Small Businesses Criticize States’ Economic Policies

Policies favor big business and big incentive deals and hurt state finances, they contend.

By , Wisconsin Budget Project - Oct 5th, 2015 10:22 am
72% of small business leaders do not believe their state's incentive policies promote economic growth.

72% of small business leaders do not believe their state’s incentive policies promote economic growth.

A national survey of small business leaders reveals that they overwhelmingly believe that state economic development incentives favor big businesses, and they say small businesses interests in economic development are not well represented in their state capitols.

The survey of 41 leaders of small business organizations representing 24,000 member businesses in 25 states found they think that states are overspending on large individual deals and that state incentive programs are not effectively meeting the needs of small businesses seeking to grow. Almost three-fourths (72%) do not believe their state’s current incentive policies are effective in promoting economic growth.

The small business leaders’ views run counter to the trend in many state capitols to prioritize incentive programs over spending for education, training and infrastructure. Many of the small business leaders made statements to the effect that public goods that benefit all employers – such as job training, education, and transportation – deserve to be a higher priority.

The study was funded by the Ewing Marion Kauffman Foundation and was commissioned by Good Jobs First, which is a non-profit, non-partisan resource center on economic development. Greg LeRoy, Good Jobs First’s executive director, said:

“Our findings are absolutely consistent with what we have heard for years from small business leaders. Despite their pro-small business rhetoric, state officials’ programs are perceived as biased in favor of large companies that receive big tax-break packages.” 

Specifically the survey of small business leaders found:

  • 92% believe that the spending balance on incentives between small and large businesses in their state is biased toward big businesses (69% strongly believe that).
  • 79% believe that their state is overspending on big incentive deals, hurting state finances (56% strongly).
  • 87% say that small business interests in economic development issues are not effectively represented in their state’s capital (36% strongly).
  • 85% believe that economic development incentives in their state are not effectively addressing the current needs of small businesses that are seeking to grow (36% strongly).

The survey results are available here on the Good Jobs First website.

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