After eight long, bitter years under Obama, will things go better for entrepreneurs and small businesses now that Donald Trump is in the White House? Once upon a time, America was the best place in the world for those that wanted to work for themselves. Our free market capitalist system created an environment in which entrepreneurs and small businesses greatly thrived, but today they are being absolutely eviscerated by the control freak bureaucrats that dominate our political system. Year after year, leftist politicians just keep piling on more rules, more regulations, more red tape and more taxes. As a result, the number of self-employed Americans is now lower than it was in 1990…
In April 1990, 8.7 million Americans were self-employed, but today only 8.4 million Americans are self-employed.
Of course our population has grown much, much larger since that time. In 1990, there were 249 million people living in the United States, but today there are 321 million people living in this country.
What this means is that the percentage of the population that is self-employed is way down.
In fact, one study found that the percentage of Americans that are self-employed fell by more than 20 percent between 1991 and 2010.
And if you go back even farther, the numbers are even more depressing. It may be hard to believe, but the percentage of “new entrepreneurs and business owners” declined by a staggering 53 percent between 1977 and 2010.
Sometimes I like to watch a television show called Shark Tank, and on that show they make it seem like entrepreneurship in America is thriving.
But the exact opposite is actually the case. In a previous article, I discussed how the number of new businesses being created in the United States has been steadily falling over the years. According to economist Tim Kane, the number of startup jobs per one thousand Americans has been declining for several consecutive presidential administrations…
Bush Sr.: 11.3
Bush Jr.: 10.8
So why is this happening?
As I mentioned at the top of this article, self-employed Americans are being absolutely strangled by oppressive rules, regulations and taxes.
To illustrate this point, I would like to share with you some quotes from an open letter that was authored by a small business owner named Don Chernoff…
#1 I work for myself and have to pay my own medical expenses. Before the “affordable care act” I was paying about $200 per month for a high deductible policy. It was far from perfect but it got so much worse under the “Affordable” care act.
I now pay over $400 a month, my deductible went from $5,000 to over $6,000 and my out of pocket costs for care have skyrocketed.
#2 I have to spend dozens of hours and thousands of dollars for a tax accountant each spring to prepare my taxes because I cannot possibly understand how to do it myself, and I have a master’s degree in engineering.
#3 Many years ago when I quit a perfectly good job to start my own small business, I was shocked to learn that I had to pay both my share and what had been my employer’s share of Social Security.
#4 Between state, federal and local taxes you’ve probably paid 50% or more of your income in taxes, but that’s not enough for politicians.
If you’ve been lucky enough to have created a business you can sell, now you’ll get to enjoy paying another tax on the capital gain from the sale.
This is another reason why we need a conservative revolution in Washington. We should demand that our members of Congress lower tax rates dramatically, completely eliminate the self-employment tax, greatly simplify the tax code and get rid of as many regulations on small business owners as possible.
In fact, if it was up to me I would abolish a number of federal agencies completely.
What we are doing right now is not working. Small businesses have traditionally been one of the main engines of economic growth in this country, but thanks to the left they are unable to play that role at the moment.
It isn’t an accident that over the last ten years the U.S. economy has grown at exactly the same rate as it did during the 1930s.
If we want our economy to be great again, we need to go back and start doing the things that made it great in the first place. If we continue to suffocate our economy, we will continue to get the same results.
And with each passing day, we get more signs that the economy is heading into another major downturn. For instance, we just learned that Sears is closing 30 more stores on top of the 150 that had already been announced…
Sears Holdings, which wasn’t shy when it announced at the start of the year that it is closing 150 underperforming stores, has quietly added at least 30 more to the list.
Another 12 Sears stores and 18 Kmarts are among the locations that are closing, from Carson, Calif., to Hialeah, Fla., with most scheduled to shut their doors in July, based on calls to the stores, malls and confirmation in local media.
At the start of the year, the retailer pinpointed the 150 stores it said it would close. But it declined this week to provide a list of additional locations that are slated to shut since then, saying that it update store counts each quarter.
In addition, we just learned that new home sales in April were 11.4 percent lower than they were in March…
If you’re surprised by the collapse in new home sales in April, then you’re not paying attention.
The 11.4% MoM plunge in new home sales in April was 5 standard deviations below expectations and the biggest since March 2015.
