Newspaper Page Text
THE ISLANDER, MARCH 16, 2009, PAGE 15
Small Firms and the Recession
By Shawne McGibbon, Acting Chief Counsel, U.S. Small Business Administration, Office of Advocacy
The Office of Advocacy, ser-vices industry has lost 4.7 Advocacy observed in The and experience of work-ers a crucial role in experimen-
which is charged to study the percent of its workforce. The State of Small Business that being laid off will prod some tation and innovation. . . In
role of small business and trades, infor-mation services, while small firms absorbed of them to sell those talents
entrepreneurship in the U.S. financial activities, and lei- much of the shock of the as their own boss,
economy, has been receiv-ing sure and hospitality sectors 1974-1976 recession in their Some may have previ-
many calls asking about the also lost jobs. profit positions, they also (col- ously contemplated striking
effects of the current reces- Education and health lectively at least) maintained out on their own, but
sion on small firms. services, on the other hand, their employment share in
Because of the timing of showed a healthy 3.1 percent the economy as a whole.
many
questions th Qn a quarter century to
data collection, the hard-data employment increase.
answers But the
to many "Advocacy has had more sketchy
information
about the
current busi
ness cycle
presents
only a par-
The following year’s report
observed that small busi-
short, small firms are about
change and competition
because they change market
structure.”
If history is a guide, and if
small firms can pull through
today’s chal-lenges, the light
at the end of the recessionary
will not be
observe how small firms fare
available
for some i n periods of recession and
time. The across the business cycle."
on tneir own, out were
not ready to forego the stabil
ity of an existing job. Others
will see new opportuni-ties
for innovations in the midst tunnel is likely to be in the
ness employment was either of the economic adversity. hands of entrepreneurs,
up more, or down less, than From the long view, today’s From the March 2009 The
that of large busi-nesses over pain is felt at a low point of Small Business Advocate.
the 1981-1982 recessionary an econom-ic cycle in which The Small Business Advo-
period. small firms play a critical cate is a periodic newslet-
“So what is going on here?” role. As Zoltan Acs noted in ter that details economic
some economists began to Are Small Firms Important? developments and regulatory
lack of
current data by firm size tial picture and leaves many ask. “What can we learn from “Small firms...are an integral trends related to small husi-
makes it difficult to say any- questions unan-swered.
thing about the number of Are some job losses related
firms that have either closed to structural changes, and
or opened. do the circumstances of par-
The figures that are avail- ticular industries—such as
able are mostly attached to construction and banking—
minus signs. The latest edi
tion of the Quarterly Indi
cators (see pages 6-7) notes
that the unemployment rate
is at 7.6 percent, and the
country has lost nearly 3.6
million jobs.
Nearly every industry
make this a different kind of
recession?
What we can say is that
the Office of Advocacy has
the ways small and large
firms deal with economic
peaks and troughs?” Over the
years, it appeared that recov
ery often started in the more
nimble small firm sector,
as dozens of entrepreneurs
brought new prod-ucts and
services into the economy.
Looking forward from this
reces-sion, we would expect
is
had more than a quarter cen
tury to observe how small more entre-preneurship tak-
firms fare in periods of eco- ing place; indeed, it may
nomic recession and across help lead the economic turn-
expe-nencmg employment the business cycle. around. Some self-employ-
losses. More than half of the As early as 1982, with very ment will come out of eco-
declines are in manufactur- little historical data to go on, nomic necessity; the talent
ing and construction, which
have seen their workforces
shrink by 7.7 percent and
10.4 per-cent, respectively,
since December 2007. Alone
among the goods-producing
sectors, the natural resourc
es and mining sectors have
seen job growth because of
increased oil exploration.
On the services side, the
professional and business
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