A recent report by the Center for Economic and Policy Research using data from the OECD measures the share of employment in small businesses in 22 rich democracies (list found on page 4). From the summary:
An important part of our national identity is built around the idea that – thanks to low taxes, limited regulation, unfettered labor markets, and a national spirit of entrepreneurship – the United States offers an environment for small business that is unmatched anywhere else in the world.
The international economic data, however, tell a different story about the state of U.S. small business. By every measure of small-business employment, the United States has among the world’s smallest small-business sectors (as a proportion of total national employment).
One interpretation of the data presented here is that self-employment and small-business employment may be a less important indicator of entrepreneurship than we have long thought. Another reading of the data, however, is that the United States has something to learn from the experience of other advanced economies, which appear to have had much better luck promoting and sustaining small-business employment.
On the possible impact of non-universal healthcare
One plausible explanation for the consistently higher shares of self-employment and small-business employment in the rest of the world’s rich economies is that all have some form of universal access to health care. The high cost to self-employed workers and small businesses of the private, employer-based health care system in place in the United States may act as a significant deterrent to small start-up companies, an experience not shared by entrepreneurs in countries with universal
access to health care.
It appears the myth of America as the land of entrepreneurs has been debunked.
**Update**
My friend Josh commented and shared an article from the Economist that provides a different perspective. Perhaps it’s that small businesses in the US are more able than their European counterparts to grow into larger businesses? The article points to some interesting cultural and structural differences that might contribute to this, though I wish there were more examples other than the successes of well-educated tech entrepreneurs. And I’m not sure most working-class Americans would agree with the statement that “They are comfortable with the risk-taking that is at the heart of entrepreneurialism.” Perhaps when you are well-educated and relatively well-off (as in the article’s preferred illustrative region, Silicon Valley: 75% over $75k, 86% college educated) you don’t fear that next layoff as much as the other guy, but I wouldn’t assume this ethos of entrepreneurialism (which in this context seems to be a euphemism for job insecurity) is held by every or even most Americans, especially at a time like this.
Tagged: business, economics, entrepreneurship, politics, research
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[...] now for something completely (maybe not, healthcare is sort of involved ) http://www.adambohannon.org/blog/uni…usiness-small/ Just got me thinking about entrepreneurship here. __________________ Saying smaller engines [...]
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This article from the Economist isn’t talking about the relationship between health care and small business, but it makes a pretty good case that the U.S. is a major exporter of entrepreneurship, mainly b/c it’s so rooted in our history and identity as a nation. But there is no doubt health care costs put a strain on small businesses.
http://www.economist.com/specialreports/displaystory.cfm?story_id=13216037
“The other two of the world’s three biggest developed economies—the EU and Japan—are far less entrepreneurial. The number of innovative entrepreneurs in Germany, for instance, is less than half that in America, according to the Global Entrepreneurship Monitor (GEM), a joint venture between the London Business School and Babson College.”