Yes, the stock market is holding up for the moment, but for most Americans the “real economy” just continues to deteriorate. Just because we are at the end of a giant financial bubble does not mean that everything is going to be okay.
The numbers that I brought up in this article are just another example of our long-term economic decline. In a healthy economy, entrepreneurs and small businesses would be thriving. But instead, they are being systematically strangled out of existence by a political system that is wildly out of control.
What would you say about an economy where businesses are shutting down faster than they are opening? Well, a shocking new study released by the Brookings Institution indicates that this is exactly what is happening in the United States. We are absolutely killing small businesses and the entrepreneurial spirit in this country, and as you will see below, the number of self-employed Americans has been on a downward trend for a decade even though our population has been steadily growing. Traditionally, small businesses have been the primary engine of job growth in this nation, so the fact that study after study has found that small business creation is being crippled in the United States is a really bad sign for our economic future.
Personally, I write about our long-term economic decline nearly every day, but even I had no idea that businesses were being destroyed faster than they were being created. According to the Brookings Institution, this first started happening in 2009…
The American economy is less entrepreneurial now than at any point in the last three decades. That’s the conclusion of a new study out from the Brookings Institution, which looks at the rates of new business creation and destruction since 1978.
Not only that, but during the most recent three years of the study — 2009, 2010 and 2011 — businesses were collapsing faster than they were being formed, a first.
And this mirrors an earlier study conducted by economist Tim Kane. According to his analysis of U.S. Department of Labor data, the following is how the decline in the number of new business jobs per one thousand Americans breaks down by presidential administration…
Bush Sr.: 11.3
Bush Jr.: 10.8
As you can see, this is a problem that has been building for decades and that has accelerated under the Obama administration.
We are strangling small business creation to death, and as a result the number of Americans that are self-employed just keeps going down. Just check out this chart…
And keep in mind that throughout this entire time the U.S. population has been growing. So the numbers in the chart above should be going up steadily as the population grows. But instead they have just kept going down.
Meanwhile, the “economic recovery” is continuing in the corporate world as well.
On Tuesday, we learned that Office Depot is going to be closing 400 stores.
Why would that happen if the economy was actually getting better?
When this was announced, shares of Office Depot rose about 20 percent.
I can never understand why that happens. You would think that when a business makes an announcement that essentially says “our business is failing” that it would cause people to dump the stock.
In any event, this comes on the heels of an announcement by Staples back in March that it was going to shut down 225 stores in the United States and Canada.
So where will we buy our pens and paper from now on?
If the economy really was “recovering”, you would think that demand for office supplies would actually be on the rise.
But the only places where the economy is “recovering” is in places such as Washington D.C., New York City and San Francisco.
Those at the top of the pyramid are doing well, but almost everyone else in the country is really suffering right now.
When you kill off small businesses and the entrepreneurial spirit, it tends to increasingly funnel money to the very top of the food chain. And this is precisely what is happening in America at this point. In a recent article, Charles Hugh Smith included a chart that shows how average household net worth in the U.S. breaks down by quartile…
Bottom 25%: $4,600
From 25% to 50%: $21,700
From 50% to 75%: $78,900
From 75% to 90%: $242,800
Top 10%: $1,606,600
As you can see, the bottom 50 percent are really not that much above zero at all. In the old days, it seemed like almost everyone was “middle class” in America, but now that is rapidly changing.
We can see this increasing divide in the real estate market as well. According to Bloomberg, sales of million dollar homes are booming, but sales of homes at the low end are plunging…
“Million-dollar homes in the U.S. are selling at double their historical average while middle-class property demand stumbles, showing that the housing recovery is mirroring America’s wealth divide.
Purchases costing $1 million or more rose 7.8 percent in March from a year earlier, according to data released last week by the National Association of Realtors. Transactions for $250,000 or less, which represent almost two-thirds of the market, plunged 12 percent in the period”
So this explains why it is almost impossible to find an affordable home in San Francisco, but the overall homeownership rate in the United States has dropped to the lowest level in 19 years.
But even in our wealthy enclaves there are signs of deep economic trouble. For example, in New York City the number of homeless children has soared to a new all-time high…
They’re just like other kids except they have a secret. They are homeless. Children are living hidden lives in plain sight. They are part a growing number of low income families who find themselves with no way out but they are working hard to find a solution.
