The Multifaceted Impact of Small Businesses

Local Economic Impact

Small businesses don't just create jobs; they create local jobs that tend to stay local. Unlike large corporations that might relocate operations based on economic incentives, small businesses are typically rooted in their communities. This leads to more stable local economies and a multiplier effect where wages are often reinvested locally.

For instance, a study by the U.S. Small Business Administration found that for every $100 spent at a small business, $68 stays in the local economy, compared to only $43 for large businesses. In Idaho, with its many rural communities, this local economic impact is even more crucial.

Innovation and Adaptability

Small businesses are often more innovative and adaptable than their larger counterparts. The U.S. Small Business Administration reports that small businesses produce 16 times more patents per employee than large firms. This innovation drives economic growth and creates new job opportunities.

In Idaho, small businesses in sectors like technology, agriculture, and renewable energy are at the forefront of innovation. For example, Idaho's burgeoning tech scene in Boise, largely driven by small startups, has been creating high-paying jobs and attracting talent to the state.

Cost-Effective Job Creation

When comparing the cost of job creation through tax incentives for large corporations versus support for small businesses, the latter often proves more cost-effective. A study by Good Jobs First found that state and local governments spend an average of $658,000 per job on incentives for large corporations. In contrast, programs supporting small businesses often create jobs at a fraction of this cost.

In Idaho, redirecting even a portion of the funds used for big business incentives towards small business support could potentially create more jobs at a lower cost per job.

Promoting Diversity and Inclusion

Small businesses play a crucial role in providing opportunities for diverse groups. According to the U.S. Small Business Administration, 45% of small businesses are owned by women, and 33% are owned by minorities. These businesses often create jobs in underserved communities and provide opportunities for groups that might face barriers in larger corporations.

In Idaho, supporting small businesses could be a key strategy for promoting economic inclusion, especially in rural and minority communities.

Skills Development and Workforce Training

Small businesses often provide unique opportunities for skills development. Employees in small firms typically wear multiple hats, gaining diverse experience that can be valuable throughout their careers. Additionally, small businesses are often more willing to train employees on the job, providing valuable workforce development.

Idaho could leverage this aspect of small businesses to address skills gaps in its workforce, particularly in emerging industries.

Economic Resilience

While small businesses can be vulnerable during economic crises, they also demonstrate remarkable resilience. After the 2008 financial crisis, small businesses led the recovery, creating 67% of net new jobs from 2009 to 2011, according to the U.S. Small Business Administration.

In Idaho, focusing on small business support could create a more resilient economy better able to weather future economic shocks.

Rural Economic Development

Given Idaho's significant rural population, it's worth noting the outsized role small businesses play in rural economies. According to the Center for Rural Affairs, small businesses account for 64% of jobs in rural areas nationwide. In many of Idaho's rural communities, small businesses are often the only source of local employment.

Supporting small businesses in these areas isn't just about job creation; it's about maintaining the viability of entire communities. Programs targeted at rural small businesses could help address the urban-rural economic divide in Idaho.