news

During a hearing of the House Small Business Committee today, Democrats on the panel pressed for policy improvements that would help reverse a decades-long reduction in entrepreneurship.  While business starts have seen an uptick in recent years, overall business formation has been declining since the 1970s, resulting in fewer new, fast-growing firms that are responsible for most net job growth.  

“When we think about job creation – something I know all our constituents want us focused on – it is not just small companies, but specifically new firms that often lead the way,” said Rep. Nydia M. Velázquez (D-NY), the top Democrat on the Committee.  “Fledgling companies that scale up rapidly need to add employees to their payrolls –and that translates into new jobs.”

Velázquez noted that entrepreneurship among traditionally disadvantaged demographics such as women and minorities remains constrained in large part due to a dearth of affordable capital options.  The Kaufman Foundation recently found that over 70% of Asian, Hispanic, and Black entrepreneurs relied on personal and family savings as their main source of startup capital.  Women business owners typically launch their ventures with 25 percent less capital than their male counterparts.   

“These disparities come with significant cost to our economy,” Velázquez noted.  “According to one analysis, if minorities started businesses at the same rate as non-minorities, the U.S. would have more than one million additional employer businesses -- and as much as an extra 9.5 million jobs.”

Velázquez also called for policies to help younger people launch new venture.  While in the mid-1990s, young people aged 20-34 comprised more than a third of new entrepreneurs, today they make up 25 percent of new entrepreneurs.  With over $1 trillion in national student loan debt and an average of $37,000 for recent graduates, many young Americans are foregoing the opportunity to create a new business.  Velázquez has authored legislation that would provide student loan relief to recent graduates who launch startups and to their employees.

“It would be regrettable if we lose out on a new generation of businesses due to barriers like student loan debt,” Velázquez added. “We need to ensure entrepreneurship remains a viable path for young people who are just entering the workforce.”  

Finally, Democratic Members of the Committee noted the important role immigration has historically played in fostering entrepreneurship. With half of small businesses in New York owned by immigrants and more than half of U.S. startups worth more than $1 billion founded by immigrants, Velázquez questioned whether an anti-immigration stance by the Trump Administration might stifle future immigrants’ contributions to economic growth.  

“Immigration and entrepreneurship have long been twin drivers of our economic success,” Velázquez added. “For generations, America has been the place where people come from around the globe to take a chance, build a business, and ultimately, strengthen our economy and communities. I am concerned that the current Administration’s policies and anti-immigrant rhetoric could severely stifle this important source of talent.  We must ensure that our nation remains the land of opportunity for foreign-born entrepreneurs.”  

Democratic Members of the Committee called for policies to boost entrepreneurship. 

“Democrats are committed to advancing strategies that help more Americans pursue dreams of business ownership,” Velázquez concluded. “This shouldn’t be just about cutting taxes or slashing regulations, but also finding creative ways to invest in those innovative risk takers willing to turn a new idea into a job-creating venture.” 

# # #