Small businesses have been the leaders of the current economic expansion, however some new data suggests that some of the wind is being taken out of the sales of small companies. SurePayroll publishes a monthly payroll scorecard, which shows a slow down in small business employment growth. Their latest report shows a flattening of small business hiring, which should be sending out alarm bells across the country. Instead there is virtual silence.
Michael Alter, SurePayroll's President, has some theories on what is going on:
There are many reasons that the deck is stacked in favor of larger companies. Larger companies can engage high-paid lobbyists who promote laws that give them an advantage over smaller companies. Small businesses have to deal with higher health insurance costs and higher costs of capital.
If we look at the overall transition that our economy is in right now, Alter's comments should raise some serious concerns. It is fairly well established that we are in a new entrepreneurial age right now. When we look over the past 20 plus years, it has been small businesses leading our economic growth. I have written a couple of essays about this in the recent past (here and here).
If Alter is correct on the causes of the small business slow down that his scorecard seems to indicate, it is alarming indeed. What he is suggesting is that small businesses fuel our economic expansion only to have large companies lobby to their way into economic advantage once the recovery is well underway. The current poster child of large corporations bullying small business (in full cooperation with government I might add) is the use of eminent domain to take land from entrepreneurs and give it to corporations and developers, as can be seen in the last post I made yesterday (see below).
And over regulation of small business and the costs this creates for these entrepreneurial firms, adds an additional tether to slow down the little guy. Efforts such as those to enact regulatory flexibility for small businesses help, but we need a fundamental shift in our economic policies to truly support entrepreneurial economic growth. Changes need to be enacted in how we think about regulating business. Instead of thinking about our economy in only in terms of large powerful corporations and passing regulations accordingly, we need to think first about the small businesses that are fueling our growth and try to understand how we can keep out of their way. We also need some very serious rethinking about our tax system.
The corporate/union/governmental alliance that defined the economy of the 1900s could literally strangle the life out of the new entrepreneurial economic era if we don't change our public policies and governmental strategies.
