Job Creation: Obama Turns Eye Toward Start-ups


Job creation remains a key challenge for American legislators, as well as for President Obama. In an announcement on Tuesday, he contended not enough emphasis is being put on helping start-ups thrive in America. He also promoted his $2 billion Startup America program. What do you think? Beneficial or just government meddling?

President Obama on Tuesday proclaimed November 2011 to be National Entrepreneurship Month, a benign and routine ritual that stroked a favored cause, but nevertheless a timely nod to the heart of the economy’s job creation dilemma.

The president focused his two-page proclamation on business startups (that is, businesses less than a year old) rather than on the innovations of all small businesses, or even the savvy entrepreneurship displayed by the largest, established companies (big companies employ the lion’s share of workers). Why? Because the administration has looked at new studies showing that while small businesses are indeed important for job growth — a canon among politicians — it’s really the startups that are key…

In public policy debates about small businesses and the creation of net new jobs, the question continues to be asked: What works? To spur more startups, does the economy need greater confidence, more capital, more consumers willing to spend, new and innovative ideas, a risk-averse (i.e., younger) population? Yes to all of the above, experts say. But which policies really nurture the dynamics that lead to a net addition of jobs? So far, there are more theories than firm conclusions, and lots of experimentation.

“The world is messy and the data are imperfect, so when you’re trying to create a model . . . there’s so much I can’t control for,” said Brian Headd, a Small Business Administration economist who authored a study in 2010 about hiring and small businesses for the data-centered SBA Office of Advocacy.

“We’re at a point where businesses aren’t expanding at the rate they used to be and startups aren’t occurring at the rate they used to be,” Headd said in an interview. “So some people will say, policy-wise, ‘We need to focus on one or the other — we’ll get a bigger bang for the buck — one or the other.’ I don’t have that answer. I just take the view that we need both, but I don’t know whether throwing $1 billion or $1 million, policy-wise, at one group or another is going to have a big effect. I just don’t know.”

Obama’s proclamation Tuesday listed some of the policies he supports to spur infant businesses, including his $2 billion Startup America program, which he launched in February, designed to improve access to capital, cut paperwork and regulatory burdens, expand business mentoring, and increase information and educational opportunities for entrepreneurs in markets designated as priorities by the government. He also mentioned Startup America collaborations with the private sector and international partners. In Obama’s view, the entire U.S. economy must “become more dynamic and flexible.”

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