MESSAGE
| DATE | 2014-05-06 |
| FROM | Ruben Safir
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| SUBJECT | Subject: [NYLXS - HANGOUT] making a buck
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Anyone see this. They stiffled inovation to no end and now wonder where
the innovative businesses are ...
http://www.washingtonpost.com/blogs/wonkblog/wp/2014/05/05/u-s-businesses-are-being-destroyed-faster-than-theyre-being-created/
U.S. businesses are being destroyed faster than they’re being
created
By Christopher Ingraham
May 5 at 2:51 pm
Photo via Flickr user Boegh, used under a Creative Commons license.
(Photo via Flickr user Boegh, used under a Creative Commons license)
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. Overall, new businesses creation (measured as the
share of all businesses less than one year old) declined by about half
from 1978 to 2011.
firm entry and exit rates
The authors don't mince words about the stakes here: If the decline
persists, "it implies a continuation of slow growth for the indefinite
future." This lack of economic dynamism, particularly the steep drop
since 2006, may be one reason why our current recovery has felt like
much less than a recovery. As Matt O'Brien noted on Wonkblog last week,
annual job growth rates have stubbornly refused to budge above 2 percent
for the duration of the recovery.
The authors of the Brookings study dug beyond the national numbers to
look at the change in new firms at the state and metro levels and found
that they generally mirrored the national trends.
I mapped the state data below. While all states showed steep drops in
new firms, New York stands out for its much smaller decline in the share
of new companies than other states -- only 18 percent, compared with the
50-state average of 47.2 percent. Illinois, Texas, New Jersey and
Missouri round out the top five.
At the other end, Alaska had the largest drop in new business, at 61
percent. Hawaii, Vermont, New Mexico and Wyoming rounded out the bottom
five. Teasing out the causes of the overall decline or the variation
between states is difficult; the authors stressed to me that their data
don't answer the questions of why or how just yet. But they will be
looking into that in the months ahead.
No immediate pattern emerges from the state-level geography, but one
thing is worth nothing. For kicks I tried to correlate the drops in new
businesses in each state with the states' scores on the Tax Foundation's
2014 State Business Tax Climate Index. There was no significant
relationship one way or the other. For example, New York, which showed
the lowest decrease in new businesses, actually scored dead last in the
Tax Foundation's ranking. Wyoming had one of the largest declines, even
though it ranked first in the Tax Foundation's report.
At the very least, the Brookings findings strongly suggest that when it
comes to luring new businesses to a given state, there are a lot more
factors at play than straightforward calculations of corporate tax
rates.
More business news and analysis:
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Christopher Ingraham
Christopher Ingraham is a data journalist focusing primarily on issues
of politics, policy and economics. He previously worked at the Brookings
Institution and the Pew Research Center. He's on Twitter.
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