As much of Europe struggles with double-digit unemployment this year, the United States has been creating an average of 200,000 new jobs a month. One of our great advantages is the relative ease with which Americans can start new businesses. Physical disability, the desire to stay home with young children, racial or religious discrimination — all of these can be obstacles to traditional employment, but they are less serious barriers to starting your own business.
Now, thanks to the explosion of the Internet, the barriers to entrepreneurship have fallen still further. That is especially good news at a time when Americans worry about competition from abroad for manufacturing and even many service jobs.
A remarkable new survey by ACNielsen International Research finds that 724,000 Americans use eBay, the online auctioneer and general marketplace, for their primary or secondary income. That figure is up from 430,000 in a similar 2004 survey. In other words, about 300,000 people have started businesses on eBay in the past year. So eBay can properly be viewed as America’s No. 1 generator of, not just businesses, but jobs.
As David Faber of CNBC said recently, “If eBay employed the . . . people who earn an income selling on its site, it would be the nation’s No. 2 private employer, behind Wal-Mart.”
But the point is that eBay doesn’t employ them. They employ themselves. Their own cash and reputations are on the line. They innovate, they compete, they work hard. What eBay and other online sites provide is the platform: a storefront that’s electronic, not brick and mortar; a market of 157 million registered users worldwide; plus help in expediting payments, shipping packages and detecting fraud.
Marketplace sites — and eBay, with $83,000 worth of goods traded every minute, is the largest — offer a simple way, not just to sell the occasional used tie or baseball trading card, but to start and maintain a small business, allowing the entrepreneurs themselves to concentrate on the important stuff: merchandizing and marketing.
Consider Sarah Davis of San Antonio, who graduated from the University of Maryland Law School and passed the Texas bar exam but then began having children (three now) and wanted to be with them. “I started selling on eBay about six years ago with one Louis Vuitton purse and a dream,” she says.
Her business of selling high-end purses became so successful that she moved into office space and hired three employees.
Davis is a typical American entrepreneur. An extensive government study, released by the Census Bureau in July and covering 2002 data, found that small businesses owned by women rose 20 percent over five years while the number of all U.S. businesses rose by 10 percent. Black-owned businesses were up by 45 percent, Hispanic-owned by 31 percent.
Small businesses produce a little more than half of all U.S. employment and sales of goods and services. More important, these businesses now account for virtually all the net new jobs created by the economy and, says the White House, “are most likely to generate jobs for young workers, older workers and women.” In addition, the Disabled Businessman’s Association estimates that 40 percent of home-based businesses are operated by people with disabilities.
These trends can only intensify with the growth of the online marketplace and the spread of Internet connections throughout the world. The Federal Reserve reports that the majority of small businesses are based in the home. All you need is a desk, a computer, a connection to the greater wired world and a place to store your inventory.
Online entrepreneurship is so attractive that 14 percent of eBay sellers are people who retired early or quit their jobs to sell full-time on eBay, and another 12 percent are considering doing so.
It makes sense for public policy to encourage more online business formation and job creation — or, more important, not to discourage such activity. The temptation to slap sales taxes on Internet transactions across state lines continues to lure states hungry for revenues. But Web taxes would require a new federal law, which Congress has so far been reluctant to enact, especially if it does not protect small business from new costs.
My advice is to leave well enough alone. The Internet is swiftly bringing American entrepreneurship into the 21st century and opening new markets around the world.