Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

We Are Witnessing The Death Of Small Business In America
TEC ^ | 12/16/2012 | Michael Snyder

Posted on 12/16/2012 3:59:31 PM PST by SeekAndFind

Historically, small businesses have been the primary engine of new job creation in the United States. If the economy was getting healthy, we would expect to see the number of jobs at new businesses rise. Instead, we are witnessing just the opposite. We are told that the economy is supposed to be "recovering", but the number of "startup jobs" at new businesses has fallen for five years in a row. According to an analysis of U.S. Department of Labor data performed by economist Tim Kane, there were almost 12 startup jobs per 1000 Americans back in the year 2006. By 2011, that figure had fallen to less than 8 startup jobs per 1000 Americans. According to Kane, the number of jobs in the United States at businesses that are less than one year old has fallen from 4.1 million in 1994 to 2.5 million in 2010. Overall, the number of "new entrepreneurs and business owners" has fallen by more than 50 percent as a percentage of the population since 1977. The United States was once known as "the land of opportunity", but now that is fundamentally changing. At this point we truly do have a "crisis of entrepreneurship" in this country, and that is a huge reason why America is in decline. We are witnessing the slow death of the small business in America, and that is incredibly bad news for all of us.

Unfortunately, the problems that small businesses are experiencing right now have been building up for decades. The economic environment for small businesses in America has become incredibly toxic. Sadly, we can see this in the numbers. According to Kane, the following is how the decline in the number of startup jobs per 1000 Americans breaks down by presidential administration...

Bush Sr.: 11.3

Clinton: 11.2

Bush Jr.: 10.8

Obama: 7.8

Obviously, we are headed very much in the wrong direction. Kane speculates about why this may be happening in his paper...

There is anecdotal evidence that the U.S. policy environment has become inadvertently hostile to entrepreneurial employment. At the federal level, high taxes and higher uncertainty about taxes are undoubtedly inhibiting entrepreneurship, but to what degree is unknown. The dominant factor may be new regulations on labor. The passage of the Affordable Care Act is creating a sweeping alteration of the regulatory environment that directly changes how employers engage their workforces, and it will be some time until those changes are understood by employers or scholars. Separately, there has been a federal crackdown since 2009 by the Internal Revenue Service on U.S. employers that hire U.S. workers as independent contractors rather than employees, raising the question of mandatory benefits. New firms tend to use part-time and contract staffing rather than full-time employees during the startup stage. According to Labor Department data, the typical American today only takes home 70 percent of compensation as pay, while the rest is absorbed by the spiraling cost of benefits (e.g., health insurance). The dilemma for U.S. policy is that an American entrepreneur has zero tax or regulatory burden when hiring a consultant/contractor who resides abroad. But that same employer is subject to paperwork, taxation, and possible IRS harassment if employing U.S.-based contractors. Finally, there has been a steady barrier erected to entrepreneurs at the local policy level. Brink Lindsey points out in his book Human Capitalism that the rise of occupational licensing is destroying startup opportunities for poor and middle class Americans.

Kane raises some very good points in his analysis. Without a doubt, small businesses in the United States are being taxed into oblivion. If you doubt this, just read this article.

And the regulatory environment for small businesses is more suffocating than it has ever been before. Unfortunately, our politicians never seem to learn that lesson. During his first term, Obama piled on mountains of new regulations, and now that he has won a second term he is preparing to unleash another massive wave of new regulations.

But many times the worst offenders are politicians on the state and local level. There are some areas of the country (such as California) that have created absolutely nightmarish conditions for small businesses. California had the worst "small business failure rate" in the country in 2010. It was 69 percent higher than the national average. And in 2011, the state of California ranked 50th out of all 50 states in new business creation.

Yet the politicians in California just continue to pile on even more regulations and even more taxes.

Sadly, this kind of thing is happening from coast to coast and it is killing off hordes of small businesses. Just consider the following statistics...

-According to the U.S. Census Bureau, the U.S. economy lost more than 220,000 small businesses during the last recession.

