The Decline of American Entrepreneurship? Not so fast.

I read an article yesterday that was forwarded to me from The Daily Beast entitled “American Entrepreneurship in Decline” and, like the title suggests, it claimed that for the last 30 years the US has become less entrepreneurial. Additionally, it also stated that during and immediately after the Great Recession “the economy produced hundreds of thousands of fewer new businesses than it did in previous recovery periods, making a lost generation of new enterprises.”  I found the above to be rather bold, if not alarmist, statements and seeing that the most recent data the authors site in relation to entrepreneurship growth is from 2013, I wanted to dig further because I found it frustrating that the above claims were not supported by footnotes or links to tangible data to support the authors claims. So, I did some quick research using the Bureau of Labor Statistics Database and found that while American Entrepreneurship most certainly saw a decline during and immediately after the Great Recession, the pace at which entrepreneurship growth reached pre-recession levels was almost twice as fast as in years preceding.

The chart below, as the title suggests, shows the number of companies that are less than a year old for a particular year…in other words, it shows the number of new companies created each year. The data only goes back to 1994 because the BLS was not collecting it prior and the darkened areas on the chart indicate periods of recession. The peak of new company growth was in 2006 when that number reached 715,734 (chart data) and the low point was in 2010 when the number of new companies bottomed out at 560,588. 2015 saw the creation of 679,072 new companies established, which does not get us back to the high of 2006, but the last year the economy saw the creation of close to that same number was in 2005 when 679,925 new businesses were created.

What’s important to note is that before the Great Recession, it took the economy from 1994-2005, 11 years, to reach roughly 679,000 new companies in 2005 from 569,419 in 1994. However from 2010 to 2015, a period of 5 years, the economy went from 560,588 new companies to 679,072 in 2015, almost the exact same growth in less than half the time. Based on this data alone, one can argue that American Entrepreneurship is not in decline but, actually, in an exponential growth mode.

While the above is certainly reason to be optimistic about American Entrepreneurship, the number of new jobs created by these new firms is in decline. In 1994, the number of jobs created by new companies was 4.1 million, in 2015, that number was 3 million, as evidenced by the chart below.

While the number of new companies may be on the rise, the number of jobs created is in decline and that is of concern. One may attribute the growing rise of automation as a primary player in this trend but one might also consider that more entrepreneurs may be benefiting from incubators or coworking opportunities which may decrease their need to hire employees to handle finance/marketing/sales and instead rely on these models and their associated “mentors”or fellow coworking tenants to help advise them in these areas, thus eliminating the need to hire. While the rise of incubators and coworking spaces may be reducing the number of jobs created by new companies, it’s hard not to argue that their existence may be one main driver of the growth behind the fast rise in post-recession entrepreneurship and by providing a space for entrepreneurs to network and knowledge share, they may be creating a foundation for companies to spawn, grow, and hire at an even faster and more exponential rate.

To conclude, while the article in The Daily Beast lacked a good level of supporting documentation and failed to recognize what’s occurred in the last two years in regards to American Entrepreneurship, the point raised about the reduction in job creation by new companies is certainly valid and one that requires further analysis. However, I am encouraged by the growth in American Entrepreneurship over the last two years, which, I believe, has been stoked by the rise in incubators and coworking spaces across the country. These new outlets for creativity and growth are reasons enough to be optimistic about the future of entrepreneurship and jobs in America.

