The US Chamber of Commerce posted a report last month on how the states were doing in promoting enterprise. Entitled Enterprising States: Policies That Produce (get the report here), the report rated states on 33 attributes the Chamber felt were essential to economic (and entrepreneurial) growth in areas such as Economic Performance, Exports & International Trade, Innovation & Entrepreneurship, Taxes & Regulation, Talent Pipeline and Infrastructure.
Missourians are probably curious how we did. Of 33 measures, Missouri scores in the top 10% (i.e. the top 5 states) on none. We had 2 measures (Entrepreneurial Activity and Higher Education Degree Output) that were in the top 20% (a.k.a the top 10 states) and 10 more measures in the top half of states. The chamber gave top 10 state lists in the six areas mentioned above, and Missouri did not have one mention on any of the lists. On the list of “The Next Boom States,” Missouri did not get mentioned.
As a state that prides itself on low taxes and being a haven for business, state leaders and a host of politicians would probably expect the Show-me State to fare well, but in comparison to other states on those Taxes & Regulation measures, Missouri’s performance is anemic. There are six measures (Business Closure, Tax Environment for Mature Firms, Tax Environment for New Firms, State business tax climate index, Small Business Survival Index, and State Cost of Living Index). Missouri is in the bottom half of states on the first three, and ranked between 11 and 25 for the last three. And this is one of the categories where our state’s performance is strongest, along with the Talent Pipeline.
In the report’s narrative on our state, the Chamber applauds Missouri’s efforts to improve the economic climate and mentions advances in training and promoting manufacturing and exporting. It is gratifying to see the state getting recognition for making strides, but reports like this, which are really compendia of already existing surveys, bring into sharp relief the need for the state legislature to do more to help promote efforts to grow our economy. Some of these, like an angel tax credit, higher education supports, funding for economic development, or supports for improved Internet access, are relatively inexpensive, and provide relatively fast paybacks in improved business and job results. Improving the tax climate in ways that groups like the Tax Foundation recommend would help, but also require more legislative energy and pose bigger challenges in making sure the state has enough revenue to meet its own obligations.
Missouri’s entrepreneurs did their part, starting businesses at the 6th highest rate in the nation in 2011, despite the less-than-ideal conditions in the overall economy and (as the Chamber’s report indicated) the state. It would be a great time for our legislators to step up their own game.
It may be too early to hope for a “thousand points of light” for America’s small businesses, but I was asked recently if there was any good news out there, and here were three I could think of:
There is a bright spot for industries taking advantage of the downturn, for example real estate trusts buying up distressed commercial properties in hopes of the upturn. (The residential market has a similar operation going, but with less upside potential and more human capital involved.)
More students are deciding to start their own businesses rather than fight the rising tide of a horrible job market. Unemployment in the 18-24 age group is over 16% (http://michael-e.com/2009/08/unemployment-hardest-on-18-to-24-year-olds/).
We also seem to be seeing a surge in part-time self-employment, with a lot of small-scale home-based businesses, a lot of selling on eBay, and other low-cost, low overhead efforts to help make ends meet. As the economy picks up, a lot of people will abandon these efforts for better-paying employment, but the skills of working for yourself, and the emotional payoffs of it, mean that we are likely to see a long-term growth in self-employment after the post-recession dip.
Three’s not a thousand, but it is a start. I’d love to hear about more.