s first Gap analysis – Gap Analysis #1: The GDP Shortfall – which estimated a GDP shortfall of $2.7 trillion (in 2009 dollars) in 2016. A central problem has been a lack of entrepreneurship and business creation, as explained in Gap Analysis #3 – Entrepreneurship in Decline: Millions of Missing Businesses.
Since the publication of Gap Analysis #3, the Census Bureau has updated the data (latest now 2014 numbers) on the number of employer firms in our economy.
Consider the grim news on the number of employer firms compared with the number before this last recession.
• In 2014, there were 5.83 million employer firms. That was down from 6.05 million in 2007. Even five years into the current economy, and the number of employer firms still had not recovered to the number reached prior to the recession.
• Looking at the small business portion, there were 5.72 million employer firms with less than 100 workers in 2014. That was down from 5.94 million in 2007.
• As for employer firms with less than 20 employees, the 5.21 million employer firms in 2014 was off from 5.41 million in 2007.
Picking up from the analysis performed in in Gap Analysis #3 – Entrepreneurship in Decline: Millions of Missing Businesses, in terms of the population of employer firms, if the recent pre-recession percentage high (2005), that is, employer firms as a share of the relevant population, had been registered in 2014, there would have been approximately 737,000 more employer firms than there were in 2014. And as noted from the data above, this overwhelmingly is about lost small businesses. Then toss in millions lost in terms of the self-employed, and the story gets even uglier.
Unfortunately, the U.S. is suffering a dearth of entrepreneurship, and that has taken a toll on our economy over at least the past decade, and will continue to do so for the foreseeable future. Keep in mind, that a key competitive advantage that the U.S. holds in the international marketplace is entrepreneurship – in our economy, in our culture, and being part of the American Dream.
Candidates for the White House, Congress, and state offices should be talking in depth on what they plan to do to re-ignite America’s entrepreneurial fires. Indeed, when it comes to our economy, everything else is, at best, second place, since with entrepreneurship comes innovation, economic growth, job growth and income growth.
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.
Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP: The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.