-As a share of the population, the percentage of Americans that are self-employed fell by more than 20 percent between 1991 and 2010.

-As a share of the population, the percentage of "new entrepreneurs and business owners" dropped by a staggering 53 percent between 1977 and 2010.

-The average pay for self-employed Americans declined by $3,721 between 2006 and 2010.

So what needs to be done?

Well, first of all, the tax burden and the regulatory burden on small businesses both need to be greatly reduced.

Secondly, the balance of power in our nation needs to be dramatically shifted. Conservatives run around talking about the need to reduce the power of government and liberals run around talking about the need to reduce the power of corporations, and actually both of them are right.

Our founding fathers intended to establish a Republic where power would never be concentrated in the hands of just a few. That is why they tried to strictly limit the power of the federal government in the U.S. Constitution, and that is why they greatly restricted the size and scope of corporations in early America. For much more on this, please see this article: "Corporatism Is Not Capitalism: 7 Things About The Monolithic Predator Corporations That Dominate Our Economy That Every American Should Know".

Our founding fathers wanted to empower individual citizens and small businesses. They never intended for us to have a system where big government and big corporations dominate everything and crush the "little guy" at every opportunity.

Even as we witness the death of the small business in America, corporations are absolutely thriving. The following chart shows how corporate profits after tax have exploded to new record highs in recent years...

So has this been good for workers? No, it has not translated into more jobs and higher wages. In fact, wages and salaries as a percentage of GDP are now at an all-time low...

That is why it is imperative that we change "the rules of the game" so that the balance of power is shifted back in the direction of individual citizens and small businesses. We desperately need to turn back to the principles that this nation was founded upon.

If nothing is done, these trends are going to get even worse. Barack Obama certainly has no plans to reduce the size and the power of the government. Since he was elected, an average of 101 new federal employees have been added to the government payroll every single day...

In the 1,420 days since he took the oath of office, the federal government has daily hired on average 101 new employees. Every day. Seven days a week. All 202 weeks. That makes 143,000 more federal workers than when Obama talked forever on that cold day in January of 2009.

And if nothing is done, the monolithic predator corporations that dominate our economy will just get even larger and even more powerful. Meanwhile, hundreds of thousands more small businesses will close up shop all over the country.

Unfortunately, most Americans seem totally apathetic about these issues. They seem content to wear "meggings", watch "Honey Boo Boo" on television and let our government and corporate overlords run everything. Most of them have even been brainwashed into believing that this is the American way of doing things.

So where do we go from here?

Well, this nation will probably continue to keep doing the same things that it has been doing, and it will continue to get the same results.

The death of small business in America is happening right in front of our eyes, and everybody can see it happening, but very few people are doing anything to stop it.



TOPICS: Business/Economy; Culture/Society; News/Current Events
KEYWORDS: jcsbthinktank; jobs; smallbusiness; unemployment

1 posted on 12/16/2012 3:59:36 PM PST by SeekAndFind
[ Post Reply | Private Reply | View Replies]

To: SeekAndFind

More like “Murder”.


2 posted on 12/16/2012 4:01:35 PM PST by facedown (Armed in the Heartland)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

And small business keeps voting for this.

So what do you want me to say?


3 posted on 12/16/2012 4:11:38 PM PST by Tzimisce (What do you do when every every branch of the government is corrupt and aligned against you?)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Secondly, the balance of power in our nation needs to be dramatically shifted. Conservatives run around talking about the need to reduce the power of government and liberals run around talking about the need to reduce the power of corporations, and actually both of them are right.

Big government and big corporations are big buddies.


4 posted on 12/16/2012 4:13:46 PM PST by freedomfiter2 (Brutal acts of commission and yawning acts of omission both strengthen the hand of the devil.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Tzimisce

RE: And small business keeps voting for this.

How do you know this?


5 posted on 12/16/2012 4:16:34 PM PST by SeekAndFind
[ Post Reply | Private Reply | To 3 | View Replies]

To: SeekAndFind

I was watching a special about how Cuba is getting “New Freedoms” like being able to own a cell phone or applying to get a biz license. Makes me wonder if in the future an Amercian Citizen wants to open a restaurant will they have to plead before one of Obama’s panels to get one?