It’s a big issue. And it’s growing. More than 23,000 children sleep in homeless shelters every night, an all-time high, according to the Coalition for the Homeless.
The only “recovery” being experienced in America is the one that is happening on Wall Street, in boardrooms in Silicon Valley and in the halls of power in Washington.
In the rest of the country, retail stores are closing at the fastest pace that we have seen since the collapse of Lehman Brothers, 20 percent of all families do not have a single member that is employed and 49 million Americans are dealing with food insecurity.
There is no way that we are ever going to have a broad-based economic recovery in this nation if we continue to destroy small businesses. They are the lifeblood of any economy and they are the primary engine of job creation.
Sadly, our politicians seem completely clueless about all of this. So they will continue to do the same things that they have always been doing and then wonder why the economy never seems to turn around.
The percentage of Americans that are economically independent has dropped to a stunningly low level. In order to be economically independent, you have got to be able to take care of yourself without any assistance from anyone else. Unless you are independently wealthy, that means that you either have your own business or you have a full-time job. Unfortunately, as you will see below, the percentage of Americans that are self-employed is at an all-time record low and the percentage of Americans with a full-time job has declined to a level not seen in about 30 years. As a result, more Americans than ever find themselves forced to turn to the government for assistance. When you add it all up, about half of all Americans get money from the government each month these days. And yes, there will always be poor people that cannot take care of themselves that need help, but when you have more than half of the population dependent on the government that is a major problem. You see, the truth is that our independence is systematically being taken away from us and we are steadily being made serfs of the state. And once you become a serf of the state, it is very hard to resist anything the government is doing in a meaningful way. After all, the money that you are getting from the government is enabling you to survive. In essence, your allegiance has been at least partially purchased and you may not even realize it.
Of course this is not how the United States was supposed to operate. We were never intended to be a collectivist nation. Rather, we were intended to be a country where liberty and freedom thrived and where most people would be able to independently take care of themselves.
Unfortunately, it is becoming increasingly difficult to be economically independent in America today. One reason for this is that the environment for small businesses in this country is the most toxic that it has ever been before. The federal government, our state governments and even our local governments are constantly coming up with new ways to oppress small business.
And just this week we learned that the IRS is specifically targeting small business owners and sending them threatening letters.
Yes, you read that correctly. Despite all of the trouble that the IRS is currently in, they are still choosing to specifically go after small businesses with both barrels. As a recent Forbes article explained, the IRS plans to send threatening letters to 20,000 small businesses all over the country…
The tax agency is doing some targeting of its own, fingering at least 20,000 small businesses. And that number will grow. The scrutiny on this group and in this way is a little frightening. Small business people across America are receiving IRS notices. More will be coming. The IRS gathers data from many third parties—including credit card companies—to see if you picked up every nickel of income.
This is absolutely disgusting, but it is just another example of how small business is being eradicated in the United States. As I mentioned in a previous article, the percentage of Americans that are self-employed has dropped to a record low…
Well, at least we can achieve economic independence by getting a full-time job, right?
Sadly, that is becoming increasingly difficult to do as well.
The chart below was created by Chartist Friend from Pittsburgh, and it shows that the percentage of working age Americans with a full-time job dropped sharply to 47 percent during the last recession and it has stayed about that level ever since. The yellow line is the line in the chart which demonstrates this…
As you can see, we briefly touched that level in the 1970s and again briefly in the 1980s, but it is important to remember that the percentage of women that chose to seek employment was much lower back then. When you take that into account, the current level of full-time employment in this country looks even worse.
The quality of jobs in this country has been steadily falling for quite some time, and we are rapidly transitioning to an economy where part-time employment will be much more prominent.
But you can’t support a family or be economically independent on a part-time income. In fact, most of those that try to make it on a part-time income find that they must turn to the government for help.
And right now, a higher percentage of Americans are economically dependent on the government than ever before. The following is from a recent article by Charles Hugh-Smith…
Why? Because half of us are getting a direct check, benefit or payment from the state. Over 61 million people get a check from Social Security, over 50 million draw Medicare benefits, another 50 million get Medicaid benefits, 47 million receive SNAP food stamp benefits, 22 million people work directly for the state on all levels, millions more work for government contractors that are effectively proxies of the state, millions more receive Federally funded extended unemployment, retirement checks, Section 8 housing benefits, and so on.
