PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Small Business Week Data: Entrepreneurship Resumes Growth

By at 30 April, 2018, 10:36 am

Self-employed entrepreneurship in recent months is on the rise, but we’re still far from where we should and need to be in terms of levels of startup activity.

by Raymond J. Keating-

Since this is National Small Business Week, it’s the right time to get an update on the trend in entrepreneurship. And after a troubling time of decline and stagnation, we’re starting to see some promising growth.

The most up-to-date data on entrepreneurship comes from the Bureau of Labor Statistics, specifically, incorporated self-employment and unincorporated self-employment. This tends to be a good measure for capturing early levels of entrepreneurship.

Incorporated Self-Employed

The number of incorporated self-employed grew from 4.452 million (annualized average) in 2001 to 5.784 million in 2008. The numbers then declined to 5.127 million in 2011. Subsequently, growth resumed sluggishly, finally topping the 2008 level in 2017 at 5.845 million.

Looking at the last nine months, growth in incorporated self-employed has been solid. Since the incorporated self-employed data are not seasonally adjusted, comparisons each month are basically limited to looking at the same months in earlier years.

In each of the last nine months, from July 2017 to March 2018, growth has been strong compared to the same month in the previous year.

In March 2018, the latest month, 5.891 million in incorporated self-employed compared to 5.740 million in March 2017, up from 5.130 million in March 2012, and it beat the previous March high of 5.830 million in March 2008.

Unincorporated self-employed

The number of unincorporated self-employed (seasonally adjusted data) came in at 9.793 million in March 2018. That was the seventh month of growth out of the last eight – increasing from 9.196 million in July 2017. The March 2018 level also was the highest level since February 2010.

But there still remains a noteworthy shortfall compared to the previous all-time high of 10.912 million hit in April 2005, and the fact that the unincorporated self-employed effectively had remained above 10 million from the late 1980s to 2008 except during periods of recession.

Total Self-Employed

Finally, if we combine the seasonally unadjusted incorporated and unincorporated data, we get a more complete picture of this aspect of entrepreneurship. This total self-employed data point to some solid growth occurring over the last eight months, from August 2017 to March 2018, with each month’s level up over the same month in the previous year.

Zeroing in on the latest month, we see that the 15.690 million in March 2018 was up versus 15.237 million in March 2017.

The March 2018 level also was the highest level since 2008, but still fell short of the March high of 16.165 million in 2007.  Also, in terms of annual averages, the 15.371 million in 2017 was up versus the recent low of 14.576 million in 2011, but remained short of the 16.148 million high registered in 2007.

So, the growth in self-employed entrepreneurship in recent months is most welcome after an extended period of decline and stagnation. But we’re still far from where we should and need to be in terms of levels of entrepreneurship.

It’s critical that this recent growth take hold and step up for the sake of innovation, and future economic, income and employment growth. More pro-growth policies that encourage capital formation and access, lighter regulation, more improvements to the tax system, expansion opportunities abroad through trade and sustainable and strong economic growth in general still need to be pursued and enacted.

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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.

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