While it may seem like the Portland startup community is growing in population, I’m not sure that it’s growing in the number of startup companies we’re seeing. And even if that anecdotal assumption is somewhat misplaced locally, broader demographics across the US tend to indicate that it’s probably more true than false. Entrepreneurship has never recovered from the days of the mortgage crisis.
Between 2007 and the first half of 2019, applications to form businesses that would likely hire workers fell 16%. Though the pace of applications picked up somewhat after 2012, it dipped again this year despite President Donald Trump’s assertion that his tax cuts and deregulatory drive would benefit smaller companies and their workers. Applications are down 2.6% so far this year compared with the same period last year.
Business formation has long been one of the primary ways in which Americans have built wealth. When fewer new companies are established, fewer Americans tend to prosper over time.
“What you see is reduced social and economic mobility,” said Steve Strongin, head of global investment research at Goldman Sachs. “It means that most of the growth is occurring in the corporate sphere, which keeps wage growth down and improves profits.”
“Declining startup rates,” said John Dearie, founder of the Center for American Entrepreneurship, “amount to nothing less than a national emergency.”
For more, read “A Slowdown in US Business Formation Poses a Risk to Economy.”