I am not oblivious to the political divisions that dominate national media headlines. Yet these headlines don’t tell the whole story of what our foundation associates see and experience working across the heartland.
Most want a level playing field for themselves and their neighbors. In far too many communities across the country, wages and opportunities have lagged far behind rising costs and increasingly unequal supply over the past few decades. Today, we are witnessing the outcome of policies that were ill-equipped for the global shocks of the pandemic, supply chain disruptions and now, war.
At the same time, policies that benefit very large corporations with the resources to navigate complex legal, financial and regulatory regimes have led to the consolidation of wealth in the hands of a very few. In fact, billionaires have added trillions to their fortunes during the pandemic. Their access to teams of lawyers and consultants exacerbates a competitive disadvantage faced by new and small businesses – and further deepens disparities in access and opportunity.
There is a way forward. We now have a unique opportunity to abandon the zero-sum game approach to building the economy, in favor of a new path that leads Americans currently facing difficult economic choices onto paths of economic stability through good jobs and a better future.
A recent trip to Washington DC to engage elected officials gave us hope that many on the Hill and in the administration are trying to find common ground. Despite what you see in the news about the irreparable political divide, there is agreement on many of the policy recommendations outlined in our “America’s New Business Plan,” which calls for practical, actionable, bipartisan approaches to build an economy based on entrepreneurs and a prepared workforce.
Why is entrepreneurship-driven economic development essential for a growing and equitable economy? For nearly 250 years, the United States has created opportunities for budding entrepreneurs and innovators. Today, nearly 32 million small businesses employ nearly half of America’s workforce, and it’s entrepreneurs who come up with new ideas and improve ways of doing things. New businesses, after all, create the overwhelming majority of net new jobs, making them a key indicator of a strong economy.
But while entrepreneurship has propelled millions into the American dream — building cutting-edge businesses in new and old industries in the process — systemic barriers remain that concentrate vital resources among the privileged and privileged few. While the data showing at least a partial return to pre-pandemic levels of new business creation is indeed encouraging, gender and racial gaps in growing businesses both persist.
Without sufficient support and opportunities, entrepreneurs will certainly struggle to reach their full potential. It is essential to open up more funding channels. Today, at least 83% of entrepreneurs do not have access to bank loans or venture capital when starting a business. Female founders raised just 2% of venture capital dollars in 2021, and black female founders raised just 0.34%. We must counter the harmful legacy of discriminatory policies, like redlining, by supporting women, communities of color, and rural Americans who have less access to financing in the private market. If we fail to reduce these barriers, the economy will be well below its full potential, despite an abundance of talent, ideas and resources.
The Small Business Administration (SBA) recently committed more than $58 billion for rural Americans, $17 billion for Black Americans, $23 billion for the Asian American Pacific Islander community, and $15 billion for Hispanics and Latinos, and plans to open 280 business development centers. promote greater access and establish women’s business centers on three historically black college and university campuses. These are good things, but we need to go beyond allocating funds and ensuring that the money is spent on programs and practices that change the conditions for entrepreneurs. This happens when there is strong technical assistance, mentorship, and the support systems needed to help people take risks for business creation and growth.
We also heard in conversations with policymakers on both sides of deep concern for both the current state and the future of our workforce.
In our country, 44% of workers hold low-wage jobs. A recent analysis of these workers found that skills development, career guidance or informative feedback was lacking in their workplace. As low-wage workers flounder, employers continue to sound the alarm that middle-skilled jobs are going unfilled. Businesses and education systems need to work together to develop pathways that make it easier to seek out these experiences and that are inclusive of all students, regardless of race, gender or geography.
Although skill-based hiring is elevated by large companies, industries such as information technology still have a range of companies that require a bachelor’s degree for jobs that can be filled by a degree holder or a skilled worker. College degrees have become a substitute for “soft skills” (or “essential skills”), which are highly desirable for employers. But these key skills, such as collaboration, critical thinking, and proactivity, can be incorporated into workforce and workplace training.
As the country rebuilds after a historic pair of public health and economic crises, there’s no better time than now to shape a resilient, more inclusive economy that works for everyone. Growing our economy — the right way — means recognizing that no one demographic or geographic location has a monopoly on the motivation or talent it takes to start a business or get a well-paying job. It’s all about the numbers — we can’t afford to leave half or more of our population struggling to make ends meet.
To remain the leading economy and a primary engine of growth and innovation in an increasingly competitive global arena, we must prioritize national strategies that succeed in identifying, nurturing and unleashing our nation’s full brilliance. .
Wendy Guillies is President and CEO of the Ewing Marion Kauffman Foundation.