IPI Publication Press Release
IPI Policy Report - # 149
Related Publication Title:
Barriers to Entrepreneurship: How Government Undermines Economic Opportunity
Released by Naomi Lopez on 06/15/1999
IPI Policy Report - # 149
Related Publication Title:
Barriers to Entrepreneurship: How Government Undermines Economic Opportunity
Released by Naomi Lopez on 06/15/1999
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Press Release (06/15/1999)
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Small Means Big for America’s Workers
- Dallas, TX. A recent study by Naomi Lopez for the Institute for Policy Innovation (IPI), “Barriers to Entrepreneurship,” shows that despite the critical importance of small businesses to America’s labor force and economic health, some lawmakers continue to promote government policies hindering economic growth and opportunity.
The unchecked proliferation of federal, state, and local tax, regulatory and licensing requirements is impeding new business formation and expansion across the nation. Even well-intentioned government-sponsored programs that aim to spur business formation and economic development are destroying advancement opportunities for our nation’s families.
Small businesses, which are responsible for the vast majority of new jobs in our nation’s economy, are the first casualties of these counter-productive government policies. The result is that job creation, labor force mobility, and economic expansion are stifled.
According to IPI’s study, the vast majority of U.S. firms are businesses that employ fewer than twenty workers and account for most of American job growth, as firms with more than 500 workers continue to experience declines in employee count. Of all firms with paid employees, small firms are responsible for more than one-third of all existing American jobs.
Businesses with fewer than 20 employees were responsible for almost half (49%) of net new jobs between 1990 and 1995, with firms of fewer than 500 creating more than three-quarters (77%). This trend continues as some analysts now estimate that virtually all net new jobs today are in this sector.
America’s future economic growth will center on new, smaller, technology-based firms that retain an innovative advantage over larger firms. Recent immigrants and low-skilled workers frequently begin employment in small firms or home-based businesses as they gain valuable experience leading to upward mobility and, in the case of immigrants, assisting in the assimilation process.
It is easy to overlook the detrimental effects of government regulation and taxation on our nation’s entrepreneurial community, especially during this period of sustained economic growth. Yet, mounting evidence suggests that small firms and entrepreneurs are critical for continued economic prosperity.
This strong economy offers an ideal opportunity for re-examining government policy and offering alternatives for reform. Unleashing our nation’s entrepreneurial potential will have not only positive, long-term consequences on the economy, it will likely extend the current recovery and diminish the severity of any future economic downturns.
Naomi Lopez is a research associate with the Institute for Policy Innovation, a Dallas-based non-partisan public policy institute and is director of the Center for Enterprise and Opportunity at the Pacific Research Institute.
