Small (business) is beautiful
Amid the often gloomy economic news in the current recession the small business sector of the US economy still shows some surprising signs of buoyancy. And the importance of small business to the nation's economic well-being should not be minimized. Most new jobs in the US are created by small firms with fewer than 100 workers, according to the Small Business Administration. Moreover, small businesses have accounted for half of all American innovation in this century, and innovation accounts for between 40 and 50 percent of all US economic growth. The SBA reports that from 1968 to 1976 the 1,000 largest US corporations creasted 75,000 new jobs; the nation's small businesses created 6 million.
That is not to say America's small businesses have not been affected by the economic downturn like everyone else. For instance, after almost three years of steady increases, employment among small firms now has started to drop, largely the result of belt- tingtening by entrepreneurs who expect sales to continue to decline through 1980.
Small businesses also are being hurt by high interest rates wich make borrowing more difficult. Soaring social-security and other taxes and hikes in the minimum wage that have averaged from 10 to 15 percent a year recently also have added to their problems. Yet entrepreneurs traditionally exhibit a toughness and determination in hard times not always visible in larger, more cautious corporations. That same spirit of innovation and risk, of individual enterprise, that has prompted a growing number of Americans to dare to open their own businesses in recent years make the small business owner less inclined to buckle under in the face f adverse conditions.
Arthur Levitt Jr., chairman of the White House Commission on Small Business, noted recently, "There is a tide in the spirit of individual enterprise in America, and it is rising." This is a tide the Carter administration and Congress should utilize if they hope to hold unemployment within reasonable bounds as they strive to bring inflation under control.
The White House Conference on Small Businesses earlier this year put forward 60 specific recommendations that focus primarily on the biggest obstacles small businessmen encounter: high taxation, inflation, and too much government regulation and paperwork. A number of bills to simplify tax schedules, encourage business innovation, and accelerate the tax depreciation alowance on equipment have been introduced in Congress. None is more important to the small businessman than the proposed Regulation Reform Bill, which provides for coordination and simplification of government regulations.
As small businessmen are fond of pointing out, they are not seeking a handout or special favors from Washington. They just want less government interference. The need is for an environment that encourages businessmen to take the risks and try the kind of innovations that over the years have helped build the American enterprise system into the world's strongest.