-Scott

Scott Manning is the President/CEO of the Holly Springs Chamber of Commerce which is located in Holly Springs, North Carolina. He can be reached at scott@hollyspringschamber.org

Community Engagement

For those checking their inboxes this past Friday afternoon, the Chamber launched a new publication called the “Community Engagement Digest” with the hopes of spreading the word about our non-profit members doing exceptional work in our community. Over the last several months our non-profit members have been convening to network, share best practices, and discuss their upcoming events and current needs. It’s remarkable to see the diversity of initiatives and the high level of engagement exhibited by those involved in these organizations. Most people would only associate a Chamber of Commerce with for-profit organizations, and while those groups do compose the majority of our membership, it’s important that we highlight our non-profit members as the health of any community can be directly attributed to the level of empowerment given to it’s most vulnerable citizens. A healthy and diverse non-profit sector adds to the overall success of the private sector and their relationship should be one of inter-dependency and collaboration. From what I’ve seen in Holly Springs, I can say that our community is on the right track and it’s our hope that this publication will further that connection and collaboration!

If you work with a non-profit that should be a part of our Committee for Community Engagement, contact the Chamber at 919-567-1796 or email Scott at scott@hollyspringschamber.org. To read the latest Community Engagement Digest, click here.

Why the Connect NC Bond will NOT require a tax hike

The below is a copy of an article State Budget Director, Andrew T. Heath, wrote for the Star News Online from March 9th, 2016 and is copied in it’s entirety below.

“Some citizens have raised a very good question regarding the Connect NC bond: How can the state afford to pay for a $2 billion bond without a tax increase?

Aggressive debt retirement, strong revenues, and a conservative bond proposal well within the state’s credit capacity is why the Connect NC bond will not require a tax increase today or in the future. The Connect NC bond allocates $1.3 billion or 66 percent of the $2 billion bond to universities and community colleges, reflecting Governor McCrory’s commitment to education. The bond is being proposed because most major capital projects such as new educational buildings, particularly those at our universities and community colleges, cannot be paid out of the annual operating budget without a serious impact on students. If the bond is approved by voters on March 15, UNC Wilmington will receive $66 million for a new health and human services building and nursing school. The bond also provides nearly $6 million for projects at Cape Fear Community College. It has been 15 years since the last bond was approved by voters to update our state’s infrastructure and since then North Carolina’s population has grown by 2 million. To put this growth in perspective, that’s the equivalent of adding the entire population of the state of New Mexico to North Carolina. This growth has resulted in significant infrastructure needs from the mountains to the coast. Think of North Carolina as a growing family. Most families take out a mortgage to pay for their house. As the family grows, it needs a house with more bedrooms and bathrooms. If the family had to pay for a larger house with upfront cash, its ability to pay for other family needs would be severely restricted. So just as the growing family would take out a mortgage to pay for their house as they use it, the Connect NC bond allows the state to pay over 20 or 25 years for assets that will last for 50 years or more. The Connect NC bond proposes taking on only half of the debt we can conservatively afford. A recent report by the state’s Debt Affordability Advisory Committee, a nonpartisan oversight committee, demonstrates that even with the issuance of the $2 billion Connect NC bond, North Carolina could comfortably borrow an additional $2 billion over the next ten years and still keep its hard earned AAA rating, the highest bond rating level awarded by the rating agencies. Therefore, North Carolina’s proposed $2 billion bond for infrastructure improvements when it has a credit line of over $4 billion is akin to the growing family opting for the modest house that meets its needs even when they could afford the house with the swimming pool. Debt capacity is just one reason a tax increase won’t be needed. Another is the fast rate the state is paying off its current debt. North Carolina’s debt retirement is so aggressive, that if voters approve the Connect NC bond, the state will still have less debt five years from now than it does today. As stewards of the taxpayer’s purse, we owe it to our growing North Carolina family to invest during a time of historically low interest rates. It literally has never been less expensive to borrow. Our state has a long history of responsibly using bonds to pay for long-term infrastructure investments, and North Carolina is financially well positioned to make the Connect NC investments for our future and to do so without a tax increase.

Thanks for the question.

Andrew T. Heath is state budget director and former resident of Wilmington.” End of Article.

Please VOTE YES on March 15th!!

Board of Directors Shows Support for Connect NC and Vision 2030

Good morning, at last week’s Chamber Board of Directors Meeting, two resolutions were unanimously passed to express our support for the Connect NC Bond and the NC Chamber’s – Vision 2030.

