Press Releases

Press Release: The Slowdown in American Entrepreneurship: “How Would a Democratic President Respond – And What Should Be Done?”

WASHINGTON— Ahead of tonight’s Democratic Debate in Des Moines, Iowa, the Progressive Policy Institute released a new report on the troubling outlook for entrepreneurship in the United States, according to PPI Director of Policy Innovation Dane Stangler.

“Despite the continued macroeconomic expansion, there are worrying sub-surface trends,” Stangler said in Real Clear Markets. “Not potential signs of recession in the near future—but signs of potential economic erosion, threatening prosperity over the next several years.”

The report released today highlights Democratic candidates’ views on entrepreneurship, ideas, and innovation in the modern political era. A growing body of academic research has established a consistent set of empirical facts about the fall in rates of entrepreneurship and other indicators of declining dynamism:

  • The entry rate of new firms has fallen steadily, which has created an “accumulating startup deficit.”
  • There are fewer high-growth firms than 20 years ago—and their rates of growth have declined. In the terms of economists, “skewness” in firm growth has fallen.
  • These trends—falling firm entry and employment creation by high-growth firms— have been especially pronounced in the high-tech sector since 2000.
  • The overall population of U.S. businesses has grown “older and slower.”
  • Other measures of dynamism—job mobility, geographic mobility, and “job reallocation”— have also fallen.

The report highlights a number of potential proposals for Democratic candidates to adopt heading into 2020, and calls for candidates to add focus on innovative, entrepreneurial thinking to combat the decline in entrepreneurship and business dynamism in the Trump era.

“Democratic candidates—particularly those who have dominated headlines—need to put greater energy into addressing the importance of business creation,” said Stangler in the PPI report. “Acknowledging the slowdown in business creation is a start. Discussing this or that program to help is a positive step. Celebrating entrepreneurs and underscoring the urgent need to address the concerning trends in dynamism would be even better.”

Please click here to read the full report before tonight’s debate and the upcoming Iowa caucuses.

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The Progressive Policy Institute is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock.

Founded in 1989, PPI started as the intellectual home of the New Democrats and earned a reputation as President Bill Clinton’s “idea mill.” Many of its mold-breaking ideas have been translated into public policy and law and have influenced international efforts to modernize progressive politics.

Today, PPI is developing fresh proposals for stimulating U.S. economic innovation and growth; equipping all Americans with the skills and assets that social mobility in the knowledge economy requires; modernizing an overly bureaucratic and centralized public sector; and defending liberal democracy in a dangerous world.