Small businesses source of new jobs

Small business in the Rocky Mountain West is alive and well.

Small businesses - those with fewer than 100 employees - have created more than 44,000 new jobs in the seven Rocky Mountain states during 24-month period from 1988-1990, according to a study by the Center for the New West.

Small businesses generated job growth in every business category except construction and eating and drinking establishments. Large businesses - those with more than 100 employees - lost more than 7,000 jobs during the same period.

Overall, more than 37,000 net new jobs were created in the seven state region - including Arizona, Colorado, Idaho, Montana, New Mexico, Utah and Wyoming.

Although many believe manufacturing is on the decline in the U.S., the most dramatic job growth was achieved by small businesses in manufacturing and services. Small business manufacturing job growth accounted for just over 35% of all new jobs by small businesses - with about 27% in the general manufacturing category and 8% in high tech manufacturing.

In fact, small business job growth in the manufacturing sector in the Rocky Mountain region generated more than 16,000 new service jobs while large businesses created more than 7,000 new service jobs.

Most importantly, about three out of four service jobs created by both large and small companies are in the category of higher-wage business and professional services, which includes computer services, software and advertising. Only about one in four of the new service jobs in the Rocky Mountain region are in the lower-wage category of general services, which includes hotel and motel services and most personal services.

Large businesses, by contrast, are job killers, having eliminated 7,000 net jobs. More than 24,000 jobs were lost in thigh tech manufacturing and construction (about 14,000) followed by agriculture, mining, eating and drinking establishments, and financial, insurance and real estate. These were offset by 17,000 new jobs in services, transportation, general manufacturing, retail, wholesale trade and telecommunications.

What this means is than entrepreneurship is a vital force for job creation and new wealth national and especially for the West.

As we develop public policies for government spending, taxation and regulation, it is important to assess their impact on small business and entrepreneurship.

The recent so-called budget compromise passed by Congress, and many so-called tax and regulatory reforms being considered at the state level, are generally not helpful to the entrepreneurial economy - including sharply rising payroll taxes, especially for the self-employed.

We must take care not to kill the goose that lays the golden egg.