Connect NC Bond

Please vote on March 15^th in support of the Connect NC bond which will provide over $2 Billion to help fund education, agriculture and family farms, state parks and zoos, public safety and national guard, and rural water and sewer infrastructure improvements. It’s important to note, that this is a bi-partisan initiative and will be paid for without an increase in taxes. Additionally, the $2 billion has already been earmarked to various projects, which you can read about here. From Murphy to Manteo, this bond will impact both rural and urban areas of our state and will help improve the quality of life for all NC citizens. The Holly Springs Chamber of Commerce enthusiastically supports this initiative as it represents an investment to improve the competitiveness of NC for businesses looking to call NC home, as well as improve education, talent development, quality of life, and economic development across the state. For more information, visit www.voteyestoinvest.com and please vote YES on March 15^th!

NC Chamber – Vision 2030

North Carolina has no long-term strategic plan to overcome our most pressing economic challenges and ensure we emerge a winner in the global war for jobs, therefore the NC Chamber Foundation has taken a leadership role in developing a plan called North Carolina Vision 2030 – A Plan for Accelerating Job Growth and Securing North Carolina’s Future. This initiative aims to accelerate job growth and secure North Carolina’s current and future competitiveness. NC Vision 2030 is based around four pillars: Education and Talent Supply, Competitive Business Climate, Entrepreneurship and Innovation, and Infrastructure and Growth Leadership. Similar to the Connect NC Bond, the Holly Springs Chamber believes this initiative will play a critical role in fostering business growth and improving quality of life for our community as well as for all of North Carolina, and we willingly support the NC Chamber and Vision 2030. For more information, visit the NC Chamber’s Vision 2030 site. We will be rolling out additional information about Vision 2030 throughout the year.

 

FutureWork

In 1979, GM had roughly 840,000 workers and $11,000,000,000 in earnings. In 2012, Google had roughly 38,000 workers and $14,000,000,000 in earnings. Today, GM employs around 216,000 employees worldwide and earns about half what they did in 1979. These statistics represent that while work may not be decreasing, jobs certainly are.

I had the distinct pleasure to attend the annual Emerging Issues Forum hosted by NC State’s Institute for Emerging Issues this past Monday at the Raleigh Convention Center where the above statistics were presented. This year’s focus was on FutureWork. Some have called what we are living through as the “fourth industrial revolution” and it’s not hard to see why. Automation has already displaced thousands of jobs, technology is ingrained in every facet of life, and a shift in demography further complicates our current scenario. While we have not seen a massive uprising akin to the Luddites of the 19th century Industrial Revolution, there’s certainly growing concern and discontent with technological unemployment seeping into our state’s factories and warehouses and what that means for a rising precariat worker class.

More than one million North Carolinians are currently employed in the most vulnerable of jobs and it’s estimated that nearly half of all current jobs in NC will be displaced by technology within 30 years. Those are staggering and sobering statistics. So what are we, as a state, to do? The second day of the forum was focused specifically around that question, in fact, the title of day two was “A Future of Good Jobs in North Carolina: Defining Smart Strategies in Key Sectors.” The sectors of focus were Banking & Finance, Education, Energy, Healthcare, and Governments/Smart Communities. I’ll post in the coming days the results of the second day plenary sessions as soon as they are made available but I wanted to make you all aware of the Forum as well as convey how fortunate we are that we live in a state that is taking a proactive approach to addressing the above issues. As an example, one of the speakers was asked by an audience member if he knew of any other state that was doing what NC has been for the better part of 30 years by hosting the Emerging Issues Forum…his answer was “no.” We are extremely fortunate to have a history of foresight and leadership in our state that places these conversations front and center and that is something we can all rest easy about.

