卡托研究所-企业家与法规：消除州和地方对新企业的壁垒（英文）-2021.5-48正式版.doc

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1、Policy Analysis May 5, 2021 | Number 916Entrepreneurs and RegulationsRemoving State and Local Barriers to New BusinessesBy Chris EdwardsEXECUTIVE SUMMARYhe U.S. economy was damaged by the COVID-19 crisis in 2020. Output plunged and unemployment spiked. Mandated shutdowns, social distanc-ing, and alt

2、ered consumption patternsresulted in many businesses closing permanently and laying off workers.To replace lost jobs and incomes, the economy needs entrepreneurs to fill the void with business startups. During the economic downturn a decade ago, the business startup rate fell and never fully recover

3、ed, which contrib-uted to a slow recovery. Even before that, the startup rate had been trending down since the 1980s. That is troubling because startups play crucial roles in the economy. They create most net new jobs. They are a key source of innova-tion because new products are often pioneered by

4、new companies. And they challenge dominant firms, which helps to restrain prices and expand consumer choices.This report argues that state and local policymakers should slash regulatory barriers to startup businesses. State governments should repeal certificate of needrequirements and minimum wage l

5、aws, liberalize occupa-tional licensing and restaurant alcohol licensing, and fully legalize marijuana and hemp businesses. Local govern-ments should reduce and simplify permitting and licens - ing rules for new businesses. They should also liberalize zoning rules for home-based businesses.The repor

6、t presents an Entrepreneur Regulatory Barriers Index, which uses 17 variables to rank the states on their barriers to startup businesses. The re-sults suggest that the lowest regulatory barriers are in Georgia, South Dakota, North Dakota, Colorado, New Hampshire, Kansas, Indiana, Wyoming, Utah, and

7、Ohio, while the highest barriers are in Rhode Island, Oregon, Nevada, New York, West Virginia, Washington, Hawaii, California, New Jersey, and Connecticut.At the federal level, the Biden administration is likely to increase regulations on businesses and raise taxes, which would undermine entrepreneu

8、rial activity. But state and local governments should move in the op-posite direction and repeal unneeded barriers to new enterprises and spur economic growth.Chris Edwards is director of tax policy studies at the Cato Institute and editor of DownsizingGovernment.org.2TRENDS IN BUSINESS STARTUPSIn t

9、he United States, entrepreneurship and business dynamism appear to have trended downward in recent decades. One indicator of this is the decline in the startup rate for employer businesses, as calculated from the Census Bureaus “business dynamics” data.1 Employer businesses have at least one em-ploy

10、ee other than the owner. The startup rate is the number of businesses less than one year old as a share of all businesses.Figure 1 shows that the startup rate fell from more than 10 percent in the early 1980s to 8 percent in 2018.2 In 2018, there were about 430,000 startups among 5.3 million employe

11、r businesses. In most years, the overall economy is growing and there are more firms starting up than shutting down.3During the economic downturn a decade ago, the startup rate fell below the shutdown rate for several years. The startup rate did not fully recover from the decline, which is one reaso

12、n why it took many years for the unem-ployment rate to fall to its pre-recession low. Economist John Haltiwanger noted, “One ofthe reasons we took so long to recover from the Great Recession is startups got clobbered and didnt come back.”4 A Wall Street Journal news story concurred, “The sluggish pa

13、ce of new business creation in years after the reces-sion officially ended contributed to a slow re-covery and unusually high unemployment.”5Another measure of entrepreneurship is self-employment, which includes both busi-nesses that have employees and those that do not. Self-employment was fairly f

14、lat during the 1990s and 2000s but over the past decade has trended down. Self-employment as a per-centage of total private-sector employment fell from 14.1 percent in 2009 to 12.3 percent in early 2020 before the pandemic began.6 This study uses “startup” broadly to mean all new business enterprise

15、s with and without employees.Discussing the downward trend in startups, economists Germn Gutirrez and Thomas Philippon noted, “In addition to the decline in the raw entry rate, there has been a decline in size of young firms: entrants are fewer, they start smaller and grow more slowly.”7 Theresult i

