Small Business Index Reaches Eight-Year Low

WASHINGTON – Congresswoman Nydia Velázquez, Ranking Democrat on the House Small Business Committee, and her Democratic colleagues recently released the Small Business Index (SBI), which shows that the economic environment for small business is at an eight-year low.

“There are a lot of questions today about why the economy is not improving, and why job growth is still way below where it should be," Congresswoman Velázquez said. "Today's SBI shows that the reason jobs are not there is because the climate for small businesses – the main job creators – is not where it needs to be in order to be conducive for job growth.”

Last month's Bureau of Labor Statistics reported that only 78,000 jobs were created, which was well below the expected 175,000 jobs. The history of the SBI shows a relationship between favorable economic conditions for small business and increased job creation. Small firms create 75 percent of all new jobs. In March 2000, the index reached nearly 110, and 476,000 jobs were added in that month alone, versus today's index of 70 at a time when job growth is well below projections.

The SBI measures 17 key economic indicators to assess the current business climate for small businesses, including rising health care costs, energy costs, gas prices, unemployment rates and trade. This recent index was for the first quarter of 2005, which reached an all time low, declining after a slight increase in the last quarter of 2004.