Monday, November 12, 2012

US Government Focused On Wrong Small Businesses For Job Creation

From The Wall Street Journal, "Why Washington Has It Wrong on Small Business: For starters, policy makers should ask a simple question: What is a small business, anyway?" by Aaron Chatterji:
Take this simple fact: Small companies create enormous numbers of jobs, but those gains are driven by a handful of startups that actually grow big. Most small businesses start small and stay that way.

Less than a quarter of America's 27 million small businesses have employees. An even smaller portion grow beyond 20 employees. And many of them don't want to. New research from the University of Chicago finds that 75% of small-business owners aren't aiming for growth at all. They're basically just looking for a steady job as their own boss.

Source: The Wall Street Journal
Yet the government has traditionally placed the neighborhood store and the high-potential startup in the same catchall category. It offers them the same loan programs, counseling services and other assistance. And that means lots of small companies, not to mention the economy as a whole, get shortchanged.

Missing the Distinction
For instance, the government might institute a tax credit for hiring new workers. That's of great importance to a local company like a nail salon that might be on the fence about taking on an employee.

But high-potential startups often aren't as worried about how to pay for workers; they're concerned with finding high-skilled employees, whatever the cost. So they're more focused on issues like immigration reform and science, technology, engineering and math education.

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