16、s that small firms and young firms are playing a diminished role in the economy.Between 1998 and 2017, the number of small firms (less than 500 employees) in-creased 7 percent, while the number of large firms (more than 500 employees) increased 23 percent.8 Over the same period, total em-ployment in

17、 small firms increased 10 percent, while employment in large firms increased 28 percent. Meanwhile, employer firms less than five years old fell from 38 percent of all firms in 1982 to 29 percent by 2018.9In response to the COVID-19 pandemic, the economy plunged into recession in 2020 and many busin

18、esses shut down permanently. Smaller firms were hit harder than larger firms. By the end of 2020, small business revenues and the number of small businesses open were down about 30 percent from a year earlier.10 The larg-est job losses occurred in the leisure and hos-pitality industry.11 Many restau

19、rants have gone out of business, including about one-third of the restaurants in New York City.12As businesses were closing in early 2020, business startups were also falling. However, startups rebounded strongly in the summer before tapering off again in the fall, according to Census Bureau “busine

20、ss formation” data.13 These data are based on applications for new employer identification numbers.The startup rate rebound in the summer was likely due to the delay of some startups from earlier in the year, a rise in startups pur-suing new online opportunities, and people being thrown out of previ

21、ous jobs. Hardship is one driver of entrepreneurship.14 The summer spurt in startups may have also stemmed from people registering fraudulent businesses to gain coronavirus-related disaster subsidies.15CONCERNS ABOUT THE STARTUP DECLINEThe rate of business startups has improved since the drop in ear

22、ly 2020, but there is con-cern the long-term downward trend will con-tinue. That trend has puzzled economists. The advance of information technologiesand the shift toward services in the economy have reduced the costs of running many small businesses, which should have encouraged en-trepreneurship.

23、Even before the internet rev-olution of the 1990s, the personal computer revolution of the 1980s provided startups with tools that were previously only available to large firms, such as software for word process-ing, invoicing, and databases.Economists do not fully understand the reasons for the dow

24、nward drift in startups.16 John Haltiwanger found that the startup de-cline before 2000 was concentrated in sectors such as retail trade and services where there was a move toward national chains and away from mom-and-pop stores.17 That transforma-tion likely increased productivity and thus was prob

25、ably beneficial for the overall economy.However, Haltiwanger and others have found that the startup decline after 2000 has been wider spread, which may suggest growing rigidity in the economy. Economist Steve Davis looked at the employment share of firms less than five years old and found that the “

26、drop in the young-firm share is pervasive across broad industry groups and U.S. states.”18 Between 2000 and 2018, the young-firm employment share fell 60 percent in high-tech manufactur-ing, 56 percent in information, 53 percent in high-tech, 38 percent in services, 38 percent in manufacturing, 33 p

27、ercent in construction, and 13 percent in retail.19 Those declines sug-gest a fall in dynamism in the economy.Ruchir Sharma, a top fund manager at Morgan Stanley, points to another factor sug-gesting a loss of U.S. dynamism: the rise of “zombie” firms, which are companies that have not earned enough

28、 profits over three years to even pay interest on their debt.20 Government policies may be keeping zombies alive, which is a drag on growth because resources are not being reallocated to new firms. A rising num-ber of zombies “lowers the productivity of rival companiesand blocks the entry of new com

29、paniesby raising labor costs and making it difficult to attract capital,” notes Sharma.21 The percent of publicly traded companies that are zombies rose from just a few percent3“The startupdecline after2000 hasbeen widerspread, whichmay suggestgrowingrigidity in theeconomy.”4“In most years,startupsc

30、reate mostnet jobsbecause manyestablishedcompanieseither shrinkor shutdown.”in 2000 to 19 percent in 2020 before the COVID-19 pandemic started.Other indicators of falling dynamism are declines in job reallocation rates (measured by job creation and destruction) and worker allocation rates (measured

31、by hires and separa-tions). Davis and Haltiwanger note:U.S. labor markets became much less fluid in recent decades. Job reallocation rates fell more than a quarter after 1990, and worker reallocation rates fell more than a quarter after 2000. The declines cut across states, industries and demo-graph

32、ic groups defined by age, gender and education.22What is causing the fall in dynamism? Davis and Haltiwanger suggest that it is a combina-tion of demographic changes, shifting mar-kets, and government regulations:Many factors contributed to reduced fluidity: a shift to older firms and es-tablishment

