Over the weekend I was asked to speak at the African American Economic Summit sponsored by the South Carolina NAACP at Claflin University. The topic of my panel was “Factors Driving the Current Economy”. The keynote address was given by Dr. Douglas Woodward, Director of Research at the University of South Carolina’s Moore School of Business.
Last week Dr. Woodward and USC released a study analyzing job creation in South Carolina from 2004 to 2008. The study confirmed what small business advocates have been saying for a long time. Small businesses create most net new jobs in our state. The study primarily looked at businesses with fewer than 20 employees and found that just this group of small businesses alone, representing only 26 percent of all businesses in the state, accounted for 51% of all net new jobs.
I asked Dr. Woodward if he could run the numbers on businesses with 100 or fewer employees (our definition of a small business) to see the job generation ability of small businesses overall.
Within the less than 20-worker businesses there appears to be a small percentage of “high impact” firms that really drove economic expansion in the years studied. Unfortunately, according to Dr. Woodward, South Carolina doesn’t do a very good job of keeping these fast-growing businesses in the state.
In my opinion this simply reflects the abysmal job the state does in promoting the growth of small business in general. If you don’t pay attention to all our small businesses, no wonder the ones with biggest growth potential get away.
Dr. Woodward had a lot to say about our state and national economic outlook. He’s not optimistic and even suggested that a double-dip recession was possible. The reason for his negative outlook was the partisan gridlock that will probably prevent the federal government from launching any new stimulus programs or monetary policy to create the jobs we desperately need. If we think the economy is bad now, Dr. Woodward says just wait until all the stimulus money is out of our economy.
Tomorrow: Where the state’s economic development efforts went off track according to Dr. Woodward.