Orwell underestimated the power of complicity. Once a citizen receives a direct payment from the state, the state has purchased their complicity, for no matter how much that citizen may complain privately about the state, he or she will never risk the payment/benefit by resisting the state in a politically meaningful way.
Once you get a check from the state, you begin loving your servitude. The collusion of the state and its central bank is truly a thing of authoritarian beauty: the central bank (the Federal Reserve) creates money out of thin air and buys government bonds with the new money. The state can thus borrow unlimited sums at low rates of interest, and continue to send tens of millions of individual payments out to buy the passivity and complicity of its citizens.
So what is the solution?
Of course the solution would be for our economy to produce more small businesses and more full-time jobs so that more people could achieve economic independence.
Sadly, right now our system is steadily killing full-time jobs and small businesses, and there does not appear to be any hope for a major turnaround any time soon.
At this point, the number of Americans that are financially dependent on the government is absolutely staggering, and it gets worse with each passing year. Just consider the following statistics which come from one of my previous articles entitled “21 Facts About Rising Government Dependence In America That Will Blow Your Mind“…
1. Back in 1960, the ratio of social welfare benefits to salaries and wages was approximately 10 percent. In the year 2000, the ratio of social welfare benefits to salaries and wages was approximately 21 percent. Today, the ratio of social welfare benefits to salaries and wages is approximately 35 percent.
2. According to the U.S. Census Bureau, 49 percent of all Americans live in a home that gets direct monetary benefits from the federal government. Back in 1983, less than a third of all Americans lived in a home that received direct monetary benefits from the federal government.
3. Overall, more than 70 percent of all federal spending goes to “dependence-creating programs”.
4. According to the Survey of Income and Program Participation conducted by the U.S. Census, well over 100 million Americans are enrolled in at least one welfare program run by the federal government. Sadly, that figure does not even include Social Security or Medicare.
5. Today, the federal government runs about 80 different “means-tested welfare programs”, and almost all of those programs have experienced substantial growth in recent years.
6. The number of Americans on Social Security disability now exceeds the entire population of the state of Virginia.
7. If the number of Americans on Social Security disability were gathered into a separate state, it would be the 8th largest state in the country.
8. In 1968, there were 51 full-time workers for every American on disability. Today, there are just 13 full-time workers for every American on disability.
9. Right now, there are approximately 56 million Americans collecting Social Security benefits. By 2035, that number is projected to soar to an astounding 91 million.
10. Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.
11. The number of Americans on food stamps has grown from 17 million in the year 2000 to more than 47 million today.
12. Back in the 1970s, about one out of every 50 Americans was on food stamps. Today, about one out of every 6.5 Americans is on food stamps.
13. Today, the number of Americans on food stamps exceeds the entire population of the nation of Spain.
14. According to one calculation, the number of Americans on food stamps now exceeds the combined populations of “Alaska, Arkansas, Connecticut, Delaware, District of Columbia, Hawaii, Idaho, Iowa, Kansas, Maine, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Oklahoma, Oregon, Rhode Island, South Dakota, Utah, Vermont, West Virginia, and Wyoming.”
15. According to a report from the Center for Immigration Studies, 43 percent of all immigrants that have been in the United States for at least 20 years are still on welfare.
16. Back in 1965, only one out of every 50 Americans was on Medicaid. Today, one out of every 6 Americans is on Medicaid, and things are about to get a whole lot worse. It is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.
17. As I wrote about recently, it is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.
18. At this point, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years. That comes to approximately $328,404 for every single household in the United States.
19. Back in 1990, the federal government accounted for just 32 percent of all health care spending in America. It is being projected that the federal government will account for more than 50 percent of all health care spending in the United States very soon.
20. The amount of money that the federal government gives directly to the American people has increased by 32 percent since Barack Obama entered the White House.
21. When you total it all up, American households are now receiving more money directly from the federal government than they are paying to the government in taxes.
Once again, there is certainly nothing wrong with helping the poor, and there will always be people that need a helping hand.
But what we have in America today is far beyond that. What we have in America today is a situation where economic independence is being systematically eradicated and the government is increasingly being expected to provide our daily bread and to take care of all of us from the cradle to the grave.