6 posted on 12/16/2012 4:18:15 PM PST by jakerobins
[ Post Reply | Private Reply | To 1 | View Replies]

To: Tzimisce

Small business is the most Republican sector of all.


7 posted on 12/16/2012 4:28:41 PM PST by buwaya
[ Post Reply | Private Reply | To 3 | View Replies]

To: SeekAndFind

Small business can’t keep up with the excessive regulations.


8 posted on 12/16/2012 4:33:49 PM PST by tiki
[ Post Reply | Private Reply | To 1 | View Replies]

To: freedomfiter2

Yep!


9 posted on 12/16/2012 4:36:10 PM PST by tiki
[ Post Reply | Private Reply | To 4 | View Replies]

To: SeekAndFind

All by design. Fascists prefer working with a very few entities they can easily direct. Democrats want as many Americans reduced to dependency upon large entities, whether the government or large corporations in bed with it, as they can get. Self reliant people cannot be steered like cattle.


10 posted on 12/16/2012 4:38:59 PM PST by Trod Upon (Civilian disarmament is the precursor to democide.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: freedomfiter2
Conservatives run around talking about the need to reduce the power of government and liberals run around talking about the need to reduce the power of corporations, and actually both of them are right. Big government and big corporations are big buddies.

Hear hear - Preach it!

11 posted on 12/16/2012 4:48:35 PM PST by DaveyB (Our Constitution was made only for a moral and religious people. -John Adams)
[ Post Reply | Private Reply | To 4 | View Replies]

To: SeekAndFind

http://uregina.ca/~gingrich/s28f99.htm

...d. Petty Bourgeoisie and Middle Class. The lower middle class or the petty (petite) bourgeoisie (the bourgeoisie was sometimes called the middle class in this era), constitutes “the small manufacturer, the shopkeeper, the artisan, the peasant”.

The characteristic of this class is that it does own some property, but not sufficient to have all work done by employees or workers. Members of this class must also work in order to survive, so they have a dual existence – as (small scale) property owners and as workers. Because of this dual role, members of this class have divided interests, usually wishing to preserve private property and property rights, but with interests often opposed to those of the capitalist class.

This class is split internally as well, being geographically, industrially, and politically dispersed, so that it is difficult for it to act as a class.

Marx expected that this class would disappear as capitalism developed, with members moving into the bourgeoisie or into the working class, depending on whether or not they were successful. Many in this class have done this, but at the same time, this class seems to keep recreating itself in different forms.

Marx considers the petite bourgeoisie to be politically conservative or reactionary, preferring to return to an older order. This class has been considered by some Marxists to have been the base of fascism in the 1920s and 1930s. At other times, when it is acting in opposition to the interests of large capital, it may have a more radical or reformist bent to it (anti-monopoly)...


12 posted on 12/16/2012 4:51:47 PM PST by jjotto ("Ya could look it up!")
[ Post Reply | Private Reply | To 1 | View Replies]

To: freedomfiter2
Big government and big corporations are big buddies.

The end result is commonly known as "Fascism"

We are but a few steps away from it...

13 posted on 12/16/2012 4:54:56 PM PST by Popman (Gun control will not really control guns, but it will give the illusion of controlling people)
[ Post Reply | Private Reply | To 4 | View Replies]

To: SeekAndFind

Very small employers are actually exempt from most of of the Obamacare mandates and fines. Small employers who couldn’t previously afford benefits may actually be helped, since they the exchanges may enable workers who previously wouldn’t have taken no-benefit jobs to be willing to accept them.


14 posted on 12/16/2012 4:55:01 PM PST by only1percent
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Methinks we are witnessing the death of America in America.


15 posted on 12/16/2012 4:56:29 PM PST by SecondAmendment (Restoring our Republic at 9.8357x10^8 FPS)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
Apart from the various political considerations here, any analysis of small business decline should include an examination of the effect of the Internet on the particular businesses.

