Job creation by entrepreneurs at historically low levels

Bloomberg reported that the Small Business Optimism Index reached it's highest level since 1983. Read Bloomberg's story here.

Our experience with small business is a little different.  So we went to go check in with the US census on the state of small and new business.

We found the the web page of the US Census on "Entrepreneurship and the US Economy." The page collects statistics on small and new businesses. The produce a great set of charts showing how job creation by new business and fallen off since 1997. The numbers tanked during the last recession in 2007. Read the story here.

The web page has a bunch of great overview charts with links to the statistics. Charts 1,2 and 7 capture the issue.

(Chart 1). Shows the number of new businesses trending up after the recession, but (Chart 2) the number of jobs created by new business is near it's all time low.  New businesses are creating far fewer jobs than the peak in 1997.  Chart 7 shows the majority of jobs for new business are created by firms larger than 250 employees while the number of jobs created by firms 1-250 has been decreasing. The trend accelerated during the recession.

The charts tell us that many "new" business are just freelancers

Basically, it looks like many of new firms are just freelancers and contract employees forced to start firms. They have no intention of growing a business.  They simply want to get paid by an employer looking to avoid paying benefits.

Second, real job growth is coming from larger firms which are over 250 employees. Small businesses are being squeezed out.  They are not generating jobs the way it used to. Where the change is structural or political remains to be seen.

Examples of structural factors favoring larger businesses include complex IT systems, legal compliance or minimum size requirements for suppliers.

Examples of political factors include lack of anti-trust enforcement.

New York Times Upshot finds racism limits Black boys opportunity. Read the story.

Black boys from similar backgrounds earn less then White boys as they grow into adults. Note the words: Similar Backgrounds !!!

Hats off to Raj Chetty, Nathaniel Hendren, Maggie R. Jones, and Sonya R. Porter for a really sharp analysis on a couple different levels.

1) They compared the opportunity for White/Black boys and girls showing the gaps are related to being a Black male.

2) Black women show no opportunity gap with White women, so the difference is not caused by single parent homes, education or ability. Sadly, you can also conclude that gender discrimination is equal across races.

3) The inequality gap persist as boys grow into men even when both groups grow up in households that have similar income, wealth, education, and family structure.

4) "If family cannot explain the difference, then what matters may lie outside the home: Neighborhood, the economy and society."

The real world is worse

The study looks at end points for people with similar starting points; but in real life Whites have an overwhelming wealth and income advantage, making real outcomes even worse.

Side notes: Black men may do poorly in the service economy which requires face-to-face contact. Also second generation Asian Americans are less mobile than new Asian immigrants.

Propublica's Story: "Black people forced into bankruptcy over parking tickets in Chicago" is really a larger story about shaking down poor people for money

Propublica has a great set of articles linking auto tickets in Chicago to a high number of bankruptcies in that city.  But the story is much larger than that. Cities like Chicago and Ferguson, Missouri would rather raise fees and fines than reduce the size of government. It's also a story about lawyers prey on poor people and how Black people get a bad deal from Chapter 11 bankruptcy in the south. Finally, the whole debt industry is stacked against poor people.  All the links are here.

Sadly, many of the rich are parasites of the poor. 

https://features.propublica.org/driven-into-debt/chicago-ticket-debt-bankruptcy/

Some detailed interviews with people in the story

https://www.propublica.org/article/chicago-ticket-debt-investigation-interviews

Here is the series overview page

https://www.propublica.org/series/driven-into-debt

A related article on poor people not being able to afford Bankruptcy

https://www.propublica.org/article/when-you-cannot-afford-to-go-bankrupt

and finally two more article on Black people and chapter 13(reorganization and repayment) in the South

https://features.propublica.org/bankruptcy-inequality/bankruptcy-failing-black-americans-debt-chapter-13/ 

https://projects.propublica.org/graphics/bankruptcy-chapter-13

And finally, a couple stories about the debt industry

https://www.propublica.org/series/debt-inc