CBO Sounds Alarm Bell on Entrepreneurship

declining entrepreneurship jan 2021 1

The Congressional Budget Office (CBO) has rang the alarm bell on a key component of the economy, expressing concern about the “continued decline of entrepreneurship over the past four decades and the implications for economic growth.” CBO said new businesses formed decreased from 10 percent of all firms that existed in 1982 to 8 percent in 2018. In addition: “New firms (defined here as those less than five years old with at least one employee on the payroll) constituted 38 percent of all businesses in 1982 but were only 29 percent of them in 2018. During that period, new firms’ share of employment fell by a third, from 14 percent to 9 percent. The decline in new firms’ share of employment was fairly consistent in both the retail and services sectors throughout the period.” This significant fall in new businesses highlights a fall of dynamism in the economy and a…

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