-Scott

Guest Writer – Steve Parrott, President of WakeEd Partnership

Somewhere in Holly Springs, a Realtor is telling a young couple “There’s a great school just around the corner.” You’ve probably also heard that when house shopping. By successfully educating our students, the Wake County Public School System (WCPSS) has become an invaluable part of our community. And some of its biggest contributions are invisible.

For instance, did you know property values in Wake County are $11.2 billion higher solely due to WCPSS? Or that we save $565 million annually in taxes because WCPSS graduates are less likely to commit crimes or use public services? Chances are, just like that young couple, you only knew that there is a great school just around the corner. When you add up all those great schools, it makes quite an economic impact.

Recently, WakeEd partnered with WCPSS and North Carolina State University economist Dr. Michael Walden to study the economic impact of WCPSS. The results include the statistics above, and many more that are on our website (http://www.wakeed.org/economicimpact/). In addition to rigorous curriculum, state-of-the-art facilities and highly qualified educators, we found WCPSS is one of the biggest economic drivers in the county. In short, a strong public school system benefits everyone.

Thousands of people will move to Holly Springs this year, spurring economic development across the town. The majority of them won’t know about the economic impact of WCPSS, but they will probably know about the great schools. And to keep our economy strong, we need to make sure there are always great schools just around the corner.

• Steve Parrott is the President of WakeEd, an independent, nonprofit organization comprised of business and community leaders committed to improving public education. Since 1983, WakeEd has advocated for excellent educational opportunities for all students in the Wake County Public School System (WCPSS). For more information, please visit http://wakeed.org.

 

What are we reading…

I’ve never been much of a book reader…which is surprising, because I’m the first one to pull out a set of directions to read when it comes to assembling anything! However, as we embark on a new year, which is sure to be filled with all kinds of excitement ( a Presidential election, the stock market, and…China!), I wanted to try and read at least one book per quarter that, in my opinion, is relevant to what’s happening around me…whether that’s globally or hyperlocal. So, where am I choosing to start? The Coming Job Wars by Jim Clifton is up first!

Excerpt from Amazon: “Winning the jobs war will require all hands on deck, and failure is not an option, especially for the United States, which has been the global leader in promoting freedom and entrepreneurship. America’s place in the world is at stake, and there are other countries poised to surpass a sputtering U.S. economy that is currently growing at only 2% annually. The biggest threat? China, with a GDP that is increasing at nearly 10% annually — a pace that will make it the world’s leading and most influential economy within the next 30 years.”

I’ve only started in on the first few chapters, but from what I’ve read so far, I can say I’m scared as hell…but also extremely optimistic about the ability of our country’s innovators and entrepreneurs to save us, again, from the threat of the US becoming the 2nd largest economy in the world. As Ricky Bobby says, “if you ain’t first, you’re last” and in the war of global economic dominance, FIRST is the only position the United States should ever find itself. Clifton balances hard facts about the growing threat of China with the reality that even the greatest economists, data gatherers, and “experts” can’t measure one incredibly important factor…innovation! Add to innovation, entrepreneurship, and you have the beginning recipe for how and why the USA will win this war.

I look forward to continuing along in Clifton’s assessment and updating you all along the way!

(shout out to Tim Giuliani and the Raleigh Chamber for suggesting this book)

-Scott Manning

Scott Manning is the Executive Director of the Holly Springs Chamber of Commerce

You can follow Scott on Twitter – @ScottManning1

You can follow the Holly Springs Chamber on Twitter –@HollySprings_CC

Welcome to the Holly Springs Chamber Blog!

Welcome to what, we hope, is the first of many relevant, short, and informative posts by Holly Springs Chamber staff, guest writers, and community leaders. Over the coming weeks and months, this site will be updated with content that is dynamic and engaging so that we can better inform our members and the community at large as to the issues and events important to them. If you have any ideas for posts or would like to be a featured writer, please contact Executive Director, Scott Manning, at scott@hollyspringschamber.org or 919-567-1796. Again, welcome to our blog and we hope you come back regularly!