New Business Ownership In Under-Served Communities
America is about getting ahead, about finding the best in ourselves and in each other.
And without a doubt, entrepreneurship is the economic backbone of communities across America. It is no different in the under-served communities of Southern California!
Low levels of new business creation in under-served areas result in low labor force growth.
Opportunity Zones
Per the Bureau of Labor Statistics, over half a million new small businesses are launched each year in the United States, representing nearly 1.4 million new jobs each year. The nearly 30 million small businesses in the United States employ over 57 million American workers, while driving nearly half the of our national GDP.
Sole proprietorships, S corporations, and partnerships have all experienced decreases in their top marginal tax rates, benefiting millions of new and prospective small business owners. While current tax policies are lessening the tax burden on both small business and employees, the economy is experiencing the highest levels of optimism in over a decade. For the next five years, American businesses can write off the costs of newly purchased heavy equipment and other investments in their business.
Despite the importance of entrepreneurship, the United States economy experienced a net decline in the total number of American firms between 2007 and 2016. The Great Recession had a severely negative impact on new business formation, with the startup rate falling beneath the closure rate in 2009—the first time on record.
Many distressed communities have been economically hamstrung by business closures due to the pandemic, a lack of access to capital, and poor support for entrepreneurship. Stagnating and decreasing new business creation in under-served areas often compounds negative consequences for labor force development and wage growth.
Opportunity Zones represent a systematic approach to economic development in under-served communities. We will write about this topic in depth in the coming months.