SmallBusinessNewz

The percentage of the U.S. population that is starting a business is declining. Data from the Federal Reserve indicates that the percentage of American households that own a business decreased from 14.2 percent in 1983 to 11.4 percent in 2004.

Numbers from the Small Business Administration show that, on a per capita basis, the amount of people starting companies that employ one person is lower today that it was in the early 1980s. Figures from the Bureau of Labor Statistics show that the percentage of the population outside of agriculture that is self-employed is 58 percent of what it was in 1948.

Scott Shane writes for Small Business Trends, "Having fewer entrepreneurs means that we are experiencing economic growth. The more developed a country is, the fewer people work for themselves. And when the effect of the number of entrepreneurs is isolated from other factors, the evidence shows that increases in the number of people running their own businesses leads to reduced GDP growth."

Shane notes that when companies grow in size they become more efficient. They can buy in bulk and take advantage of economies of scale. Shane writes," Think of it as the Wal-Mart effect. One Wal-Mart replaces a lot of entrepreneurs - the independent grocery, jeweler, appliance store, garden shop etc So if we are able to create more high growth companies like Wal-Mart than we used to, we don't need as many independent entrepreneurs."

I don't entirely agree with Mr. Shane but believe there has to be a happy middle ground. Not achieving a good balance between entrepreneurship and large corporations has negative consequences for us all.