You’d have to be a hermit to not know this is an election year. Our news is filled with coverage on the upcoming presidential primaries. There are senate and house representative elections in every state this year and scores of local elections.
There is no shortage of issues for the candidates to discuss this year. The presidential candidate debates have been consumed with talks on healthcare, immigration, government spending, foreign policy, and much more.
There’s one topic, however, that hasn’t gotten much attention from the candidates but is actually worthy of much more of their time. Small Business. For the first time in the history of this country, entrepreneurship in the United States is on the decline. Fewer small businesses are getting started each year than ever before, and the total number of small businesses in this country has dropped as more businesses are closing their doors.
One of the greatest institutions in this country, small business, is at peril and nobody in government seems to care. This is despite the fact that small business creates the majority of new jobs in the U.S. (about 75%), leads the way for innovation (10-15 times more than larger companies), and is the primary driver of the overall domestic economy (over 50% of GDP).
What’s causing entrepreneurship to decline in the U.S.? Several key factors are at play:
The “Walmart-ization of America”: There has been a huge shift in our economy from “mom & pop” stores to national chains. Small businesses are having a harder time competing with larger mega-companies like Walmart, Costco, and Amazon.
Capital for growth: Historically, most small businesses received their growth capital from small community banks. The number of community banks has declined by over 75% in the past two decades. Fewer small banks means less capital for small businesses.
Health Insurance: In order for someone to leave their current employer and start a new business, they need to know that they will be able to acquire health insurance on their own. Historically, due to pre-existing health issues, this prevented many aspiring entrepreneurs from starting new businesses. During the Obama presidency, the passage of the Affordable Care Act gave these new entrepreneurs a chance to leave their jobs and start new companies. The small business start-up rate jumped for two years before the new administration arrived in Washington DC and began efforts to shut that small business-friendly legislation down.
Immigration: Immigrants in this country account for more than 30% of the new business start-ups. Small businesses also depend on immigrants in the labor pool to fill many positions from executives to entry-level positions. The number of immigrants coming to the U.S. today has dwindled significantly and small business as a whole has felt the pain of the government policy decisions that are driving these immigrants to other countries.
What can be done? Here are five questions that we can ask anyone running for political office in 2020:
1- Are you in favor of the Affordable Care Act and its efforts to eliminate pre-existing conditions for new policyholders?
2- Do you favor an expansion of the Small Business Administration (SBA) and thus its efforts to provide SBA guaranteed loans for more small businesses? The SBA also provides valuable training and resources to small businesses through their SCORE and SBDC offices.
3- Are you in favor of easing the current immigration policies in the U.S.?
4- Are you in favor of tax credits for individuals starting new businesses in the U.S.?
5- Are you in favor of eliminating non-competes in business today as they often times prevent individuals from starting new businesses?
The more affirmative responses we get to these five questions, the better the chance we have as a country to revive one of the most important institutions we have in the United States.