Solution To Job Creation Is To Make Everyone an Entrepreneur

The September 13th issue of Forbes magazine had several interesting articles on job creation. The first one I want to discuss is that of Tim Kane of the Ewing Marion Kauffmann Foundation. Mr. Kane’s article is entitled Every Man (and Woman) An Entrepreneur. (Sorry no online version available). He makes the point that America will not see more job creation without more job creators and he quotes a study he had done that shows that since 1970 all net job creation was accounted for by new companies. Existing firms since that time have accounted for over 1 million jobs lost. Kane goes on to say that government(s) make becoming an entrepreneur too expensive with fees and taxes and therefore people are hesitant to start companies and thus create new jobs. Without freeing up the ability to start a company by removing these restrictions we will not see the jobs needed being created. He also says that the current structure requires companies to be “paternalistic” and thus life becomes too comfortable for workers discouraging them to become entrepreneurs. His solution is to make everyone an entrepreneur.

Now being an entrepreneur myself, since 1991 in fact, I am all for the concept. I am also for the concept of reducing taxes, removing fees and other roadblocks to people starting businesses. The only problem is the Federal and state governments themselves, particularly the current Federal administration. Mr. Kane even gives the real reason they will not change things to allow freer entrepreneurship. The third line of his article is “Of all the money government collects, none makes less sense than the $800 billion a year scraped from payrolls.” There is the answer… $800 BILLION… which I will say is easily collected from payroll taxes on corporations. If the government had to try and collect that from individual entrepreneurs they would be broke. And the government is not in a mindset to collect less taxes, they blame tax breaks for the recession.

Additionally, the current mindset of the Federal government is that workers cannot protect themselves so they have to do it. If everyone was an entrepreneur what would the US DOL do?

So as noble and productive as the idea may be of making everyone an entrepreneur, free to negotiate pay and benefits, I just don’t see it happening anytime soon. Any of you know any politicians willing to give up $800 billion?

3 thoughts on “Solution To Job Creation Is To Make Everyone an Entrepreneur”

  1. Interesting, Mike. I'll leave politics out of my comments as it is such a divisive topic.

    You said it yourself, 'workers have been too comfortable to become entrepreneurs'. That's true for our generation, certainly, but I see lots of evidence of Gen Y'ers and some Gen X'ers who have no faith in the paternalistic job route and are doing 2 or 3 "gigs"; things that they really enjoy doing: life over work, social responsibility over titles; passion for their own stuff over companies who simply don't know how to engage.

    $800 million? That's what the Iraq invasion has cost and the Medicare Drug Program. What about those? Are we any better off having poured $1.6 trillion down the drain? Maybe we could afford more if people expected less.

  2. Hey Barbara.. yes younger generations are doing a couple of gigs… often due to necessity.. and they should not trust paternistic systems. My point however, was that regardless of the receptivity they current structure of government will not really allow full blown entrepreneurship easily. There is too much money involved. and it is $800 BILLION not million. You are right we could do so much more if we spent so much less making things easy.

  3. Great summary and I like your new web look. I have (at near retirement) chosen to start my own little business. It is so very much better than working for someone else. I choose my clients and serve them well. I recommend it highly. My start up costs were practically nothing and I have yet to hire anyone, but I can see that happening down the road especially if I am reflieved of providing health insurance to any employees.

    For Mr. Kane's information, however, anyone in business for themselves is not going to even think about not paying their federal taxes. They are the first thing on the payables spreadsheet followed closely by salaries and benefits. If you fail to pay your taxes, they come and get you and take you where you don't want to go. In addition, as everyone knows, paying taxes as a corporation or self-employed person generally doubles the tax bill for working. Still working for myself is worth it.

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