Expect fewer small-business starts

One reason the economic recovery doesn’t feel like one to many US workers is that the rate of new business startups in the US has fallen. In fact, the rate has declined by half – from 16 percent of all businesses in the country in the 1970s to 8 percent now, according to a study from the Ewing Marion Kauffman Foundation.

This is a disturbing trend since new and small businesses account for almost all net new-job creation in the US. Moreover, entrepreneurism is what made America the land of opportunity.

Reasons behind this strengthening trend are many, beginning with the repeal of anti-trust laws that once leveled the playing field and allowed for competition. Also, disastrous trade deals like NAFTA, to name just one, not only sent jobs big and small overseas, they fueled the growth of multinationals.

In addition, the collapse and slow restructuring of the US manufacturing sector, more stringent lending rules arising from the 2008 recession, cautious venture capital, and a lack of workers adequately trained for a high-tech economy have all slammed small business.

 While the rate of business creation depends on a constellation of factors aligning (the availability of capital, entrepreneurs’ confidence in the future, educated workers and strong markets), in the absence of repealing anti-trust laws and trade agreements, small business ventures will struggle in a merger and acquisition crazed environment where rigged markets and a cheap money-fueld economy serve only the 1 percent.


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