U.S. Senator Todd Young (R-Ind.) Thursday cosponsored a bill that passed out of the Senate Commerce Committee, which would address the falling rate of entrepreneurship in America. The Enhancing Entrepreneurship for the 21st Century Act requires the U.S. Department of Commerce to study the underlying factors driving the current “startup slump,” a 40-year low in rates of entrepreneurship in America. The bill was introduced by Senators Amy Klobuchar (D-Minn.) and Tim Scott (R-S.C.).
“Since the recession, economic dynamism and startup rates have been at an all-time low, especially for those living in rural areas,” said Senator Young. “From 2012 to 2018, rural counties accounted for just one percent of business establishment and job growth among all U.S. counties. We must act fast to end this startup slump and encourage American entrepreneurship and small business creation for all Hoosiers.”
Economists have identified several factors that may explain the reasons for the slowdown in entrepreneurship, including demographic changes caused by an aging workforce, increased industry concentration, increased risk-aversion following the last recession, difficulties related to access to capital (particularly difficulties encountered by underserved populations, minorities, and women), the concentration of venture capital in only a few cites, record levels of student loan debt, and difficulties faced by entrepreneurs in making use of federally funded research and innovation.
In conducting the study, the Secretary will be required to consult with leaders and utilize key data sets housed at the Census Department, Bureau of Economic Analysis, Bureau of Labor Statistics, Treasury Department, Federal Reserve, and Small Business Administration—in addition to consulting with entrepreneurs and representatives from consumer, community, and entrepreneurship advocacy organizations. The Secretary will be required to consider each of the potential factors identified above and will be required to make distinctions between industries, which economists believe may be affected by disparate factors. The Enhancing Entrepreneurship for the 21st Century Act is supported by the Center for American Entrepreneurship, the Small Business and Entrepreneurship Council, Small Business Majority, and the U.S. Chamber of Commerce.