May 28, 2014 --
By Dr. Eric Fuits
& Oregon Tax News,
In a recent report from the Brookings Institution, authors Ian Hathaway and Robert Litan find that American entrepreneurs started 27 percent fewer businesses in 2011 than they did five years earlier, according to data from the Census Bureau. As a share of all companies, startups have been declining since the late 1970s. Even worse, they find that in recent years, more firms are exiting than are entering. The authors conclude that the decline in entrepreneurship “points to a U.S. economy that has steadily become less dynamic over time.” While the decline in entrepreneurship is broad-based—hitting every major industrial sector, every state, and nearly every large city—Oregon has been one of the hardest hit.
“Entry” evokes images of dynamic high tech startups like Snapchat or Airbnb or Portland’s own Simple. In reality, entry also includes plain ol’ businesses like coffee shops, convenience stores, bicycle repair shops, and consulting firms. While the high tech firms get most of the attention in the media for their dollar signs and innovations, the plain ol’ businesses make up a huge portion of the start up world. One line of reasoning says that it’s okay if entry slows, so long as the mix of entrants shifts toward the innovative and dynamic.
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