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!