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A Great General Election Issue

Date: May 29, 2014

Reversing the death spiral of entrepreneurship

In her June column for the Salem Business Journal, NFIB/Oregon State Director Jan Meekcoms writes about an alarming Brookings Institution report on entrepreneurism.

Ignore the hot-now “Kimye” wedding shots.  Leave banning genetically modified crops out in the field. A real, and much more serious, issue is before every candidate and elected official in America, and we all have a duty as citizens to make sure they are at least aware of it.

Earlier this month, the Brookings Institution released a study, Declining Business Dynamism in the United States, that should alarm us all, and get elected officials debating the course of corrective action. Did you hear about it?

“I am fearful that this critically important study is not being noticed because it’s not about Wall Street,” wrote U.S. News contributor Jean Card, one of the few to report on the Brookings’ study. “The political class only really cares that the Dow hit a record high last week.”

The political class in Salem and in Washington, D.C. had better start caring in a big way. Highlights from the research done by economists Ian Hathaway and Robert Litan include:

  • “… business deaths now exceed business births for the first time in the thirty-plus-year history of our data.
  • “Firms and individuals appear to be more risk averse … businesses are hanging on to cash, fewer people are launching firms, and workers are less likely to switch jobs or move.
  • “…the decline in dynamism hasn’t been isolated to particular industrial sectors and firm sizes … the decline in dynamism has been nearly universal geographically the last three decades—reaching all fifty states and all but a few metropolitan areas.”

According to Merriam-Webster, an entrepreneur is “one who organizes, manages and assumes the risks of a business or enterprise.”  They are the risk-takers and playmakers of our economy.

As a small-business lobbyist, it will forever be my job to remind legislators of two very important facts: Small businesses employ more working Americans than big businesses do, and they are not just smaller versions of bigger companies—they have different difficulties in remaining solvent. Tend to those, and you’ll have a business dynamism that creates jobs.

The issues are no mystery. Taxes and regulations – the same ones big businesses must abide by – fall harder on small businesses, which have fewer resources to absorb them and no high-priced CPAs at all to handle them.

“Small businesses significantly impact Oregon’s economy,” reports the U.S. Small Business Administration’s Office of Advocacy. “They represent 97.6 percent of all employers and employ 55.5 percent of the private-sector labor force. Small businesses are crucial to the fiscal condition of the state and numbered 344,722 in 2010. Most of Oregon’s small businesses are very small … most employers have fewer than 20 employees.”

Although huge in number, small businesses are less likely to have influence, I believe, solely because most legislators do not understand them. They are not Nike, but explaining that – and having them comprehend it – has been hit and miss.

All businesses must carry workers’ compensation insurance, pay unemployment insurance taxes, and comply with local, state and federal regulations, but as Professor W. Mark Crain of Lafayette College in Pennsylvania notes, “… small businesses face an annual regulatory cost of $10,585 per employee, which is 36 percent higher than the regulatory cost facing large firms.”

While neighboring states try and help small businesses a little, Oregon can be downright hostile. How else to explain the tax reduction given small business in the 2013 special session, with an attempt to swipe it back in the 2014 session.  Add the threat of mandated paid sick leave, minimum wage increase, new street fees, the unaffordable care act, mandated retirement plans and you get a glimpse of entrepreneurs as an endangered species. 

After the May 20 Primary Election, six state senators will have no opponent in November, and 26 candidates running for seats in the State House have a free ride, too. Sounds like Oregon suffers from declining political dynamism as well.  If you yearn for family wage jobs, strong schools and a robust economy, identify and support business-friendly candidates grounded in how the real world of entrepreneurs works.

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Jan Meekcoms is Oregon state director for the National Federation of Independent Business.

Past Jan Meekcoms Columns

Three Hurdles to Knowing Tax Reform, May 2014 (Page 9)

Without Sideboards, It's a Smorgasbord, April 2014 (Page 9)

Anti-Small-Business Issues to Return, March 2014 (Page 9)

Of Two Different Minds on Oregon’s Economy, February 2014 (Page 9)

Where Is Oregon? January 2014 (Page 9)

How Would You Vote? December 2013 (Page 9)

Obamacare is for business, but not for Congress (September 2013 for Oregon Business and Statesman-Journal)

American Economy in Headlock. August 2013 (Page 10)

Let’s Remain One of the 49 States. July 2013 (Page 10)

Trust Us: We've Done it Wrong Before. June 2013 (pdf)

Release the Massage Therapists. May 2013 (Page 21) 

Why Doesn’t NFIB Take a Stand on This Issue? April 2013 (Page 6) 

Minimum Wage is Never the Minimum. March 2013 (Page 8) 

Small Businesses’ 2013 Legislative Wish List. February 2013 (Page 8) 

We Should Be All Nikes Now. January 2013 (Page 8)

Taxpayer Hearing That Familiar Grown Again. December 2012 (pdf)

There’s Another Big Election Day In November. November 2012 (Page 10)

Measures 79, 84 All About Fairness. October 2012 (pdf)

Job Theft More Critical Than wage Theft. September 2012 (Page 9)

We Were Well Aware Of The Context. August 2012 (Page 8)

The Oregon Tax Men Knocking On Coffin Lids. July 2012 (Page 9)

No Copyright on Good Ideas. June 2012 (pdf)

The Uncertainty Of It All. May 2012 (Page 9)

A Legislative Record—Nothing Is Something To Cheer. April 2012 (Page 9)

Landmark Court Case Begins This Month. March 2012 (Page 9)

Now Is The Time To Do No Further Harm. February 2012 (Page 9)

Shopping Small Can Make A Big Difference! January 2012 (Page 9)

Key Economic Group Goes To The Polls. December 2011 (Page 9)

A Bend In The Road To Taxing Rich. November 2011 (Page 9)

Let’s Take One Bold Step On Economy First. October 2011 (Page 9)

Oregon And Obamacare In the Stretch Drive. September 2011 (Page 9)

Importance Of The Company You Keep. August 2011 (Page 9)

Are We Choking Our Golden Goose? July 2011 (Page 9)

Annual Noise of Nothingness May 16-20. May 2011 (Page 20)

Will Re-districting Awaken A Sleeping Giant? April 2011 (Page 20)

Another Legislature, Another Reminder Of Small Business. March 2011 (Page 18)
  

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Although huge in number, small businesses are less likely to have influence, I believe, solely because most legislators do not understand them. They are not Nike, but explaining that – and having them comprehend it – has been hit and miss.

Salem Business Journal

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