Policies > Future of Work > Section 3
Supporting Entrepreneurship, Innovation, and Access to Capital
As the manner, structure, and content of work is changing to reflect our globalizing and automating economy, so must the policies that support innovation and entrepreneurship.
Section 1:
Skill Development
Section 2:
Modernizing Social Safety
Section 3:
Supporting Entrepreneurship
Policymakers must:
Encourage businesses to grow and create jobs in the new economy, particularly outside of the relatively few areas where capital and new business activity have been concentrated since the Great Recession;
Modernize laws and regulations that govern employers and employees to ensure that they don’t unnecessarily hinder progress; and
Address inequities in access to funding and in overburdensome licensing requirements as part of reversing the drop in small business operation and startup rates.
The Facts
While new businesses play an outsize role in job creation in the U.S. economy, bank lending to large businesses has surged to new highs during the recovery, but lending to small businesses has failed to grow in proportion and has taken much longer to return to pre-recession levels.
Reflecting the need for a close review of occupational licensing to ensure requirements are geared toward protecting the public rather than powerful interests, one estimate finds that government licensing means 2.85 million fewer jobs and costs consumers an additional $203 billion each year. The Mercatus Center has reported that occupational licensing disparately affects ethnic minorities and other specific populations.
Nearly 80% of the investments made by VC firms in 2015 were made in just four metropolitan areas: San Francisco, Los Angeles, New York, and Boston.
POLICY GOALS
At a time when businesses and workers must be nimble and adaptive, government must likewise update requirements to reflect modern realities. More specifically, we should strive to update permitting, licensing, and other regulations to make it easier to start and maintain a new business.
Government must do more than just update requirements; rather it should be an active partner in helping employers thrive, most importantly by helping them get access to a trained workforce and to the capital and resources they need to succeed.
Policymakers must acknowledge the value of small and medium-sized businesses, recognizing that communities with more of these successful enterprises are better positioned for success than those that rely on one large company.
Workers deserve access to a wide range of employment opportunities, and entrepreneurs should have every reasonable opportunity to start a business without unnecessarily onerous requirements.
Employers should inform efforts to support entrepreneurship and innovation in an ongoing and meaningful way.
Policy Recommendations
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Encouraging Entrepreneurship
Waive state licensing and permitting costs: State and local policymakers should spur growth in key industries by reducing startup costs.
Improve access to capital for small businesses: Recognizing that access to capital is one of the primary barriers facing innovators and entrepreneurs, policymakers should partner with local lenders to ensure loans are available for people with good ideas.
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Equal Access to Jobs & Career Fields
Overhaul licensing and certification requirements: Governments should modernize and eliminate barriers to entry that are not essential for consumer protection and improved service quality.
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Growing Rural Economies
Support Economic Development Efforts: State and local governments should provide monetary and non-monetary support for economic development in rural areas.
Universal Broadband Access: Recognizing that cell phone and broadband service is essential for workers to obtain jobs, work remotely, and advance their careers in the new economy, yet many rural areas, as well as urban broadband deserts and other distressed communities, lack adequate access, government should support expansion of services to cover all areas.
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Employer Input
Establish an Employer Advisory Group: To ensure governments hear perspective of business leaders who are dealing with the changing economy in real time, policymakers should convene a group of employer partners to inform (1) regulatory updates that eliminate red tape and modernize rules to reflect the new economy and (2) ways to support start-up and expansion of new, innovative businesses.
