Entrepreneurs Proving Key Factor in Economic Recovery

As the coronavirus lockdowns are slowly lifted, Americans are opening new businesses at the fastest rate in more than ten years.

Entrepreneurs are “seizing opportunities” and finding new avenues for business after the pandemic shutdown, The Wall Street Journal reports.

Applications for employer identification numbers have passed 3.2 million this year, compared to 2.7 million at the same time last year. Although some of those applicants may be part of the gig economy, more than 1.1 million are businesses likely to employ others.

“This pandemic is actually inducing a surge in employer business startups that takes us back to the days before the decline in the Great Recession,” said John Haltiwanger, an economist at the University of Maryland.

“The jump may be one sign that the pandemic is speeding up ‘creative destruction,’ the concept popularized by economist Joseph Schumpeter in the 1940s to describe how new, innovative businesses often displace older, less-efficient ones, buoying long-term prosperity,” write Gwynn Guilford and Charity L. Scott for The Wall Street Journal.

Although unemployment remains high in the wake of the pandemic, official data show there were fewer new employment claims in September than in August.

“Unemployment insurance payments went to 12.6 million people in the second week in September,” economist Robert Genetski noted in Budget & Tax News. “This is down about 2½ million from the first week in August.”

Columnist Carl Shramm says entrepreneurs will be the key to a growing post-COVID economy.

“Stimulus plans overlook a critical resource that could help the recovery as we begin to exit lockdown,” writes Schramm for the New York Post. “I’m speaking of aspiring entrepreneurs in their 30s, 40s and 50s. To recover from the ravages of COVID-19, our economy needs a surge in entrepreneurship just as we need a vaccine. President Trump should set about changing the nation’s perception of entrepreneurs by celebrating mid-career Americans who start new manufacturing, laboratory and logistics companies—the kinds of firms that can break our dependence on foreign suppliers, by the way.”

Schramm says the government should not discourage entrepreneurs by imposing “mindless regulations” and other administrative burdens. The nation needs entrepreneurs who create new and different goods and services, “a product that the world doesn’t yet know it needs,” Schramm writes.

Entrepreneurs are the people most prepared for times like these, writes Davis Sax for Entrepreneur, because they are resourceful and flexible by nature and are self-motivated and able to respond to opportunities quickly. Freedom and risk are the two central elements of entrepreneurship, says Sax.

“You cannot have one without the other, so you have to have both,” Sax writes.

With the government COVID lockdowns having shuttered so many businesses, those that remain are demonstrating the reality of creative destruction, says Frank Marshall, associate dean of professional business studies at Point Loma Nazarene University.

“The businesses that are surviving are being creative, innovative, and adaptive to the situation,” Marshall told Budget and Tax News. “Entrepreneurs who are surviving have a growth mindset. My research with small-business owners indicates that they have a mindset to find a way to survive.”

Economist Stephen Moore told FOX News the overall economic recovery is “amazing” and the numbers are positive across the board, citing in particular the increase in new start-up businesses, which is up 10 percent this year over 2019. The growth of new business reflects “the vitality of a free enterprise system,” Moore said.

Government policies are among the biggest obstacles to entrepreneurship, says Mackinac Center for Public Policy Senior Fellow F. Vincent Vernuccio.

“Entrepreneurship and flexibility should be encouraged,” writes Vernuccio in The Hill. “Unfortunately, some [states’] laws make it harder for companies to provide benefits and training to independent contractors and freelancers. These laws could be changed to allow companies to give training and benefits, if they choose, to independent contractors and small businesses that are not directly in their employment.”

California’s AB 5, which puts independent contractors out of business by forcing their clients to make them into employees, is an example of a particularly draconian, job-killing law restricting entrepreneurship, Vernuccio writes.

“[T]he state should fully repeal AB 5 instead of making tweaks and exemptions as [AB 5 author] Assemblywoman [Lorena] Gonzalez proposes,” Vernuccio writes. “Other states should reconsider any similar legislation, as should federal officials when they look at bills such as the PRO Act.”

Small business is the key to all economic improvement, says Marshall.

“Small businesses have been the economic engine of all Western civilizations,” Marshall said.

“We need entrepreneurs now more than ever,” Marshall said. “Entrepreneurship is job creation as well as wealth creation. Entrepreneurship will always be the way to create solutions to existing problems. A definition of entrepreneurship is to find a niche and exploit it. There is no better time than now to exploit a niche. There is no better time to execute on an idea that will create jobs allowing our economic engine to roar.”