NPR Sings the Praises of Small Business

NPR did a propaganda piece on small businesses on Morning Edition today, featuring an uncritical interview with the Karen Mills, the head of the Small Business Administration (SBA). There are many good things that one can say about small businesses. They are responsible for the overwhelming number of new jobs in the economy, they are a source of innovation, they can be an important source of upward mobility.

However, small businesses are also responsible for the overwhelming majority of job losses in the economy. (Serious economists would talk about net job creation -- jobs created minus jobs lost -- and by this measure small business does no better than big business.) Small businesses pay their workers less on average than large businesses. They are less likely to provide workers with health care and pension benefits. Small business owners are also the major source of tax cheating. Their evasion of hundreds of billions of taxes every year leave the rest of us with larger tax bills.

It would have been helpful if NPR raised these issues instead of implying that anything and everything that the government does to promote small business is a benefit to society.

--Dean Baker

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