Obama Economy Fostering More New Businesses

More Americans are starting their own businesses, not because they’ve lost their jobs and have to do something, but because the Obama economy is offering them more opportunities to captain their own destinies:

The current crop of entrepreneurs is more likely to form a business based on a viable idea, increasing the chances that the ventures will be successful and longer-lasting, says Dane Stangler, Kauffman’s vice president of research and policy.

“Now that the unemployment rate has fallen (to 4.9% from 10% in 2009), you’re seeing people start businesses not out of necessity … but because they’re pursuing an opportunity that’s better than staying at their organization and at salaried jobs,” Stangler says.

The share of entrepreneurs motivated by opportunity rather than necessity reached 84% last year, up from 79% in 2014 and 74% in 2009, a Kauffman report says [link added; Paul Davidson, “Business Start-up Activity Is Surging. Here’s Why,” USA Today, 2016.08.28].

What does President Obama have to do with that positive trend?

Also, the low unemployment rate has made workers more willing to quit their jobs and take a risk. And the Affordable Care Act is making it easier for them to obtain health insurance outside of company-sponsored plans [Davidson, 2016.08.28].

Improved access to health insurance increases liberty and entrepreneurship—I’ve been saying that for years, and ObamaCare and our entrepreneurship numbers show I’m right. Thanks, President Obama!

Related Reading: The Kauffman organization analyzes the state of startups in each state. South Dakota ranks ninth among the 25 smallest states and fourteenth overall on the Kauffman “Index of Startup Activity” for 2015, scoring just above average on a weighted combination of rate of new entrepreneurs, share of entrepreneurs starting a business for opportunity rather than necessity, and startup density. Seventeen states are above average; 34 are below.


7 Responses to Obama Economy Fostering More New Businesses

  1. Troy Jones

    CH:

    How are only 1/3 above average? Because obviously they are using a median vs. a mean. I only nitpick because too often people not of a math disposition don’t understand there is a difference.

    By the way:

    1) You are only looking at the most recent history. Prior to this year, the Obama years have 7 of the worst 10 years in the past 50 for new business creation.

    2) Entrepreneurs start business because they expect the future to be bright. Maybe they are making the move because they see the end of the Obama policies.

  2. Troy – anyone paying attention today already knows Clinton will be our next President. I doubt any entrepreneurs are banking on drastic policy changes. If anything they should be counting on another four or possibly eight years of the same.

    That said, we shouldn’t give Obama too much credit here. Yes the ACA might give people a bit more freedom to take risks, but it is difficult to quantify it. We also need to acknowledge the cyclical nature of the economy (not as many people are willing to start businesses during a recession). There is another factor worth considering – the millennial generation. I’ve noticed an increasing number of younger workers willing to gamble and try something. They aren’t as worried about job security, and the idea of a company pension disappeared long before they entered the workforce, so there is less incentive to remain loyal.

    I’d love to see a breakdown showing the age ranges of those started all of these new businesses and I’d put money on the fact there is a disproportionate number of them being started by those which fall into the category of millennial.

  3. Don Coyote

    Self employed individuals have always had access to private health insurance policies so Obamacare really hasn’t added anything to that part of the equation. The problem always was and is still cost, something the ACA has failed miserably at with insurance premiums soaring and healthy entrepreneurs being taxed for non-compliance.

  4. Nailed it on the health insurance and its availability for those with some health issues but not bad enough for them to not do any work. As long as a Democrat occupies the White House, things will be on the upward trend. Get a Democrat in the White House with a Democratic Congress and then you will see real progress for all Americans. The tired obstructionism of the not get anything done current congress for the last 7 years, is tantamount to treason. Republicans should be ashamed of the legacy they are leaving for others to clean up, but here, they will be re-elected. Thankfully, there are progressive states that offset our little island of political mediocrity. We are common with one state it would seem, Kansas.

  5. Don has the pre existing condition known as republican amnesia. They developed this acute condition about 7 years ago when reality left them completely (see Donald Trump). The facts are these, individual health insurance was underwritten, which meant that the insurance company demanded a clean sheet for them to take the risk of insuring you. If you had something like high blood pressure, you were denied coverage. As a small business with employees, you could get group health insurance for your group including yourself. As group insurance is not really geared towards the guaranteed coverage of dependents, their costs were extreme. As a side note, the children were kicked off any kind of insurance at age 19 unless full time students and then until 22. After that, no soup for you if you were sick. Of course the problem will always be cost and that is why it needs to be made into Medicare for all to insure all for a reasonable cost. Ask someone who is 65 or older what they think of Medicare.

  6. “healthy entrepreneurs”

    Everybody is healthy right up until they point they aren’t. Those who gamble because they think they are healthy are the most likely to end up in acute care of the ER with no insurance card in their wallets. Guess who gets stuck with the bill in those conditions?

  7. Roger Elgersma

    People starting businesses being up is huge compared to bankruptcies up during Bush and his job loss economy.
    It may be that when wage stagnation is high that people would rather start a business when wages they will be paying is low. But remember that has not made South Dakota the hot spot for starting new businesses either. When we start protecting our wages to make our people great again, then the foreign competition will be greatly reduced and then there will be demand driven business startups to supply the products that are now produced overseas. That will be the real boom in business startups and also business expansions. Those making one product will start making more products as well. That is when the huge growth in business and also growth in real wages for our workers will happen. We might also get a slight drop in standard of living from not getting the cheap foreign products but that could be offset by the increase in wages and hours worked to produce all that product ourselves and also an increase in standard of living for he workers since the income distribution will not be so in favor of the one percent. The one percent will go back to the old normal for them and they will still be rich, just not unbelievably rich and the worker will gain and the tax revenue will gain because of more taxes from workers and expanded businesses. Raise taxes to what they were when we balanced the budget on a regular basis and protect wages through different trade policies and we could both balance the budget and pay off the debt. Unbelievable what good can all happen when you give the worker a decent break.