The Declining Impact of Small Business? Some New Evidence

I’m a pretty big cheerleader for the positive impact of small business on local economies, but I do try to ensure that my advocacy is fact-based as opposed to faith-based.   It’s important to weigh all the facts, even if you don’t necessarily like the conclusions.   That’s my perspective on two new reports that are worth a look:

1) America’s Self-Employment Landscape:   New data from CareerBuilder and EMSI looks at the latest trends related to self-employment in the US.  The 2000s saw a big jump in self-employment and rising interest in what we’ve been calling the 1099 Economy.  The new data show that the number of self-employed workers is declining after a solid period of growth.   Much of the decline has occurred in sectors hard hit by the economic downturn, such as construction, but the decreases are generally occurring across most sectors.   The study finds an increase in the number of people taking 2nd or 3rd jobs for extra income, but fewer people seem to be quitting their day jobs to start a full-time business.

2) Rethinking the National Export Initiative:  This Peterson Institute critique of the Obama Administration’s National Export Initiative (NEI) argues that the NEI was too focused on helping small and medium-sized enterprises (SMEs).    Exporting is dominated by large businesses–the top 1% of US exporters account for 80% of all merchandise exports.    By focusing on SME export promotion, the program targeted firms facing the highest barriers to  success.   According to this view, a more effective export strategy would encourage larger firms to invest in entering new markets via interventions to improve local business climates, to promote a more competitive exchange rate, and to open new markets via new trade pacts.

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