Positive Data on Entrepreneurship

By SBE Council at 12 March, 2023, 8:01 am

by Raymond J. Keating –

We could all use some good news, and there were bits of positives regarding entrepreneurship in various indicators released on Friday, March 10.

Self-Employment Data

The U.S. Bureau of Labor Statistics report offered updated measures on self-employment, or what amounts to, full-time entrepreneurship. Unincorporated self-employed (seasonally adjusted) increased for the third straight month in February, hitting 10.1 million.

Meanwhile, since incorporated self-employed numbers are not seasonally adjusted, we need to look at the same time last year for a comparison. And the February 2023 level of 6.44 million compared to 6.29 million in February of last year.

Non-seasonally-adjusted unincorporated self-employed increased from 9.77 million in February 2022 to 9.93 million in February 2023. So, the full set of full-time self-employed (unincorporated plus incorporated) increased from 16.06 million in February 2022 to 16.37 million in February 2023.

This lines up with SBE Council’s recent analysis on the state of self-employment or full-time entrepreneurship.

New Business Applications Data

The U.S. Census Bureau released its latest tally of new business applications, and they grew strongly in February.

Total business applications (i.e., “the business applications for tax IDs as indicated by applications for an Employer Identification Number (EIN) through filings of the IRS Form SS-4”) increased by 1.9 percent in February to 429,800, with high-propensity business applications – that is, applications more likely to turn into businesses with payrolls – growing by 4.8 percent to 144,868.

As noted in the above chart from the Census Bureau, new business applications have been running well ahead of pre-pandemic levels, after shaking off the initial negatives when the pandemic hit.

How many of these new applications actually launch in actual business starts? Of course, business applications still must be transformed into actual businesses. And we’re still waiting for that data, as the Census numbers have a frustratingly long lag time.

But we can look at whether or not policymakers are making it easier or harder for entrepreneurs and investors to face the risks and uncertainties of starting up, building and investing in businesses. Unfortunately, policy has been working against entrepreneurship, as illustrated most recently by the array of policies that discourage business startup and economic growth, such as the anti-growth tax increases proposed by President Biden. Policy matters, and Biden is getting nearly all of it wrong.

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.