Building an Opportunity Economy: The State of Small Business and Entrepreneurship

Abstract

Entrepreneurship matters. It fosters discovery, innovation and job creation. It leads to more productive production processes that improve productivity and real wages. Entrepreneurs develop new and less expensive products that improve consumer well-being. They make markets more efficient. New firms account for most of the net job creation in the United States. Moreover, the vast majority of economic gains from innovation and entrepreneurship accrue to the public at large, rather than entrepreneurs. Entrepreneurship is in decline. The reasons for this are manifold. One policy change – or even a few – will not solve the problem because the problem is caused by the combined weight of hundreds of regulatory or statutory burdens imposed on small and start-up enterprises. The problems fall into eight basic categories: (1) Poor Tax Policy; (2) Inadequate Access to Capital; (3) Expensive Health Care; (4) Burdensome Energy and Environment Laws; (5) High and Growing Regulatory Costs; (6) Onerous Labor and Employment Laws; (7) Bad Immigration Rules; and (8) A Costly Legal System. If we want a return to a prosperous America with opportunity for all and rising real wages, then Congress needs to systematically address these issues with alacrity. This testimony makes 97 specific recommendations to remove barriers to entrepreneurship and economic growth.