Study: U.S. Businesses Are Being Destroyed Faster Than They’re Being Created

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The American economy is less entrepreneurial now than at any point in the last three decades. That’s the conclusion of a new study out from the Brookings Institution, which looks at the rates of new business creation and destruction since 1978.

Not only that, but during the most recent three years of the study — 2009, 2010 and 2011 — businesses were collapsing faster than they were being formed, a first. Overall, new businesses creation (measured as the share of all businesses less than one year old) declined by about half from 1978 to 2011.

The authors don’t mince words about the stakes here: If the decline persists, “it implies a continuation of slow growth for the indefinite future.” This lack of economic dynamism, particularly the steep drop since 2006, may be one reason why our current recovery has felt like much less than a recovery. As Matt O’Brien noted on Wonkblog last week, annual job growth rates have stubbornly refused to budge above 2 percent for the duration of the recovery.

Read more at The Washington Post.

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  1. what is happening is that big department stores are taking over. The small hardware stores small markets, shoes stores etc are closing because people go to the mall. The Problem is that they create a $8.00 an hour Jobs while the owners get super rich. so…the economy is growing they say….more jobs….but in reality strict capitalism does not really work. That is why the Torah does not believe in strict capitalism some social laws are require to protect small business .

    Canada requires that big business and malls be outside the city that way the protect the small businesses.
    Quality has diminish dramatically virtually everything today is made in China, cheaply and quickly. Good old fashioned quality items are being replaced by junk.

  2. its due to high taxes
    and the obamadoesntcare health mandate tax where people can not afford to open a business having to buy unneeded health insurance

  3. The fact is that if people don’t have the money to buy your product, how are you going to have sales? And profits? and keep from going out of business? and as noted above, there’s the effect of Walmart and the other big chains that destroy small local businesses and create minimum-wage jobs. And businesses need short-term loans to survive, to cover the time lag between buying raw materials and selling the finished product, so we need lots of easily-available short-term loans for cash flow, which the banks simply aren’t giving.

    It’s a complex situation, with no one cause and easy answers.

  4. “Canada requires that big business and malls be outside the city”

    Huh? Toronto has five large shopping malls within the city limits each with at least 80,000 square meters of space.

  5. “unneeded health insurance”

    Health insurance is needed. By everyone.

    But in any case, the statistics given here end two years before Obamacare took effect. We know you hate President Obama, but don’t embarrass yourself next time you post one of your rants.

  6. “It’s a complex situation, with no one cause and easy answers.”

    True. And you could add the influence of the internet, which is harming even the big megaretailers. Borders and Tower Records are gone thanks to the internet. Sears and K Mart are dying (although a lot of that is incompetent management by an ideologue CEO, which was what killed Montgomery Ward) Walmart has had to focus on groceries and pharmacy in order to stay competitive.


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