Is the U.S. Really the Most Hospitable Economy for Small Business

The party line, both Democrat and Republican, has always been that small businesses are the cornerstone of the U.S. economy; and that the U.S. economy is uniquely positioned to support entrepreneurship in all business sectors.

A new study by The Center for Economic and Policy Research calls those assumptions into question.

In their August, 2009 report—An International Comparison of Small Business Employment—21 “rich” democracies are compared based on percentage of the workforce that is self-employed or employed in a small business. The U.S. consistently ranks at the bottom of the pack. Some Examples:

• 2007 Self Employment Rate: The U.S. ranks 20/21 at 7.2% (Greece is #1 at 35.9%)
• 2006 Manufacturing Related Employment (businesses with <20 employees): The US ranks 19/21 with 11.1% (Greece is #1 at 35.3%)
• 2001 Computer Related Employment (businesses with <100 employees): The US ranks 14/15 with 32% (Italy is #1 with 73.2%)
• 2001 R&D Related Employment (businesses with <100 employees): The US ranks 10/12 with 25.3% (Italy is #1 with 74.8%)

What does this data tell us? Perhaps that the vast number of businesses, large and small, in the U.S. skew data when looking at percentages. Or perhaps, as the study posits, that healthcare costs in the U.S. make self-employment a prohibitively expensive choice compared with the self-employment choice in countries with government sponsored “universal” healthcare.

Read the study and decide for yourself.