Are You With Us?
Dec 15th, 2008 | By Dawn R. Rivers | Category: Policy MattersThe U.S. economy is the world’s largest. I bet you knew that.
But did you know that the world’s second largest economy is the U.S. small business economy?
Yes, that’s right. In 2004, small businesses generated 50.7% of the $10.2 trillion U.S. economy (about $5.2 trillion), putting it ahead of Japan’s $3.8 trillion economy.
Which means, among other things, that U.S. policy makers have not one but two world-leading economies to safeguard.
Against a backdrop of multi-billion dollar bailouts of giant multi-national corporations and financial institutions, it’s hard to remember that. I have a strong suspicion that those policy makers forget it on a regular basis.
Of the total small business economy, nonemployer businesses were responsible for generating $887 billion in receipts (about 17%) in 2004. By 2006, the nonemployer segment of the economy was populated by roughly 30 million people, possibly more.
By now, you’re probably wondering why I’m throwing all these numbers at you.
It’s a well-established fact that the number of nonemployer businesses increases when the economy tanks. We won’t have the numbers for a couple of years yet but, when we look back on 2008, I have no doubt at all that we’ll see another large spike in self-employment.
And yet, there’s little evidence that the policy movers and shakes either know or care about all those single-person businesses, even as they consider how best to respond to this newly-declared recession.
That’s a problem.
It’s a problem because it ignores one simple, sparkling, ineluctable fact: regardless of how lawmakers will choose to respond to the recession, Americans are already responding, by creating hundreds of thousands – possibly millions – of new nonemployer businesses.
Whether the lawmakers work with that or ignore it will depend, in part, on the degree to which they accept their responsibility for how that other U.S. economy is doing.
In this type of economy America is creating thousands of jobs and many entrepreneurs are creating these home-based businesses including nonemployer enterprises because there is simply no jobs. We all know that jobs are created by small businesses . In this economy, “micro” businesses are being created by the thousands and MDO’s (Microenterprise Development Organizations) have to be prepared for an onslaught of technical and credit assistance that they will be called on to provide.
Are these MDOs ready!
Self Employment is another term that is being used in inner-cities as well as in rural areas of America. It is here and it is growing and IT WILL CREATE jobs and stabilize micro, small and medium businesses.
No matter what, MDOs MUST be prepared to provide loans to this sector. Banks are NOT and they will NOT provide micro (loans under $35,000) or business loans nor technical assistanace! The Association for Enterprise Opportunity (AEO) the national trade association for MDOs as well as State Microenterprise Associations (SMAs), are very much involved in proposing : Stimulate Main Street….. A Microenterprise Development Approach.
This strategy has three steps:
Step One: Designate $1 Billion in capital to microbusinesses; getting capital flowing immediately to Main Street
Step Two: Invest $1 Billioin in the infrastructure that supports microenterprise.
Step Three: Direct $ 1 Billion of new capital into communities and support communities in need.
This investment of $ 3 Billion in microenterprise development will produce jobs, increase the tax base, and reduce entitlements. It will provide stimulus to the the lower and middles class, immediate relief to micro and small business owners and their employees (those who are left). This strategy will begin the process of lifting the economy of Main Street America! It is time!