More Businesses Shutting Down than Starting Up
'Business deaths now exceed business births for the first time' in decades.
7:28 AM, May 8, 2014 • By WHITNEY BLAKE
A new Brookings Institution report indicates that businesses are shuttering their doors more quickly than new ones are popping up.
From the Washington Post:
This descent has a broad scope; no group is immune. Brookings notes that “the national decline in business dynamism has been a widely shared experience.” It “hasn’t been isolated to particular industrial sectors and firm sizes” and “reach[es] all fifty states and all but a few metropolitan areas.”
The think tank further observes: “Firms and individuals appear to be more risk averse too—businesses are hanging on to cash, fewer people are launching firms, and workers are less likely to switch jobs or move.”
Brookings doesn’t attribute the trend to anything in particular, stating that would “requir[e] a more complete knowledge about what drives dynamism, and especially entrepreneurship, than currently exists.”
Just going out on a limb here, but perhaps an additional $73 billion in government regulations each year have something to do with it? Not to mention the 400-plus employers that have cut hours or positions because of Obamacare—or the overall hostile business climate in which businesses are reminded they didn’t achieve anything on their own.
Brookings recommends the government “adopt policies that better facilitate entrepreneurship,” increase visas for entrepreneurs, and retain foreign students with STEM degrees (science, technology, engineering, math).
The report attempts to provide a glimmer of solace in the last paragraph, even invoking the father of the “Bridge to the 21st Century”:
Nevertheless, the future does not bode well; according to Brookings, “if [the decline] persists, it implies a continuation of slow growth for the indefinite future.”
So much for jobs being “saved or created.”
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