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Featured Article filed under Independent Business | Written by Olivia LaVecchia | No Comments | Updated on Jan 12, 2016

New Studies Reveal 5 Reasons Policymakers Should Prioritize Local Business in 2016

The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/5-reasons-for-policymakers-to-prioritize-local-in-2016/

It’s the season of resolutions, and creating a better environment for locally owned businesses to succeed ought to be near the top of every elected official’s list of priorities.

That’s the suggestion of a raft of recent research from prominent economists, sociologists, and other researchers, which finds that small, local businesses are critical to overcoming many of our biggest challenges, from reducing economic inequality to building resilient communities.

Here’s a roundup of the new studies that give five compelling reasons for policymakers to focus on local business in 2016.

 

1. Fewer new businesses are starting, and that’s bad news for long-term job creation.

Employment is finally on the rebound, but high rates of underemployment and minimal wage growth suggest all is not well in the U.S. job market.  One disturbing trend may be to blame: the creation of new businesses has fallen sharply.

While startups accounted for 16 percent of all businesses in the late 1970s, that share has fallen by half, to 8 percent, explains a new brief from the Kauffman Foundation. The brief also explains why that’s so troubling. The authors round up the recent research on firm age and job creation, and find that young firms are the major contributor of new jobs to the U.S. economy.

“New businesses account for nearly all net new job creation and almost 20 percent of gross job creation,” they write, adding, “companies less than one year old have created an average of 1.5 million jobs per year over the past three decades.”

While no one is certain what’s caused the drop in new businesses, the same policies and conditions that have made it harder for small, local businesses to succeed may well be impeding new entrepreneurs.

2. Places with a high density of locally owned businesses experience higher income and employment growth, and less poverty.

Counties in which locally owned businesses account for a larger share of economic activity are more prosperous, according to a new study [PDF] by an economist at the Federal Reserve Bank of Atlanta.

Using data on every U.S. county in the period between 2000 and 2008, the author, Anil Rupasingha, finds that local entrepreneurship has a positive effect on three critical indicators of economic performance: It increases county per capita income growth, increases county employment growth, and decreases county poverty rates. Rupasingha finds that this effect of local ownership is most pronounced when businesses are also small, defined as having fewer than 100 employees.

3. Small businesses make communities more resilient during hard times.

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Photo: Two beer glasses.
Featured Article filed under Independent Business | Written by Olivia LaVecchia | 1 Comment | Updated on Nov 23, 2015

With New Wave of Mega-Mergers, the Big Aim to Get Bigger

The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/new-wave-of-mega-mergers-means-the-big-get-bigger/

A recent agreement between two beer conglomerates will turn them into a single company with control over nearly 30 percent of the global beer market and 70 percent of the U.S. market — and it’s just one deal in a recent spate of mega-mergers that’s set to make 2015 a record year for mergers and acquisitions. While much of this concentration is invisible to most of us, its effects ripple throughout all areas of the economy. Continue reading

Photo: Ribbon cutting at a Walmart expansion.
Featured Article filed under Independent Business | Written by Olivia LaVecchia | No Comments | Updated on Oct 21, 2015

States Shower Big Companies with Economic Development Incentives, at Small Businesses’ Expense

The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/states-shower-big-companies-with-economic-development-incentives-at-small-businesses-expense/

Even when state economic development programs purport to be open to businesses of any size, in practice, they overwhelmingly favor large companies, according to a study released Tuesday. The study determined that 90 percent of a $3.2 billion pot of economic development incentives was awarded to large firms, a finding that casts light on one of the ways that small businesses are placed at a competitive disadvantage. Continue reading

Amazon_warehouse
Featured Article, Resource filed under Independent Business | Written by Stacy Mitchell | No Comments | Updated on Oct 22, 2015

5 Things Local Officials Need to Know About Amazon

The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/5-things-local-officials-need-to-know-about-amazon/

Amazon is on a building spree, and many local officials are eager to bring one of its giant fulfillment centers to their own backyard. They are so eager, in fact, that some have resorted to offering the company lavish tax breaks and other public assistance. Between 2012 and 2014, Amazon picked up $431 million in local tax incentives to finance its warehouse expansion. Yet, as our analysis shows, Amazon fulfillment centers impose so many hidden costs on local economies that cities ought to reconsider welcoming them at all, much less greasing the way with public funds. Continue reading

Photo: Cleveland City Hall.
Featured Article filed under Independent Business | Written by Olivia LaVecchia | No Comments | Updated on Aug 27, 2015

Procurement Can Be a Powerful Tool for Local Economies, but Takes More Than a Policy Change to Work

The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/procurement-more-than-a-policy-change/

The decision of which firm will get the food service contract at the City Hall cafeteria doesn’t always make it into the news, but local governments spend a lot of money. In towns, counties, and states everywhere, there are roads to be paved, lawyers to be hired, and office supplies to be purchased, and the rules set up to govern those contracts—procurement policies—hold significant potential for governments to grow their local economies. Continue reading