Originally published February 8 2015
More businesses in America now dying than starting up
by J. D. Heyes
(NaturalNews) It hasn't happened in more than three decades, and it's a disturbing trend that is likely to worsen: For the first time in 35 years, business deaths are outnumbering the birth of new businesses in the U.S., according to Gallup CEO Jim Clifton.
In a new online report, Clifton noted that, since 2008, employer/business startups have fallen below the business failure rate, a six-year period of time he calls "an underground earthquake" that is only set to worsen as more U.S. Census Bureau data pours in.
What's more, Clifton -- citing the business data -- made this startling prediction: "Let's get one thing clear: This economy is never truly coming back unless we reverse the birth and death trends of American businesses."
To be sure, the figures and statistics are alarming. For one, the oft-cited figure that there are 26 million businesses in American is grossly misleading; Clifton says that 20 million of those businesses exist on paper only -- they are companies without any employees, no profits, no customers and no sales.
Trouble in the birthplace of free-market capitalism
In reality, he notes, the country has only about 6 million companies and businesses, which provide jobs for about 100 million people in the country. And of the 2.2 million job-creating firms that have at least five workers, the numbers break down thusly, he notes:
There are about a million companies with five to nine employees, 600,000 businesses with 10 to 19 employees, and 500,000 companies with 20 to 99 employees. There are 90,000 businesses with 100 to 499 employees. And there are just 18,000 with 500 employees or more, and that figure includes about a thousand companies with 10,000 employees or more. Altogether, that is America, Inc.
In all, he said, the United States -- bastion of free-market capitalism -- now ranks an abysmal 12th among developed nations in business startup activities. Countries that rank higher include Israel, New Zealand, Hungary, Denmark, Finland, Sweden and Italy. That represents a dire picture of an America in decline.
"I don't want to sound like a doomsayer, but when small and medium-sized businesses are dying faster than they're being born, so is free enterprise," Clifton wrote. "And when free enterprise dies, America dies with it."
Until 2008, Clifton says, citing Census Bureau data, business startups outpaced failures by about 100,000 per year. However, in the past six years, the number has suddenly been turned upside down.
"As you read this," he wrote, "we are at minus 70,000 in terms of business survival." What's more, he said, "the data are very slow coming out of the" Census Bureau, "via the Small Business Administration, so it lags real time by two years."
Part of the reason why business failures are up is because the number of federal regulations is compounding. Since President Obama has taken office, hundreds of thousands of pages of new regulations have been entered into the Federal Register.
"Countries will experience revolution"
In all, reports the National Association of Manufacturing, compliance with the U.S. regulatory state now costs businesses and the economy more the $2 trillion annually:
Complying with federal regulations costs Americans $2.028 trillion in lost economic growth annually, or roughly equivalent to 12 percent of total GDP that could be invested back into our nation's businesses, according to a new study....
"Manufacturers have long cited more and more complex regulations as a barrier to their growth, and today, we have new data demonstrating the true burdens shouldered by manufacturers throughout the supply chain, particularly the smallest firms, in complying with growing federal mandates," said NAM President and CEO Jay Timmons, citing the results of his organization's September study.
In his 2011 book, The Coming Jobs War, Clifton noted that governments which neglected to create a job-growth environment would face collapse in the near future.
"As of 2008," he wrote in the book's introduction, "the war for good jobs has trumped all other leadership activities because it's been the cause and the effect of everything else that countries have experienced. This will become even more real in the future as global competition intensifies. If countries fail at creating jobs, their societies will fall apart. Countries, and more specifically cities, will experience suffering, instability, chaos, and eventually revolution."
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