Newspaper article The Christian Science Monitor

Small Business Faces Sad Week with Los Angeles Damage and Slow US Economy, `Small Business Week' May Be a Letdown

Newspaper article The Christian Science Monitor

Small Business Faces Sad Week with Los Angeles Damage and Slow US Economy, `Small Business Week' May Be a Letdown

Article excerpt

THE destruction or damage to perhaps 10,000 businesses during the Los Angeles riot - most of them small businesses - couldn't have occurred at a more ironic time.

This week is "small business week" in the United States.

At least 3,000 of those Los Angeles businesses may not reopen, observers there say.

Across the nation, the US small-business community has been hit by the recent recession.

Bankruptcies are still on the rise. Job hiring is down. The pace of new-business formation is off substantially compared to prior recoveries.

Moreover, the main concerns of small businesses - soaring health-care costs for employees, government red tape, the need for bank credit, and tax relief - have yet to be fully addressed by the major presidential candidates, small-business experts say.

"The small-business sector is very weak right now," says an economist with Bear Stearns & Co., an investment house. "Since the first quarter of 1991, new business formations in the US, including smaller firms, are up about 5 percent. But that pace is only about half the rate of increase for business formations in a typical economic recovery."

That is unhappy news, considering that small businesses are the linchpin of the US economic system. "Some 58 percent of the entire private work force in the US is employed by small businesses of 100 people or less," says Terry Hill, a spokesman for the National Federation of Independent Business (NFIB) in Washington. All told, there are some 5 million small businesses that employ workers; another 5 million firms are individual proprietorships, Mr. Hill says.

Some economists estimate there may be as many as 20 million small businesses. Many unincorporated small-business owners file personal, rather than corporate, income tax returns, and are thus difficult to track.

Whatever the number, the economic impact of small businesses is enormous. Total annual sales of companies with 500 or fewer employees are in excess of $4 trillion, according to US Department of Commerce figures. …

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