Tuesday, 18 March 2014

On US start-ups - or rather the lack of them


From Joel Kotkin in New Geography:

2010 SBA report found that federal regulations cost firms with less than 20 employees more than $10,000 a year per employee, while bigger firms paid roughly $7,500 per employee. The biggest hit to small business is environmental regulations, which cost small firms 364 more percent than large ones. Small companies spend an average $4,101 per employee on such regulations, compared with $1,294 at medium-size companies (20 to 499 employees) and $883 at the largest companies. This has come over a period when many of the key costs faced by the business-owning middle class – house prices, health insurance, utilities and college tuition – have all soared.

Make running a small business more expensive and there will be fewer small businesses. It's worth remembering that, when you talk to business people, it's almost always regulatory barriers that they cite as the source of growth problems. And, for large and established businesses, it makes good business sense to accept those regulatory costs since they prevent new entrants and increased competition.


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