Brick-and mortar retail businesses are getting creamed by Internet vendors, and that's just the start.

16 posted on 12/16/2012 4:57:50 PM PST by TChad
[ Post Reply | Private Reply | To 1 | View Replies]

To: freedomfiter2
Big government and big corporations are big buddies.

Big government and big labor are big buddies, too.

The one begats the other.

Big government necessitates big business -- in order to deal with the reality that big government can destroy medium and small businesses totally by accident.

On the other hand, big government requires big labor -- for the financial support and "boots on the ground".

Reduce the size of government and big business and big labor will both find their natural level.

17 posted on 12/16/2012 5:15:10 PM PST by okie01 (THE MAINSTREAM MEDIA; Ignorance on parade.)
[ Post Reply | Private Reply | To 4 | View Replies]

To: SecondAmendment
bingo...
18 posted on 12/16/2012 5:15:49 PM PST by Chode (American Hedonist - *DTOM* -ww- NO Pity for the LAZY)
[ Post Reply | Private Reply | To 15 | View Replies]

To: SeekAndFind

as small businesses stay to close... our economic diversity decreases... reducing items that other countries would want... driving down non-domestic sales... resulting in an inability to pay off national debt


19 posted on 12/16/2012 5:23:28 PM PST by sten (fighting tyranny never goes out of style)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

There is no upside to what the Food Stamp President and the progressives are up to. They are like Lenin and Stalin who exterminated the Kulaks (small businesses and successful farmers) as their first order of business in order to eliminate any competition to the state run businesses. The progressives are trying the same thing to eliminate any competition to GE, Google, GM, etc. Remember, their ultimate goal is to eliminate them.


20 posted on 12/16/2012 5:49:07 PM PST by RetiredTexasVet (The law of unintended consequences is an unforgiving and vindictive b!tch!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: only1percent

Don’t count on it. Recently, full time was 40 hours, now by fiat of the IRS, it is 30 hours. Same with the 50 personnel rule. Maybe 50 today, but possibly none tomorrow if it furthers the agenda to eliminate small businesses.


21 posted on 12/16/2012 5:51:31 PM PST by RetiredTexasVet (The law of unintended consequences is an unforgiving and vindictive b!tch!)
[ Post Reply | Private Reply | To 14 | View Replies]

To: SeekAndFind
Small businesses are, by definition, not members of the big-government/big-corporate criminal complex, and their existence is competition for the BG/BC monopoly.

Just tax it to death, and the competition is gone, and the BG/BC criminal complex owns everything.

And the death tax ensures that small businesses have to sell out to the BG/BC criminal complex.

22 posted on 12/16/2012 6:03:40 PM PST by E. Pluribus Unum ("The more numerous the laws, the more corrupt the state." - Cornelius Tacitus, Roman Senator)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind; facedown; Tzimisce; freedomfiter2; jakerobins; buwaya; tiki; Trod Upon; DaveyB; ...
Ping

Exploratory Discussion Group

Judeo-Christian, Small Business (JCSB) Think Tank

You don't for vote for them - or even know them. But they govern your life.



Congress needs small business morals and common sense - they work.

FReepmail me if you want to be on or off the JCSB Think Tank ping list.

23 posted on 12/16/2012 6:13:24 PM PST by PieterCasparzen (We have to fix things ourselves)
[ Post Reply | Private Reply | To 1 | View Replies]

To: PieterCasparzen

Many have given up to go “Gualt” or “shrugging” whatever you want to call it.

I’m not sure what the solution is—at least for another 4 years.


24 posted on 12/16/2012 6:44:19 PM PST by Steve Newton (And the Wolves will learn what we have shown before-We love our sheep we dogs of war. Vaughn)
[ Post Reply | Private Reply | To 23 | View Replies]

To: SeekAndFind

Sure glad I sold my business a few years back.

My sympathy to my fellow small business owners. Regulations are causing a slow death.

Of course, that is exactly what nobama wants.


25 posted on 12/16/2012 7:06:20 PM PST by upchuck (America's at an awkward stage. Too late to work within the system, too early to shoot the bastards.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: upchuck

RE: Sure glad I sold my business a few years back.

