Why Do Laws Cater to Big Business When Startups Drive Growth?

By Kayla Matthews

There’s no question that startup culture is sweeping the nation. Everywhere you turn, new businesses are popping up, and entrepreneurs are raising money to get their companies off the ground. With all these one-person or small-team shops opening up, they can’t possibly have an effect on the economy, can they?

They can, and they do.

A snapshot of Wisconsin …

A recent economic study by the University of Wisconsin shows that it’s the state’s startups that are actually fueling job growth, not big corporations. That’s excellent news for Wisconsin’s small-business sector, but unfortunately, the state’s overall job growth is a bit lagging. Wisconsin’s job growth sits at just 7.6 percent, as opposed to the United States’ overall 11.2 percent, over the last five years.

The study, which looked at data from 2012, examined job and income growth after the great recession. It found that Wisconsin’s small businesses, defined as those with less than 500 employees, employ more than 80 percent of workers in Wisconsin, and they generate more than 90 percent of new jobs.

That’s a huge deal, but Wisconsin legislation and other policies are still leaning toward the more established corporations. According to the state, low job-growth numbers have to do with the decline of the Wisconsin manufacturing industry. Despite the statistics that support job growth in the small-business sector, the Wisconsin Economic Development Corp. still focuses much of its work on big industries like manufacturing, agriculture and biotechnology, rather than the small startup organizations that have been proven to fuel the state’s economy.

The WEDC does provide resources and assistance for smaller startups, but the support is minuscule compared to that provided to larger industries.

… And the bigger picture

Why do laws cater more to the big businesses of the world than to the small, scrappy startups?

The answer is, surprisingly enough, money. Wisconsin and Gov. Scott Walker pledged to create a quarter of a million jobs between 2010 and 2014. However, as of June 2014, that number looked more like 5,840. Walker’s WEDC is still favoring money over actual jobs.

The larger industries that make their home in America’s dairy land can afford to make contributions to political causes. Since startups don’t have the money to lobby, the lawmakers in charge push those causes to the bottom of the pile. It’s clear there are larger issues here than just the low rate of job growth in Wisconsin.

Many of Wisconsin’s startups are launched by entrepreneurs who call the state home. Since WEDC focuses on bringing industry and companies in from other states, its homegrown small-business owners and founders get lost in the shuffle. If local entrepreneurs aren’t given the resources they need to grow and flourish, that job growth is going to stop surging and start plateauing. So, many factors need to be taken into consideration. Different industries’ data analysis needs, suppliers, materials and labor costs could all be addressed through some well-planned state funding.

Right now, they aren’t.

WEDC provides several resources that help entrepreneurs and small businesses get loans and other kinds of support, especially for technology startups, but there’s a serious dearth of support for other kinds of small-business owners. To address this, the recently released study advocates for change to the state’s entrepreneurial support program in several ways. The authors of the study, Tessa Conroy and Steven Deller, suggest a program in which state universities and technical schools provide educational resources for entrepreneurs and startups. Additionally, they’ve proposed a mentorship program to help young businesses get off the ground.

Wisconsin’s startup economy is flourishing, and those entrepreneurs are working their tails off. They need the government and lawmakers to work their tails off with them.

Image credit: Public domain via Huney

Kayla Matthews is a healthy living writer and blogger who writes for The Huffington Post and The Climate Group. Follow her on Facebook or atProductivityTheory.com.