Dear Madam or Mister President:
The United States is facing an emerging national crisis simmering just below the surface, one that risks tearing apart the delicate economic, social, and political fabric that binds this nation together. The economy is no longer providing growth and opportunity for vast portions of the country—myriad communities and millions of Americans are being left behind. Individuals’ experiences of the economy increasingly diverge. Those living in super-performing metropolitan centers enjoy vibrant growth; those living just about anywhere else see stagnation or outright decline.
Access to the American Dream is increasingly defined by ZIP Code. This gating of economic opportunity is driven in part by the shrinking footprint of U.S. entrepreneurship. New businesses are the seed stock of the industries and jobs of the future. Entrepreneurs turn our innovations into new businesses and industries that fuel productivity growth, create the job opportunities of the future, and drive wages higher. But decades of steady national decline in the rate of new business formation have left such enterprises largely confined to a select handful of innovation hubs.
To understand the magnitude of the problem, consider these five statistics:
One-Third. How many new businesses were created after the Great Recession compared to the ’90s recovery period.
Twenty. The number of counties that generated half of the nation’s net new businesses during this recovery, down from 120 counties in the ’90s.
5 percent. The percentage by which job growth in the median county—“Anytown, USA”—trailed the national job growth rate.
58 percent. The percentage of counties that reduce, rather than boost, the future earnings of low-income children.
50 million. The number of Americans living in economically distressed communities.
In spite of the challenges, the United States has the best ingredients for entrepreneurship of any country in the world. We simply need to reorient our policy agenda. As president, you can bring national focus and coordination on support for new businesses for the 21st century economy. This is the only path to dramatically improve U.S. economic dynamism. And, as an all too rare bonus in these increasingly polarized times, there are plenty of bipartisan solutions that can help rebuild some of the collaborative muscle memory in Washington, D.C.
Here are three common sense ways we can help entrepreneurs and support new business growth right now:
1. Democratize Access to Capital: Access to opportunity requires ensuring that would-be entrepreneurs have the access to capital necessary to realize their dreams. Small-business lending and community banking is on a steep decline, and nearly 80 percent of venture capital financing—a critical element for scaling America’s high-growth startups—is concentrated in only three states. The Investing in Opportunity Act, bipartisan legislation that has been introduced in the Senate (by Sens. Tim Scott (R-SC) and Cory Booker (D-NJ)) and in the House (by Reps. Pat Tiberi (R-OH) and Ron Kind (D-WI)), would help connect billions of dollars in private capital currently sitting on the sidelines with hundreds of economically distressed communities throughout every state. This legislation could serve as a model for the new types of public-private partnership we so desperately need to build big things in America again.
2. Cut Red Tape: New businesses—those less than five years old—are among the most vulnerable in our economy. They must juggle the everyday challenges of growing a young business—building a brand, hiring a great team, and getting to profitability—while short-staffed and on a shoestring budget. That’s why an accumulation of complex regulations places a disproportionate burden on young companies, giving more established firms, with their teams of lawyers and lobbyists and proven economies of scale, a heavy advantage. Almost everyone agrees we can and must do better to sensibly reduce regulatory complexity and to ease compliance burdens for new businesses. We also need to get rid of excessive and anti-competitive occupational licensing requirements that prevent many Americans from starting their own small businesses.
3. Collect More and Better Economic Data: This should sound obvious, but better economic data will enable us to better understand and address the nation’s economic challenges. If not for federal investments in the Census Bureau’s Business Dynamics Statistics or the Bureau of Labor Statistics’ (BLS) Job Openings and Labor Turnover Survey, we would be completely in the dark about what’s really happening in important corners of the economy, particularly in our troubled labor market. Despite this, every year the Census and BLS have to fight for their lives in Congress when we should be increasing federal support for more sophisticated data collection instead. Starving these agencies will blind our policymaking process—as well as thousands of businesses who rely on the data—at a time of historic economic transformation.
By advancing a bold vision to revive the engine of American entrepreneurship, you can help put our economy on a path to a more innovative and dynamic future—one that is rich in opportunity for all people.
What better theme for your first 100 days?
This is the fifth and final in a series of partnered content from the Economic Innovation Group and The Daily Beast.
Steve Glickman is co-founder and executive director for EIG. John Lettieri is co-founder and senior director for policy and strategy for EIG.