The United States economy is still as of now lagging behind, with millions of Americans locked out of this labor market in the country. One of the key factors in all of this is that the U.S. is producing fewer and fewer startups.
In order to truly innovate and deliver novel experiences for customers, this country needs a healthy balance of large, established companies as well as startups that allow for innovation and develop truly revolutionary experiences. In this article, we’re going to take a look at the lack of startups in this country and how this is taking a toll on the economy in the United States. In the process, hopefully we can figure out how to solve this problem.
The dearth of startups
It’s no secret that this country has seen a marked decrease in the amount of startups that are starting up in this country. Even sports betting sites which usually flourish are on the decline.
This decline is an important factor in the overall productivity slump that’s been going on for well over a decade now.
The number of employees who are at companies that are less than five years old has likewise slumped to 9.1 percent of the overall workforce back in 2013. That’s about half the share during the peak back in 1987. Experts have said that while there is new data available, it doesn’t exactly bode well for startup numbers in the modern day.
The lack of productivity growth is going to become more and more important as the labor market tightens up and growth starts to increase. Some experts even believe that low productivity might create faster increases of interest rates. The startup deficit, according to experts, slows down the shift from less productive startups to bigger, stronger ones.
Lagging behind
There was a definite startup decline after 2000, but experts are still not aware of what might have caused that. In way of contrast, the startups that our country had in the 1980s and 1990s were an important component of productivity as a whole.
It’s been cited that low productivity can lead to a lack in living standards, and the 2007-2009 recession has been cited as one of the major causes of all of this. This may have hurt research as well as overall investment in startups as a whole.
Around 400,000 businesses are started each year, with a large percentage of them never getting beyond the first five years. A typical firm will employ nine employees by its fifth year, which is a definite lag in the amount of employees that are employed.
The reasons
The reasons for the decline are numerous. Entrepreneurs might have less access to potential capital, with little ability to look at home equity since the housing market collapsed during the recession.
Some lenders have also tightened requirements for all small business loans. Along with this, millennials have been struck by large amounts of student debt. All of this will make them less likely to invest in a new startup.
Simply put, people are not taking risks in this economy the way they used to. Many might feel like it’s not worth it to take the gamble, as financial situations in this country have been difficult for some time.
While this list isn’t exhaustive, it should give you an idea as to how startups are declining and why this is taking its toll on the United States economy. It’s very important to keep an eye on these things, as our economy really hinges on the ability of startups to change things and innovate constantly.
It’s always been the American way to pioneer and innovate, constantly focusing on improvement and success. We’ve been seeing a shift, however, for the last couple of years where entrepreneurs are less and less likely to be starting up their own small business. These numbers will change over time, though, so it’s important to keep an eye on them.
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