Entrepreneurship is "Weak," Who's to Blame?

     Over the past six years, we have seen the number of startup businesses decline considerably due to a variety of reasons. Even though there have been some improving job numbers in recent months, the disturbing trend is that are fewer new businesses appearing, and the businesses that currently do exist aren't hiring as many workers as they used to hire. Researchers consider this situation a huge threat to the workforce since a variety of studies have indicated that America's true job creators are these startup businesses. 

     In the past, new companies have generated approximately 3 million new jobs for the citizens of the United States. This number has dropped to 2.5 million during the past recession and new government figures forecast that it's only getting worse. Using statistics from the Labor Department, Tim Kane, an economist at the Hudson Institute, researched how many jobs were created per 1,000 people by these startup businesses. Throughout the 1980s and 1990s, the number held solid at 11 (per 1,000 people), but that number has steadily declined to below 8 in 2010 and 2011 as evidenced in the chart.

     There are a variety of reasons for this decline. One major reason is that the local governments have been growing into a major obstacle for entrepreneurs. Local boards, various city officials, and even state governments, have increased the amount regulations for entrepreneurs and demanded that they get licenses in order to operate. According to Brink Lindsey, a scholar from the Kauffman Foundation, the burdens of the government on these entrepreneurs are destroying their opportunities. In addition, new companies that do not need employees in the office find it cheaper to hire freelancers in developing countries around the world than hire workers in America. This process requires less paperwork and less taxes overall for business owners.

     In my opinion, the government needs to reduce the amount of regulations they have on rising entrepreneurs. By doing this, entrepreneurs can start to create businesses again with ease and begin to hire more American workers. In addition, the government should do something to either discourage hiring freelance workers or encourage hiring domestic workers. If local governments can provide some sort of incentive to entrepreneurs to influence them to hire American workers, the number of jobs created can also rise a bit over time. Doing all of this may be somewhat of a risk as it could take a while for the ease in regulations and implementation of incentives to make their mark, but I feel that if governments do this, it can help the economy grow and allow more people to get back to work. The way things are going now though, something needs to be done in order to shift these discouraging numbers into the right direction. If nothing is done, all I can see happening is more entrepreneurs struggling to start up businesses, which will overall lead to an even greater decrease in jobs created, something our economy can not afford.