And once you are dependent on the system, at least part of you is going to become resistant to anyone or anything that threatens to bring meaningful change to the system because your survival depends on the system.
Or could I be wrong about this?
What do you think?
Please feel free to share your opinion by posting a comment below…
If you know someone that actually believes that the U.S. economy is in good shape, just show them the statistics in this article. When you step back and look at the long-term trends, it is undeniable what is happening to us. We are in the midst of a horrifying economic decline that is the result of decades of very bad decisions. 30 years ago, the U.S. national debt was about one trillion dollars. Today, it is almost 17 trillion dollars. 40 years ago, the total amount of debt in the United States was about 2 trillion dollars. Today, it is more than 56 trillion dollars. At the same time that we have been running up all of this debt, our economic infrastructure and our ability to produce wealth has been absolutely gutted. Since 2001, the United States has lost more than 56,000 manufacturing facilities and millions of good jobs have been shipped overseas. Our share of global GDP declined from 31.8 percent in 2001 to 21.6 percent in 2011. The percentage of Americans that are self-employed is at a record low, and the percentage of Americans that are dependent on the government is at a record high. The U.S. economy is a complete and total mess, and it is time that we faced the truth.
The following are 40 statistics about the fall of the U.S. economy that are almost too crazy to believe…
#1 Back in 1980, the U.S. national debt was less than one trillion dollars. Today, it is rapidly approaching 17 trillion dollars…
#2 During Obama’s first term, the federal government accumulated more debt than it did under the first 42 U.S presidents combined.
#3 The U.S. national debt is now more than 23 times larger than it was when Jimmy Carter became president.
#4 If you started paying off just the new debt that the U.S. has accumulated during the Obama administration at the rate of one dollar per second, it would take more than 184,000 years to pay it off.
#5 The federal government is stealing more than 100 million dollars from our children and our grandchildren every single hour of every single day.
#6 Back in 1970, the total amount of debt in the United States (government debt + business debt + consumer debt, etc.) was less than 2 trillion dollars. Today it is over 56 trillion dollars…
#7 According to the World Bank, U.S. GDP accounted for 31.8 percent of all global economic activity in 2001. That number dropped to 21.6 percent in 2011.
#8 The United States has fallen in the global economic competitiveness rankings compiled by the World Economic Forum for four years in a row.
#9 According to The Economist, the United States was the best place in the world to be born into back in 1988. Today, the United States is only tied for 16th place.
#10 Incredibly, more than 56,000 manufacturing facilities in the United States have been permanently shut down since 2001.
#11 There are less Americans working in manufacturing today than there was in 1950 even though the population of the country has more than doubled since then.
#12 According to the New York Times, there are now approximately 70,000 abandoned buildings in Detroit.
#13 When NAFTA was pushed through Congress in 1993, the United States had a trade surplus with Mexico of 1.6 billion dollars. By 2010, we had a trade deficit with Mexico of 61.6 billion dollars.
#14 Back in 1985, our trade deficit with China was approximately 6 million dollars (million with a little “m”) for the entire year. In 2012, our trade deficit with China was 315 billion dollars. That was the largest trade deficit that one nation has had with another nation in the history of the world.
#15 Overall, the United States has run a trade deficit of more than 8 trillion dollars with the rest of the world since 1975.
#16 According to the Economic Policy Institute, the United States is losing half a million jobs to China every single year.
#17 Back in 1950, more than 80 percent of all men in the United States had jobs. Today, less than 65 percent of all men in the United States have jobs.
#18 At this point, an astounding 53 percent of all American workers make less than $30,000 a year.
#19 Small business is rapidly dying in America. At this point, only about 7 percent of all non-farm workers in the United States are self-employed. That is an all-time record low.
#20 Back in 1983, the bottom 95 percent of all income earners in the United States had 62 cents of debt for every dollar that they earned. By 2007, that figure had soared to $1.48.
#21 In the United States today, the wealthiest one percent of all Americans have a greater net worth than the bottom 90 percent combined.
#22 According to Forbes, the 400 wealthiest Americans have more wealth than the bottom 150 million Americans combined.
#23 The six heirs of Wal-Mart founder Sam Walton have as much wealth as the bottom one-third of all Americans combined.
#24 According to the U.S. Census Bureau, more than 146 million Americans are either “poor” or “low income”.
