“It’s the economy, stupid.”
A campaign mantra that drove a national election 27 years ago has been a recurring theme during every election cycle since. The economy remained a top issue in the 2018 midterms, and it is already taking center stage in the run-up to the 2020 election.
Many ideas are being debated on the campaign trail about how to strengthen our economy, create jobs and restore the middle class. But there is a critical issue that, surprisingly, often gets taken for granted. We cannot achieve our economic goals without entrepreneurship — entrepreneurship spread across the U.S., not just its wealthy coastal cities.
Entrepreneurs are the top job creators. They are the source of nearly all net new job creation in the United States. However, barriers to new business creation have contributed to decades of long-term decline in entrepreneurship rates.
{mosads}Countless entrepreneurs face these barriers. Take Natasha Griswold from Kansas City, Mo., for example. She represents both the hope and the struggles for many Americans.
Evicted from her apartment when she was five months pregnant, she could have easily given up. Instead, she was able to land a job as a hairdresser in a salon. One of her clients was an older man who had difficulty making it from his nursing home to the salon. That sparked an idea to start a service that would solve that problem. She now owns 10 Elder Hair Care salon units, which travel to nursing homes, thus creating new job opportunities within her community (and making seniors look handsome).
But as a woman of color based in the middle of the country with a small business, Natasha faced obstacles getting access to the right capital. She’s one of the 83 percent of entrepreneurs who don’t access bank loans or venture capital. In fact, recent studies show that less than 1 percent of all entrepreneurs receive venture capital, despite the disproportionate attention it gets.
Natasha’s story illustrates what’s both right and wrong with entrepreneurship today.
On one hand, her story sounds like the American dream. She saw a need and created a business to fill that need, taking a personal risk to get it started.
Yet, her story also shows that there are systemic challenges, especially for people of color, women and individuals of limited wealth. It’s not a level playing field. Only about 9 percent of proposals submitted to angel investors come from women entrepreneurs. Further, black entrepreneurs are three times less likely to be approved for a loan than white entrepreneurs.
We can’t be prosperous as a nation if entrepreneurship only thrives in certain places, for certain kinds of people. We need to better support Natasha and the thousands of other makers, doers, and dreamers who are trying to solve everyday problems in their communities, build businesses, and create jobs.
That’s why, recently, more than 70 entrepreneurs flew to Washington, D.C., to meet with elected officials and talk about the challenges they face when starting and growing their businesses. These entrepreneurs came from very different backgrounds, locations and business types. They met with policymakers of both parties who listened and were willing to help. Entrepreneurship is truly that rare bipartisan issue.
So what can candidates and elected officials do?
{mossecondads}It starts with listening to entrepreneurs and taking action. Following the November election, only 50 percent of entrepreneurs surveyed said Congress has done a good job for small businesses. There is even less optimism among female and Latinx entrepreneurs.
Second, policymakers need to focus policies on helping new starts. The numbers show it is possible to replicate entrepreneurial success in middle America. New businesses create jobs that are easy to overlook because they seem small when counted separately. But taken together, the numbers can be surprising. In Kansas City alone, startups like Natasha’s created 84,000 jobs over five years.
If we want job creation and a thriving middle class, we need to build an economy that supports entrepreneurship. That means adopting commonsense policies to improve the flow of capital, reform tax rules that overburden business owners, and increase access to the tools, resources and networks needed to start and grow businesses.
Entrepreneurship is the answer to fixing our economy.
Victor Hwang is the vice president of entrepreneurship at the Ewing Marion Kauffman Foundation. Find him @rainforestbook