In a world with more government regulation and government consuming a larger percentage of GDP, you’d think that it become increasingly sensible for an individual to work for the government or a big company that can lobby the government. Starting your own company would go from dumb to dumber. Inc. magazine gives us some numbers:
49.7 percent of World War II vets went on to own or operate a business, according to Syracuse University’s Institute for Veterans and Military Families. Some 40 percent of Korean War veterans did the same–creating millions of jobs along the way. … only 4.5 percent of the more than 3.6 million people who have served in the U.S. military since September 11, 2001, have launched a company, according to the Bureau of Labor Statistics.
The government sorting potential contractors by race and sex may distort the statistics:
Government contracting preferences have recently made it more attractive for a company to be woman-owned, so some of the numbers may reflect paperwork changes (such as dropping a husband from a co-owner title) rather than broad-based demographic shifts.
But it is tough to see how this can explain a drop from 50 percent down to less than 5 percent.
Related:
- Bloomberg article showing shift since 1988 of workers from small enterprises to larger ones
Word War II vets were recruited via a broad based draft whereas today’s vets are volunteers. I would think that someone who is averse to working in a large organization (and therefore more likely to start or work in a small business) is less likely to join the military today whereas before they may not have had a choice. We are also a much wealthier society now. Someone who previously might have gotten on their feet via a stint in the military and then started a small business would be more able to skip straight to the small business today.
A more relevant comparison would be the % of WWII and Korean War vets who had started a business during the period following their service equal to the average number of years the average person who served in the US military since 9/11/2001 has been out of the military.
There have been other changes to the economy which impact the feasibility of small business that aren’t directly related to the size of government. For example, the spread of grocery stores/Walmart/Target have made certain kinds of small businesses harder to sustain (much less start). Perhaps some of the competitive advantage can be ascribed to larger business being better able to obtain advantages from larger government, but certainly not all.
The Inc. writer mentions the fact that today’s veterans “more likely to come from military families.” That’s probably true, but it’s more important to note that veterans are much more likely to come from poor and working class backgrounds. In World War II George H. W. Bush postponed his enrollment at Yale to join the Navy. After the war he started an oil business in Texas. His father was a rich Wall Street guy who helped finance the business. Such people have rarely served in the armed forces since Vietnam.
Furthermore, it’s unlikely that half of WW2 vets were self-employed for all of their working years. We often hear statistics saying that 80% or 90% of new businesses fail after one year. It’s quite possible that most of the 49.7% of WW2 veterans started a business, closed it after a short period of time, and went to work for someone else. Current veterans are just much more likely to go and work for someone else directly after leaving the armed forces, skipping the year or two spent running a failing business.