33、s, an aging workforce, the transformation of business models and supply chains (as in the retail sec-tor), the impact of the information revolution on hiring practices, and several policy-related developments. Occupational labor supply restrictions, exceptions to the employment-at-will doctrine, the

34、 establishment of protect-ed worker classes, and “job lock” asso-ciated with employer-provided health insurance are among the policy factors that suppress labor market fluidity.23The sections below discuss the importance of regulations to startups and economic dyna-mism. But nonpolicy factors also p

35、lay a role. One factor is Americas changing demograph-ics. The Congressional Budget Office (CBO) found that “people between the ages of 35 and 54 are more likely to be entrepreneurialand successful in their new businessesthan those of other ages, and their share of the workforce has fallen since 200

36、0.”24Another factor is that young people appear to be starting fewer businesses today than in the past. A Small Business Administration study found that “At age 30, less than 4 percent of Millennials reported self-employment in their primary job in the previous year, compared with 5.4 percent for Ge

37、neration X and 6.7 percent for Baby Boomers.”25 Similarly, the Kauffmann Foundation noted about 20- to 34-year-olds: “In 1996, young people launched 35 percent of startups. By 2014, it was 18 percent.”26The decline in startups may partly stem from financial factors. High levels of student debt today

38、 may make it harder for young people to access financing and dissuade them from launching businesses.27 In polls, young people interested in entrepreneurship point to financial factors as a barrier.28 Also, the de-cline in housing prices during the 20072009 recession appears to have undermined start

39、-ups because home equity is often used as col-lateral for business loans.29The climate of ideas influencing young people may also play a role. Some policy influ-encers of the young, including celebrities and political leaders, demonize businesses and profitmaking.30 But other cultural factors are su

40、pportive of entrepreneurship. Numerous television shows, such as the reality series Shark Tank, portray startups in a positive light, and some technology entrepreneurs are widely admired. Also, programs in entrepre-neurship have blossomed in American col-leges in recent decades.31Should we care abou

41、t the level of startups and entrepreneurship?Yes, for numerous reasons. New business-es are important for job creation. Looking at employer businesses, startups created 2.4 mil-lion jobs in 2018, which was 15 percent of gross jobs created that year.32 However, the effect of startups is more striking

42、 when considering net jobs. Established firms both create and lose jobs, whereas startups only create jobs. In most years, startups create most net jobs because many established companies either shrink or shut down. In 2018, the 2.4 million jobs created by employer startups accountedfor nearly all t

43、he 2.5 million net jobs created by employer businesses that year.Startups revitalize local communities by creating jobs for people displaced by shrink-ing businesses. Some startups grow to become large and durable companies that propel the overall economy. Economist Ryan Decker and colleagues found

44、that about 15 percent of U.S. companies grow more than 25 percent per year.33 These top growers tend to be young companies, and they account for almost half of gross job creation, the authors find. In 1994, A consisted of Jeff Bezos in his garage in Seattle, but today the company em-ploys about one

45、million people.Startup activity fuels productivity growth because “newly established businesses are typically more productive than the firms that preceded them,” reports the CBO.34 Entrants in manufacturing industries have substantially higher productivity than exiting establish-ments.35 Looking acr

46、oss industries or across jurisdictions, a larger share of employment in new firms correlates with higher productivity growth. Haltiwanger notes that a “high pace of job reallocation has been largely productivity enhancing. That is, it reflects jobs being reallo-cated away from less productive to mor

47、e pro-ductive businesses.”36Startups are crucial for spearheading in-novations and competition. In his research, former Harvard Business School professor Clayton Christensen highlighted the impor-tance of disruptive innovations, which are new products that may start in a niche but eventually shake u

48、p and replace existing busi-nesses and industries.37 Such innovations are often pioneered by new companies, not by established ones. Established companies tend to focus on growing their current markets and may miss shifts in tastes and technologies that startups exploit.For instance, IBM dominated the main-frame computer market in the 1960s but was slow to recognize the shift to minicomputers, which were pioneered by Digital Equipment Corporation (DEC) and other new firms in the 1960s and 70s. Then both mainframeand minicomputer firms missed the shift to personal comp