What exactly was the business doing and what kind of regulations did it suffer?


26 posted on 12/16/2012 7:27:22 PM PST by SeekAndFind
[ Post Reply | Private Reply | To 25 | View Replies]

To: upchuck

RE: Sure glad I sold my business a few years back.

What exactly was the business doing and what kind of regulations did it suffer?


27 posted on 12/16/2012 7:27:38 PM PST by SeekAndFind
[ Post Reply | Private Reply | To 25 | View Replies]

To: SeekAndFind; All; PieterCasparzen

Thanks VERY MUCH for the post; thread; ping and your work. BTTT!


28 posted on 12/16/2012 7:37:50 PM PST by PGalt
[ Post Reply | Private Reply | To 23 | View Replies]

To: SeekAndFind

Hyper-taxation.......hyper-regulation.......who’d a thunk?.?


29 posted on 12/16/2012 8:16:47 PM PST by mo (If you understand, no explanation is needed. If you don't understand, no explanation is possible.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
What exactly was the business doing and what kind of regulations did it suffer?

We sold medical software and were very much hassled by HIPAA. Everybody in the patient medical community was (still are). Impossible deadlines. Screwup after screwup by the government which cost the company a bunch of bucks.

I could write pages about this but won't. Glad to be out of it.

30 posted on 12/16/2012 8:19:34 PM PST by upchuck (America's at an awkward stage. Too late to work within the system, too early to shoot the bastards.)
[ Post Reply | Private Reply | To 26 | View Replies]

To: Trod Upon

This is a winning statement. I want to add, when you work for a large corporation, the corporate management like their employees to be in debt, why ? They can use that leverage where if you don’t play their game, you lose your job, therefore lose your ability to pay your debt. Large corporations don’t like when their employees are debt free.

Additionally, I seen people financially ruined like when they are told to relocate and have to sell and then buy a house and then after a few months at their new location, they are cut from their jobs. And sometimes they were so unethical where they didn’t pay the relocation cost based on lame excuses such as the form was filled out incorrectly and oh, BTW, too late to resubmit the form.

Small business gives you independence which big gov’t and big corporations don’t like.

>All by design. Fascists prefer working with a very few entities they can easily direct. Democrats want as many Americans reduced to dependency upon large entities, whether the government or large corporations in bed with it, as they can get. Self reliant people cannot be steered like cattle.


31 posted on 12/16/2012 8:36:16 PM PST by CORedneck
[ Post Reply | Private Reply | To 10 | View Replies]

To: SeekAndFind

32 posted on 12/16/2012 8:47:54 PM PST by timestax (AMERICAN MEDIA DOMESTIC ENEMY)
[ Post Reply | Private Reply | To 1 | View Replies]

To: timestax

33 posted on 12/16/2012 9:07:40 PM PST by timestax (AMERICAN MEDIA DOMESTIC ENEMY)
[ Post Reply | Private Reply | To 32 | View Replies]

To: Trod Upon
All by design. Fascists prefer working with a very few entities they can easily direct. Democrats want as many Americans reduced to dependency upon large entities, whether the government or large corporations in bed with it, as they can get. Self reliant people cannot be steered like cattle.

And mandatory health insurance is a great example of that process in effect. In Massachusetts as soon as Romney Care was adopted the state department of labor issued new rules regarding the classification of independent contractors - supposedly to ensure that companies didn't switch their employees to contractors in order to avoid having to provide health insurance. But the actual effect was to greatly reduce the market for 1099 contractors, and add a huge risk to small companies that a contractor could be reclassified by the Mass. Dept. of Labor to an employee.

Government's desire to "do something" about health care had the side effect of reducing opportunities for people who wanted to work, and making it much less desirable for businesses to use local contractors. From the company's point of view it is safer to just use overseas contractors, or have the work performed by one of the large outsourcing companies.

34 posted on 12/16/2012 9:31:20 PM PST by freeandfreezing
[ Post Reply | Private Reply | To 10 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson