PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Hope Persists in August Business Applications Data

By at 18 September, 2022, 8:55 pm

by Raymond J. Keating – 

The latest Census Bureau report on new business applications continues to offer hope that America is experiencing or will experience some kind of resurgence in entrepreneurship. Make no mistake, that’s vital for the U.S. in terms of completely recovering from the pandemic economy, and moving onto a track of stronger economic growth.

New business applications (i.e., “applications for tax IDs as indicated by applications for an Employer Identification Number (EIN) through filings of the IRS Form SS-4”) actually were down in August versus July, and that also was the case for high-propensity applications, which are applications most likely to turn into businesses with employees.

However, as noted in the two following charts, both total and high-propensity applications seem to have settled into ranges that run well above their pre-pandemic levels.

Source: Federal Reserve Bank of St. Louis, FRED

Source: Federal Reserve Bank of St. Louis, FRED

The key, of course, is whether these business applications actually turn into businesses. A recent SBE Council analysis offered some evidence that this could be happening, or at least, we’re seeing resiliency among fulltime entrepreneurs.

But as SBE Council also has pointed out before, among the largest impediments to entrepreneurship have been misguided and costly public policy measures that reduce the resources and incentives for starting up, building and investing in businesses. Among those measures are increased taxes, more government spending, protectionist trade measures, and heavier regulatory burdens. Most recently, consider the National Labor Relations Board’s resumption in attacking and undermining the franchise business model with a restrictive and unpredictable joint employer standard. And of course, the so-called “Inflation Reduction Act” was signed into law, and among its destructive measures were counter-productive tax increases, undermining property rights and investment in the pharmaceutical sector, and jacking up government intrusiveness in small businesses.

Business applications data indicate that the American Dream of owning and operating one’s own business is still alive, but elected officials keep trying to kill that dream.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest book is The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist.

 

 

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