by Mitch Kokai
Senior Political Analyst, John Locke Foundation
The relationship between Big Business and small business is complicated. Big Business now employs the majority of American workers, and a lot of small-business employees are Big Business employees at one degree of separation, working for smaller firms that get most — or all — of their sales from a single client, usually a much larger firm. The textbook example is the automotive industry, in which smaller companies provide specialized components and services to the big marques. Which is to say, Big Business relies on smaller businesses for inputs — about 25 percent of the inputs for big U.S. businesses are supplied by small U.S. businesses, according to a Business Roundtable study.
It is a delicate ecosystem, and the political desire to lean toward one group of businesses at the expense of others — for reasons that have a lot more to do with rhetoric than with economics — helps no one.
“Job creation” is a questionable metric — abolishing high-tech agricultural equipment would create a lot of jobs but leave us no better off — but the numbers are worth appreciating: The biggest 1 percent of U.S. companies create about a third of the new long-term jobs. Big is beautiful, and so is new: Successful startups have for years made the difference between positive and negative net job growth in the United States. Big businesses pay better, offer better benefits, and offer more-stable long-term employment than their smaller cousins. And the small businesses that have the biggest impact on wealth, wages, and employment are the little ones that end up being big ones: Apple, Google, Microsoft, Facebook, Amazon.