NCPA - National Center for Policy Analysis

Small Businesses Are The Powerhouse Of Economic Growth

July 30, 1999

Analysts are almost unanimous in crediting small-business entrepreneurs for today's vibrant U.S. economy. Start-up companies are generating the jobs and creating the new wealth which have kept the economy humming for eight years.

  • From 1994 to 1998, companies with fewer than 20 employees generated nearly 9 million jobs -- about 80 percent of the positions created.
  • Businesses with 100 or fewer workers spend $2.2 trillion annually -- just a bit less than big companies, which spend $2.6 trillion.
  • Small companies with 500 or fewer employees account for about 51 percent of the country's private gross domestic product.
  • Just 30 companies started in recent years account for 40 percent of the Nasdaq's $3.4 trillion market capitalization.

Some 47 percent of small businesses were started less than 10 years ago and economists say most of the new ventures are initially financed for less than $10,000.

But as they grow and perhaps issue stock, they contribute to the cycle of profits. Economists estimate than every $1,000 gain on stock markets translates into $50 worth of consumer spending.

Source: Bill Meyers, "It's a Small-Business World," USA Today, July 30, 1999.


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