The COVID-19 outbreak and the economic downturn it engendered swelled the ranks of unemployed Americans by more than 14 million, from 6.2 million in February to 20.5 million in May 2020. The rise in the number of unemployed workers due to COVID-19 is substantially greater than the increase due to the Great Recession, when the number unemployed increased by 8.8 million from the end of 2007 to the beginning of 2010
Economic research on net job creation to identify the types of businesses that appear to create the most jobs. That research indicates that small businesses tend to create more jobs than large businesses during economic expansions and lose more jobs during and immediately following recessions. Furthermore, according to the Congressional Research Service's analysis report on private-sector job creation in the United States, Small businesses create two-thirds of new jobs and deliver 43.5 percent of the United States’ gross domestic product (GDP).
In addition to keeping the economy running, small businesses also lead the way in innovation. Small businesses are major drivers in the U.S. economy, spurring local job creation and innovation while also fostering entrepreneurship. They produce 16 times more new patents per employee than large patenting firms do. Small tech startups with fewer than 5 employees account for a large number of these patents.
Not only that, but small businesses reflect the diversity of the United States population in a way that the employee base of large corporations do not. 36 percent of small businesses are owned by women. 9 percent are owned by veterans. 14.6 percent of small businesses are owned by people of color. This includes 2.3 million Latinx business owners, 1.9 million black business owners and 1.6 million Asian business owners.
Even though these businesses are considered the backbone of the economy, providing the economy with an overwhelming number of benefits, small businesses don’t receive the same government support as large corporations. They do not receive the same tax breaks that are provided for large corporations, nor the same local and state incentives for things like production facilities, or research and development. Large companies can receive federal bail-out money in times of financial turmoil, an option that is not available to small businesses.
Small businesses have the odds against them but continue to thrive. They bring jobs and revenue to the local economies by offering jobs, local products, paying sales and property tax, and using local vendors and supporting services. In fact, a recent study shows that for every dollar spent at a small business, 68 percent funnels back into the community. Compare that to the 46 percent that funnels back from large businesses.
As a coworking space designed to provide an optimized workspace to cater to the needs of entrepreneurs, startups and small businesses, ZED Coworking is proud to support the growth of innovative small businesses.