There are probably multiple reasons for the nation’s 40-year low in new business startups. In 2019 the Enhancing Entrepreneurship for the 21st Century Act was introduced in the Senate by Tim Scott and Amy Klobuchar and in the House by Hill, Foster, Chabot, Murphy, Schweikert and Veasey. The Act has been refiled in 2021 in the Senate (S.329) by Senators Klobuchar, Tim Scott, Sinema and Young as well as in the House (H.R.1345) by Representatives French, Foster, Schweikert, Murphy, Veasey, Chabot, Emmer, and Phillips. This Act calls for the Secretary of Commerce to conduct a comprehensive study into the underlying economic factors driving the decline in rates of entrepreneurship. Senate Bill 329 is now included in the Innovation and Competition Act (S.1260) which passed the Senate on June 8, 2021. The House has yet to pass the bill.
Recommendations
The SBA should conduct the research called for in the Enhancing Entrepreneurship for the 21st Century Act. This research should examine the possible factors impeding small business startups including those that are articulated in the Act:
Demographic changes caused by an aging workforce.
High cost of childcare.
Increased risk-aversion following the 2008-2009 financial crisis and recession.
Access to capital difficulties particularly for underserved populations, women, and members of minority groups.
Extreme concentration of venture capital geographically in only a few cities, and demographically, almost entirely men.
Record levels of student debt.
Inefficiencies or other difficulties pertaining to the commercialization of federally funded research and innovation.
Increased industry concentration that may make it more difficult for new market entrants to compete with established companies.