#25 According to the U.S. Census Bureau, 49 percent of all Americans live in a home that receives direct monetary benefits from the federal government. Back in 1983, less than a third of all Americans lived in a home that received direct monetary benefits from the federal government.
#26 Overall, the federal government runs nearly 80 different “means-tested welfare programs”, and at this point more than 100 million Americans are enrolled in at least one of them.
#27 Back in 1965, only one out of every 50 Americans was on Medicaid. Today, one out of every 6 Americans is on Medicaid, and things are about to get a whole lot worse. It is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.
#28 As I wrote recently, it is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.
#29 At this point, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years. That comes to approximately $328,404 for every single household in the United States.
#30 Right now, there are approximately 56 million Americans collecting Social Security benefits. By 2035, that number is projected to soar to an astounding 91 million.
#31 Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.
#32 Today, the number of Americans on Social Security Disability now exceeds the entire population of Greece, and the number of Americans on food stamps now exceeds the entire population of Spain.
#33 According to a report recently issued by the Pew Research Center, on average Americans over the age of 65 have 47 times as much wealth as Americans under the age of 35.
#34 U.S. families that have a head of household that is under the age of 30 have a poverty rate of 37 percent.
#35 As I mentioned recently, the homeownership rate in America is now at its lowest level in nearly 18 years.
#36 There are now 20.2 million Americans that spend more than half of their incomes on housing. That represents a 46 percent increase from 2001.
#37 45 percent of all children are living in poverty in Miami, more than 50 percent of all children are living in poverty in Cleveland, and about 60 percent of all children are living in poverty in Detroit.
#38 Today, more than a million public school students in the United States are homeless. This is the first time that has ever happened in our history.
#39 When Barack Obama first entered the White House, about 32 million Americans were on food stamps. Now, more than 47 million Americans are on food stamps.
#40 According to one calculation, the number of Americans on food stamps now exceeds the combined populations of “Alaska, Arkansas, Connecticut, Delaware, District of Columbia, Hawaii, Idaho, Iowa, Kansas, Maine, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Oklahoma, Oregon, Rhode Island, South Dakota, Utah, Vermont, West Virginia, and Wyoming.”
The percentage of Americans that are working for themselves has never been lower in the history of the United States. Once upon a time, the United States was a paradise for entrepreneurs and small businesses, but now the control freak bureaucrats that dominate our society have created a system that absolutely eviscerates them. This is very unfortunate, because by murdering small business, the bureaucrats are destroying the primary engine of job growth in this country. One of the big reasons why there are not enough jobs in America today is because small business creation is way down. As I mentioned yesterday, entrepreneurs and small businesses are being absolutely devastated by rules, regulations, red tape and by oppressive levels of taxation. If anyone doubts that small business in the United States is dying, just look at the charts below. Sadly, this is what the bureaucrats that run things want. They don’t want us to be independent of the system. Instead, they are much more comfortable when as many of us as possible are heavily dependent on the system in one way or another. If all of us have to go running to the government or to one of the big corporations for a job, then we are much easier to control. But as the control freaks continue to construct their bureaucratic utopia, they are also killing off what once made the U.S. economy so great.
The other day I came across the following two charts in an article by Charles Hugh Smith, and I was absolutely stunned by what I saw. This first chart shows that the number of unincorporated self-employed Americans has dropped back to levels that we have not seen since the mid-1980s even though our population has increased by tens of millions of people since that time…
As you can see, from 1970 to the mid-1990s the number of unincorporated self-employed Americans rose steadily. But in the mid-1990s it began to level off and now it is falling rapidly.
This next chart shows the percentage of self-employed Americans as a share of non-farm employment. In other words, those that work on farms are excluded from this chart. The percentage of self-employed Americans was fairly stable between 1970 and 1990, but since 1990 it has been steadily eroding and it has now reached a level never seen before…
At this point, only about 7 percent of non-farm workers are self-employed. That is depressingly low. That means that an overwhelming majority of those that are employed in America are working for the system in one capacity or another.
But isn’t that what we pound into the heads of our children these days? We teach them to work hard in school so that they can “get a good job” when they grow up. From a very early age we train our children to plug themselves into the system.
Not that working for someone else is wrong. Of course not. It is just that we are not fostering a spirit of entrepreneurship in America today. In fact, we seem to be doing everything that we can to kill it off.
