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So we know that entrepreneurs are the primary engines of job creation in the United States. Research study after research study has confirmed that it is young firms that drive improvements in the employment situation. From 1980–2005, firms less than five years old accounted for all net job growth in the country. In 2007 alone, young firms (1-5 years old) accounted for nearly two-thirds of job creation. We also know more than half of the companies on the 2009 Fortune 500 list were launched during a recession or bear market, along with nearly half of the firms on the 2008 Inc. list of America’s fastest-growing companies. In light of all this evidence and in face of the employment crisis in the country, how can we truly support the entrepreneurs behind these young firms?
When President Obama will deliver his first State of the Union address is still unclear. However, with 80 percent of the population believing that new economic growth and jobs will come from entrepreneurs, discussion around what his address should include in terms of policies that encourage new start-ups is already underway.
It is an important week for entrepreneurship in the Middle East. Here in Dubai, two important global summits will be convened by His Excellency, Sheikh Nahayan Mabarak Al Nahayan, United Arab Emirates Minister of Higher Education and Scientific Research, and Carl Schramm, President of the Kauffman Foundation: The HCT Global Entrepreneurship 2010 Conference (E2010) and the Kauffman Foundation’s Global Entrepreneurship Congress which I will emcee.
Today, I would like to discuss the education-related recommendations outlined at the Kauffman Foundation’s State of Entrepreneurship address. We have long been aware that American education is struggling to stay competitive. We also know that the development of entrepreneurial skills, such as opportunity recognition and prudent risk taking, are not prioritized in most U.S. educational institutions. Developing tomorrow’s talented, capable innovators is a challenge that will require entrepreneurially-driven improvements in education at all levels.
In the hopes to continue a much-needed conversation on how to revamp the economy, this week I would like to highlight another policy recommendation that emerged from the Kauffman Foundation’s State of Entrepreneurship address: reform immigration policy to attract migrants who want to start new companies and create jobs.
At a time when we need risk-takers to start companies and create jobs, we need to do everything we can to remove unnecessarily burdensome regulations that dampen entrepreneurship. A high-impact, low-cost reform would be to make some of the more onerous requirements of the Sarbanes-Oxley Act of 2002 optional. This would permit companies whose shareholders don’t feel that the benefits of “SOX” requirements outweigh compliance costs to access public capital more quickly and less expensively. This kind of access to capital is critical for the survival of young firms, which have accounted for all net job growth in the United States in the past two decades.
The unemployment pressure does not appear to abate. Layoffs continue every day and despite massive government intervention for economic recovery, there is little evidence of anything more than a slow, prolonged recovery. It is time to give a payroll tax holiday for young firms.
Haitians have received help from governments, the private sector and the philanthropic community around the world to deal with the awful devastation, but the long term goal of rebuilding a nation and constructing institutions from scratch will require sustained commitment to the country. I can’t think of a better group to enlist in this task than Haitian entrepreneurs. The needs of the businesses affected in this region are extraordinary, but so is their potential to become agents for restoration.
Last June, President Obama announced in Cairo, Egypt that the U.S. government will host a Summit on Entrepreneurship to identify how we can deepen ties between leaders, foundations, and entrepreneurs in the U.S. and Muslim communities around the world. Throughout April leading up to the April 26th summit, I will comment on the state of entrepreneurship in some of the nations participating which I will be attending in the hope of prompting further observations from readers.
Last Friday, I had the opportunity to join an extraordinary group of women entrepreneurs mostly from Saudi Arabia for a lunch at the home of the Honorable Esther Coopersmith. All were both proud of their higher education in Saudi Arabia and had started companies in a wide range of businesses from construction to IT. I should not have been surprised. Starting a business in Saudi Arabia is relatively easy. Its “ease of starting a business” rank is 13 out of 183 economies, according the World Bank’s Doing Business 2010 data. This is not surprising. Saudi Arabia is widely recognized as a leader in promoting and enabling entrepreneurship and innovation.
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