What's the single best idea to jumpstart job creation?
The United States should create a national microlending program positioned to provide ready access to capital to small business. It is widely acknowledged that small business represents the engine of job creation in this country. Small business accounts for approximately 50 percent of all private-sector jobs, and roughly 70 percent of all new jobs created in the past decade.
Unfortunately, the job creation engine of small business is out of gas; new job creation among existing small businesses has been stagnant for the past two years, and most troublesome is the fact that the number of new business start-ups has declined dramatically over the past decade. In fact, the Bureau of Labor Statistics reports that the number of new businesses created for the year ending in March 2010 was at its lowest count since 1994.
Politicians and policy makers have attributed this situation to tightening credit markets as banks recalibrate their tolerance for risk in response to one of the most significant financial downturns in US history. That's true, but it's not the whole story. At a deeper level, today's tighter credit is about risk and profit.