Various factors during the COVID pandemic led to an increase in small business creation
Small businesses are the backbone of the U.S. economy, and even during the pandemic there was a surge in new businesses formed. In a Forbes op-ed, NFIB Chief Economist Bill Dunkelberg and Research Policy Analyst Maddi Oldstone highlight the increase in the creation of small businesses between 2020-2022.
“The 2020 COVID pandemic saw a surge in new business formations, unlike the last major economic disruption experienced in the fall of 2008,” explains Dunkelberg. “Various factors created an entrepreneurship-friendly environment in 2020, which led to an increase in new businesses. The main factors in play included an increase in household wealth due to higher saving rates, government-issued stimulus checks, and more time spent at home.”
Small business accounts for nearly half (45.9%) of U.S. private-sector employees. The formation of businesses is a good indicator of job creation and U.S. productivity growth. Start-ups contribute to job creation, which helps in productivity and the overall economy. Unlike the 2008 financial crisis which saw a decline, 2021 saw a 5.7 million increase in businesses. Many individuals were laid off due to the pandemic, resulting in more home businesses allowing for goods to be sold from their residence. New economic needs and changing consumer preferences created more circumstances for new businesses to start.
Whether or not the surge in new business formations will continue is unclear, but supporting small business-friendly policies will help these new businesses thrive and attract others.
Take Action: Sign NFIB’s petition and support a crucial business-friendly policy to make the 20% Small Business Deduction permanent before it expires in 2025.