In a previous article, I detailed how the number of new businesses (and the number of jobs those businesses create) has been steadily declining. In particular, this decline has accelerated dramatically under the Obama administration. According to an analysis of U.S. Department of Labor data performed by economist Tim Kane, the following is how the decline in the number of startup jobs per 1000 Americans breaks down by presidential administration…
Bush Sr.: 11.3
Bush Jr.: 10.8
Is that a good trend or a bad trend?
It doesn’t take an advanced degree in economics to figure out where things are going.
Kane speculated about why we are witnessing such a decline in his paper…
There is anecdotal evidence that the U.S. policy environment has become inadvertently hostile to entrepreneurial employment. At the federal level, high taxes and higher uncertainty about taxes are undoubtedly inhibiting entrepreneurship, but to what degree is unknown. The dominant factor may be new regulations on labor. The passage of the Affordable Care Act is creating a sweeping alteration of the regulatory environment that directly changes how employers engage their workforces, and it will be some time until those changes are understood by employers or scholars. Separately, there has been a federal crackdown since 2009 by the Internal Revenue Service on U.S. employers that hire U.S. workers as independent contractors rather than employees, raising the question of mandatory benefits. New firms tend to use part-time and contract staffing rather than full-time employees during the startup stage. According to Labor Department data, the typical American today only takes home 70 percent of compensation as pay, while the rest is absorbed by the spiraling cost of benefits (e.g., health insurance). The dilemma for U.S. policy is that an American entrepreneur has zero tax or regulatory burden when hiring a consultant/contractor who resides abroad. But that same employer is subject to paperwork, taxation, and possible IRS harassment if employing U.S.-based contractors. Finally, there has been a steady barrier erected to entrepreneurs at the local policy level. Brink Lindsey points out in his book Human Capitalism that the rise of occupational licensing is destroying startup opportunities for poor and middle class Americans.
In my previous article, I also pointed out some of the other statistics that show that small business in America is dying…
-According to the U.S. Census Bureau, the U.S. economy lost more than 220,000 small businesses during the last recession.
-As a share of the population, the percentage of Americans that are self-employed fell by more than 20 percent between 1991 and 2010.
-As a share of the population, the percentage of “new entrepreneurs and business owners” dropped by a staggering 53 percent between 1977 and 2010.
Unfortunately, this is a crisis that has taken decades to develop and that there are not any easy solutions for. But there are certain factors that should be addressed immediately. The following are some of the things that are contributing to the murder of self-employment and small business in America…
#1 Taxes: The IRS seems to especially enjoy tormenting entrepreneurs and small businesses. In fact, things have gotten so bad that even late night talk show hosts are joking about it. Recently, NBC Tonight Show host Jay Leno joked that if Barack Obama really wanted to close down Guantanamo Bay, he should “do what he always does: declare it a small business and tax it out of existence”
#2 Ridiculous Regulations: If you have ever tried to start a small business, you probably know how frustrating it can be dealing with government red tape. In particular, the federal government has burdened our small businesses with gigantic mountains of rules and regulations and it gets worse with each passing day.
#3 State Governments That Are Openly Hostile To Business: A perfect example of this is the state of California. In 2011, the state of California ranked 50th out of all 50 states in new business creation, and yet they just continue to pass more legislation that hurts small businesses.
#4 Obamacare: Our broken healthcare system is a tremendous burden on small businesses, and Obamacare is going to make things much worse.
#5 The One World Trade Agenda: In many industries, U.S. small businesses simply cannot compete against products made by workers that are being paid slave labor wages on the other side of the globe.
#6 Predator Corporations: Time after time we have seen corporate giants extract huge tax breaks and other enormous concessions from local officials which give them an overwhelming advantage. But once the corporate giant moves into town, many of the existing small businesses find that they cannot compete and are forced to shut down.
#7 Our Corrupt Political System: On the national level, elections are almost always won by the politician that raises the most money. Our politicians know that their careers depend on raising money, so they tend to be very good to those that they get big money from. There is a reason why big corporations spend billions of dollars on campaign contributions and lobbying. They do it because it works. Over the decades, the big corporations have been able to shift the rules of the game massively in their favor, and this has been to the detriment of entrepreneurs and small businesses.
Can you think of any other factors that you would add to this list? Please feel free to share your opinion by leaving a comment below…