Blog | April 6, 2017
The Next Million Jobs Will Come from Startups Across America, But Not Without Smarter Public Policy
(This article originally appeared on Forbes on March 30.)
It might have been possible at one time for politicians from the Heartland to be indifferent to public policy conversations about the Startup Economy. After all, that was an issue for Silicon Valley. Or maybe the tech hub of Boston. But it didn’t resonate with their constituents in Chicago or Cincinnati.
In the past decade, though, that has dramatically changed. Startups are everywhere, from Silicon Valley to Boston, and from Provo to New Orleans. Those young and innovative companies are job-creating engines that spur economic development across every sector of the economy. But they can’t do it alone.
A new research report, released today, says policymakers on the national, state, and local level “must pay close attention to startups – encouraging their formation and removing the obstacles to their growth.” The report comes from TechNet, a bipartisan political network of tech-oriented CEOs and senior executives (disclosure: I serve on the Executive Council of TechNet, and support their work), and the Progressive Policy Institute (PPI).
Among the policy changes advocated by the report are many issues that both parties in Congress should support, and while some priorities are a bit more politically charged, it’s nonetheless urgent and important to act.
The report argues that overly strict rules governing crowdfunding sometimes limit the ability of startups to raise funds on the local level and that changing tax policy to support innovation will make it easier for companies to pour money back into research and development. And improving access to overseas markets and limiting trade barriers will open up new opportunities for startups to grow their businesses and scale. It also suggests increasing investment in entrepreneurial and STEM-related education similar to the curriculum at the Chicago Tech Academy and a growing number of schools across America.
The TechNet-published report says Congress needs to tackle immigration reform to make it “easier for immigrant entrepreneurs to build new companies in the United States.” While acknowledging that immigration reform “won’t be easy,” the report urges Congress to remove barriers for immigrant entrepreneurs through a Startup Visa program that would allow them to build companies here that create jobs and stay.
There should be no confusion about this: We are in a global fight and the country’s economy is riding on the results.
Last Fall in Fortune, John Chambers, Cisco’s executive chairman, talked about France’s drive to become a “digital republic.” The country expects to create more than 1 million jobs and hundreds of millions of dollars in GDP growth by attracting entrepreneurs, expanding digital training for its workforce, all while building upon its already burgeoning high-tech economy.
Chambers said technology skills are becoming “a prerequisite across the board.” Yet in the U.S. and most other countries, the education system isn’t teaching workers the skills they need to meet this demand.”
Germany is expanding training by creating highly valued apprenticeships, which are set aside for roughly half of its high-school graduates. Those students are choosing job training (often in technology-related fields) over traditional four-year colleges for one key reason: almost certain employment, according to a Wall Street Journal article last fall.
The U.S. continues to lag in similar job training and apprenticeship programs because students are not persuaded of their value. As a result, according to the Bureau of Labor Statistics, two-thirds of U.S. high school graduates who enrolled in college in 2015 opted for four-year degrees (and too many others leave high school without either path forward into careers).
Underscoring the bipartisan nature of the quest for increased attention and investment in workforce training, Democratic and Republican senators appeared together last month at a D.C. symposium to discuss the topic. Senator Chris Coons (D-DE) said America needs to boost investment in workforce training. And Senator Thom Tillis (R-NC) pointed out the mismatch between the U.S. workforce’s skills and the needs of industry, and he heralded the apprenticeship programs in Germany as something of a model for the future.
Smart and focused public policy that enables and empowers startup growth will be the best way to move our economy and our country forward, the TechNet/PPI report says, and the stakes are enormous. Economists have documented what happens when the Startup Economy is humming. In the late 1990s, young companies (five years old or younger) were creating jobs at a rate of about 2.8 million per year. That job creation rate slowed in the five years ending in 2014, but those companies still were creating about 2 million jobs a year, four times as many jobs as created by older companies. If we hope to return to the late 1990s level of job creation, though, it’ll take a concerted effort by industry and government to make it happen.
Increased attention to the startup world isn’t just about throwing money and support to innovative newcomers, however. There are plenty of long-established businesses that are being transformed by emerging technologies.
At TechNexus, we’ve worked with dozens of leading enterprises in search of meaningful ways to engage, invest into and get value from the entrepreneurial ecosystems, and that’s not just happening on the coasts or in major metro tech hubs. It’s happening everywhere and it will require a comprehensive local and national approach to see it flourish.
The report concludes that startup-friendly policies will not require a massive influx of cash to achieve results, but they will “require governments to do things differently than before.”
And the rewards of those policies will be felt everywhere, from Silicon Valley to the Carolina Shores and everywhere in between.