Washington, DC— Today, House Small Business Committee Ranking Member Nydia M. Velázquez (D-NY) released a report examining the impact of increased corporate concentration and a consistent decline in competition in the American economy on US small businesses. The report surveys decades of antitrust policies, the threat increased economic concentration poses to entrepreneurs, and proposed policy solutions to ensure a level playing field for small firms.
“For too long, US policy has ignored increasing economic and financial concentration and its harmful impact on American small businesses. From Big Tech to industrial farms, corporate consolidation has created a business environment where small firms find it harder to compete on a level playing field with their larger peers,” said Ranking Member Velázquez. “It’s vital to reverse this trend and spur competition while protecting the small firms that make up the backbone of our economy. I’m hopeful that this report will provide a sober look at the impact of economic concentration on small businesses and help provide a path forward to ensuring a level playing field for entrepreneurs.”
Despite the rich history of laws that safeguard the competitive environment, alarming indicators point towards a stark decline in competition across the US economy. While the robust recovery from the COVID-19 pandemic has driven a surge in new startups, this growth is an anomaly, breaking from a decades-long decline. Meanwhile, mergers and acquisitions have been accelerating, and industries in every sector have seen more consolidation. As a result, industries are increasingly dominated by a small number of larger and older companies and economic power has been concentrated in fewer hands.
This increased economic concentration has had a consistently negative impact on small businesses. According to data from the US Economic Census, the percentage of firms less than a year old decreased from 10 percent in 1982 to 8 percent in 2018. Over that same period, the share of firms less than five years old slid from 37.6 percent to 29.8 percent, and the share of employment by those firms fell from 13.8 percent to 8.9 percent.
The report also outlines policy recommendations from the committee to protect small businesses from the consequences of market consolidation, including increased antitrust enforcement actions, strengthened merger guidelines, tax reform to level the playing field for smaller firms, and continued investment in domestic manufacturing and infrastructure.
