Interesting Data on Small Businesses and America

I came across some small data from Dr. Bruce Manfield—whom I had the pleasure of meeting not too long ago. Bruce is Ivy League Organic Chemist, a former Undersecretary of Commerce for Economic Affairs, Professor Emeritus of the Wharton School of Business at the University of Pennsylvania, and a member of the Visiting Committee for Physical Sciences at the University of Chicago. Serious chops.

The data he shared with me is Census Small-Business data, and Kauffman Foundation data. It shows:

  1. That 98% of our currently incorporated 30 million U.S. businesses are (largely invisible) small businesses with less than 500 employees (80% have less than 20 employees!). These small businesses account for a rising 50% of the GDP…Only about 5% of these grow to be big businesses. Most people think that we are a nation of big companies.
  2. JOBS: Since 1981, these small businesses have generated 90 million new jobs (3 million a year on average). Over the same period, big businesses have lost 30 million jobs in downsizing and restructuring (a million a year on average)...big businesses don’t innovate.
  3. 87% of the Fortune 500 companies listed in 1981 have since disappeared…replaced by new small companies that grew big… Europeans call this the American Miracle. It was the capital gains tax reduction that inadvertently, accidentally and unexpectedly initiated this small business explosion…it’s currently repressed…but can be re-started by reducing the capital gains tax to zero for new start-ups. (No tax revenues are lost from non-existent businesses, but new start-ups hire tax-paying people with a surge in new tax revenues…
Interesting.

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