Authored by Phil Cohen
Years ago, America was founded on dreams and risks; however, it seems Americans’ today are a lot more unwilling to take chances. According to a recent Wall Street Journal piece, long-running trends show that the U.S. economy is slow to risk; businesses are growing and adding jobs more sparingly, even when their companies are doing well, investors aren’t putting as much money toward new projects. Americans as a whole are also less likely to start a new business, change jobs, or move to pursue a new opportunity. This could be partially due to the aging population and the supremacy of bigger companies in various industries. Experts say these also may account for the lackluster economic recoveries from the last three recessions.
Businesses that take chances on new ideas are both more likely to fail as well as make it big-time. Economists say that just as important as individuals who take big risks in business are the smaller scale risk takers like those who quit their jobs to find new better ones.
After the recession in 2001, it took approximately four years for employment to return to its rate pre-recession. Today, practically four years after the last recession ended, employment still hasn’t reached its previous pinnacle.
The main issue with less Americans launching new businesses is that there are then fewer opportunities for the next Wal-Mart or Amazon or even for a successful smaller sized business.
“It just means that there are fewer new companies that are creating jobs, fewer new companies that are competing for workers,” said economist Lina Khan, who has researched the drop in entrepreneurship for Washington think tank, the New America Foundation. “Traditionally being able to start your own business has been a path to upward mobility.”
The decrease in taking risks can also be seen in U.S. migration patterns. The Federal Reserve Board of Governors economists realized the dropping rate of long-term interstate migration is connected to the decline in job changes. People don’t move as much because they’re not changing jobs like individuals did in the past.
The Census showed for the first time since records have been archived that in 2008 more Americans were employees for large companies – those whose workers numbered at least 500 – than small businesses and the trend has continued since then.