As
we observe Independence Day, we should reflect on where our economy has
been, where it is headed and what it means for America’s small
businesses. The ongoing economic turmoil has created an uncertain
environment for small businesses, but they also have the potential to be
a main driver of the recovery. As an owner of an American small
business, you have an opportunity to contribute to job growth, highlight
America’s commitment to global competitiveness and reinforce the
nation’s continuing reputation as a driver of innovation.
Small Business Employment Numbers
Many small businesses are planning to add new jobs in the coming months, according to a recent survey
from the National Federation of Independent Business and the ADP
National Employment Report. In fact, “micro-firms” with fewer than 50
employees represented more than a third of the jobs in ADP’s report.
According to the Report to the President from the U.S. Small Business Administration (SBA) entitled “The Small Business Economy,” small businesses have been responsible for
65 percent (or 9.8 million) of the 15 million new jobs created between
1993 and 2009. Even following economic recessions, small firms have
demonstrated they can recover more quickly than some large enterprises.
During the recessions of 1990-91 and 2001, firms with fewer than 20
employees were the only ones that showed job growth. During the recent
downturn, two sectors highly populated by small firms – healthcare and
education – saw increasing employment numbers.
In addition, the U.S. government
says it is committed to fostering further job growth in the small
business sector, pledging additional aid to facilitate expansion and
existing operations. Small businesses may also have additional means of
attracting the best new employees as a result of the government’s pledge
to double the Small Employer Pension Plan Startup Credit and expand the
Saver’s Credit to a 50 percent match on retirement savings.
Increasing Global Demand
American small businesses have shown an increase in export-based revenues. Real exports grew 6.2 percent in 2008 alone,
as businesses large and small took advantage of the declining value of
the dollar, lowering of trade barriers and the increasing cache of
American-made products. Small businesses in particular represent
97 percent of all known exporters and were responsible for 29 percent
of transactions – worth approximately $311 billion. Additionally, growth
in small business exports and export-related jobs should be facilitated
by new legislation, such as the US-Korea Free Trade Agreement that was
recently proposed by the Obama administration.
Small Explosion of Innovation
Small businesses often prove to be a productive breeding ground for innovation
and technological advances, hiring 43 percent of high-tech workers
(scientists, engineers, computer analysts, etc.) and producing 13 times
more patents per employee than large patenting firms. Specifically,
small businesses represent
the following: 98 percent of the companies holding telecommunications
patents, 97 percent of the companies patenting software, 92 percent of
the companies with patents for aerospace products, 90 percent of
companies that have patented pharmaceuticals and medical devices and 87
percent of the companies patenting semiconductor machinery.
Whether
we recognize small businesses for their contribution to job growth, or
champion legislation that will foster global competition and
technological innovation, one thing is for certain: Small businesses
play an essential role in the U.S. economy. Happy Fourth of July!