“Shared prosperity is not around the corner.”
That’s the conclusion of a new study out by Harvard Business School that surveyed a wide swath of alumni. Entrepreneurship in America is in particular trouble.
The study says there are structural problems with the American economy, meaning that the economy’s issues aren’t just remnants of the Great Recession, but are underlying, ongoing issues that existed before the recession.
One of these structural issues is that “starting a business may have become less a path to the middle class and more a way that the advantaged become more prosperous.” In other words, if you went to Harvard Business School, you’ll probably be fine. Otherwise, things aren’t looking great.
This is how HBS graduates see the American business climate in 2015. They like the opportunities for entrepreneurship and dislike the tax code.
But the report is not so much about how HBS grads think business is great ― it instead goes out of its way to point out that its results don’t line up with the more general data available on small businesses in the U.S. The authors think it might be because, well, they asked Harvard alumni:
Perhaps entrepreneurship in America has become more accessible for educated, well-connected individuals such as HBS alumni but less accessible to the population as a whole. Declines in household wealth and home equity might have taken away the assets that many individuals used in the past to finance new businesses, and rising student debt might deter those individuals from taking on the risk of a startup. If so, then starting or buying a business may become less a pathway to a middle-class life and more a way that the advantaged become more prosperous. Entrepreneurship might become a source of prosperity but not shared prosperity in the United States.
It’s harder for the average person to get access to the lump of cash that’s often necessary to start a business. The venture capital industry is booming, but it’s looking to contribute money to startups looking to take over the world, like Uber, not the more quotidian kind, like a local auto dealership.
As a result, many survey respondents think income inequality is going to continue to be exacerbated. And they see this as a problem as much for businesses of the future as it is for the wage earners of the future.
Rising inequality — respondents explained in open-ended replies — reduces demand for the products of companies that cater to the working- and middle-class, creates a backlash against successful companies, undermines social stability, and makes it hard for individuals to invest in skills that companies need.
A full 71 percent of respondents think that some sort of negative economic outcome, be it rising inequality or higher poverty or lower social mobility, is a business problem.