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Do unemployment benefits stifle entrepreneurship? It’s complicated



Unemployment within the UK it rose to 4.3% at the top of March 2024. While that is on no account a worrying level of unemployment for the economy, it’s the very best since September 2021, within the second 12 months of the Covid pandemic, when it reached 4.4%.

Higher rates of interestdesigned to discourage spending and encourage saving is strictly what they mean unemployment may increase. This is because borrowing money from banks is dearer and due to this fact some firms may not find a way to finance investment or production as easily. As a result, they should want to cut costs by shedding employees.

The excellent news is that economists have known the reply to job creation for hundreds of years – entrepreneurship. It is the brand new firms that fuel the fireplace of the economy through their investments and the wages they pay their employees.

But here’s the puzzle. If rates of interest are higher than they’ve been for a few years, it signifies that recent businesses cannot borrow money as easily. And if more people lose their jobs, which means recent businesses may have less revenue.

So how can we ensure there may be enough money within the economy for brand spanking new businesses to thrive and create jobs, regardless that it’s dearer to borrow money and folks have less to spend?

Organization for Economic Co-operation and Development OECD suggests that unemployment benefits are method to achieve this goal. These payments will make sure that individuals who lose their jobs can proceed to spend money to assist firms find work.

This is one in all the needs of unemployment compensation programs (in addition to providing a vital humanitarian safety net). My last one though tests suggests that unemployment benefits can have a complicated relationship with entrepreneurship.

What can we know?

The study analyzed over 500 European regions from 2008 to 2019 and located that even after taking into consideration fluctuations in gross domestic product (GDP), population, business closures, foreign investment and taxes, increases in national spending on unemployment benefits appeared to cut back unemployment rates business creation.

Why is that this happening? Well, even though it could appear counterintuitive, unemployment can act as a catalyst for entrepreneurship. Economists they call it necessity-based entrepreneurship, where people lose their jobs after which create their very own to avoid unemployment.

There is argument amongst economists that generous unemployment benefits may inhibit this type of entrepreneurship. This is because they reduce people’s motivation to create recent work by starting their very own business. It may due to this fact be the case that top levels of spending on unemployment benefits are related to lower rates of business start-up.

But it will not be so easy. Previous tests showed that companies founded because of this of necessity-based entrepreneurship could also be more more likely to fail.

Classically, recent firms are founded by entrepreneurs who see a niche available in the market so well that they simply should reap the benefits of it. They hand over everlasting employment to reap the benefits of economic opportunities.

In contrast, necessity-based businesses are created since the owner had no other selection. There could also be no real economic or passion drive related to a business, which may end up in poor business performance with no plan and strategy.

So while necessity-based entrepreneurship helps increase the number of companies within the economy, it doesn’t necessarily increase the variety of high-performing businesses.

Money earmarked to fight unemployment can cover the prices of return-to-work programs.
1000 words/Shutterstock

Moreover, it would be the case that spending on unemployment benefits restricts entrepreneurship for other reasons. Financing may additionally come from large expenditures on unemployment benefits return to work programs in addition to unemployment benefits. Of course, the hope is that these programs will help people find work more easily than they otherwise would.

This may additionally eliminate the necessity for necessity-based entrepreneurship since the person feels they at the moment are more employable and due to this fact more more likely to discover a recent job quickly.

In any case, this negative relationship between unemployment benefits and entrepreneurship reveals one in all many trade-offs that policymakers face when coping with difficult economic issues.

Unemployment benefits are mandatory from each an economic and humanitarian perspective. They help maintain levels of consumer demand in times of economic shock, and likewise provide residents with a much-needed safety net in difficult times.

The undeniable fact that the unintended consequence could also be lower business creation rates is just a trade-off that governments must face to make sure appropriate policies.

Ultimately, it could be that governments are higher off investing money in unemployment spending to fund back-to-work programs that get people back into the labor market moderately than exposing them to the risks of necessity-based entrepreneurship.

In this case, the negative relationship between unemployment spending and entrepreneurship might not be as damaging to the economy because it may appear at first glance.

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Business and Finance

Top-earning LIME Painting franchisee celebrates success and community –




R.L. Hunnicutt, LIME Painting Oklahoma City Franchise

BLACK ENTERPRISES first mentioned by R.L. Hunnicutt in an October 2022 article “Oklahoma City’s only upscale painting franchise is Black-owned and committed to ‘leaving the door open’ for others to follow.” Two years later, Hunnicutt’s LIME painting The franchise continues to grow. This will be attributed to his understanding that a successful business is built on strong relationships and a real connection to the community. Through various community-focused initiatives, Hunnicut actively partners with local organizations, schools and non-profits to support urban development and enrichment projects.

Whether it’s revitalizing community centers, painting schools, or offering free services to underfunded local institutions, Hunnicutt ensures that his work contributes to the well-being of his neighbors. In addition to his hands-on projects, he is devoted to constructing lasting relationships along with his clients, providing exceptional service and maintaining an unwavering commitment to quality. Hunnicutt’s fame for reliability and excellence has made LIME Painting a trusted name within the OKC area, further strengthening his ties to the community.

In honor Junewe caught up with Hunnicutt and asked him to share his insights on how the meaning of the vacation manifests itself in his business.

BLACK ENTERPRISES: Juneteenth is a celebration of freedom, empowerment and community. How does your franchise promote and/or have fun these principles?

RL HUNNICUTT: I’m currently working with This is My Community Foundation, which is an initiative that helps underprivileged youth and adopted children and helps families stay together in northeast Oklahoma City. I check with local students about entrepreneurship and offer them internship opportunities with my company. I speak and mentor about 10-15 kids at college. The children are mostly minorities and come from economically disadvantaged backgrounds.

TO BE: Why is African American business ownership crucial to the American landscape?

HUNNICUTT: African American business ownership is central to the American landscape for quite a lot of reasons. First, it provides diversity to the economy, which helps generate revenue through unconventional and often neglected methods. The black dollar is robust in America and is over a trillion dollars. Then it creates freedom. When you run your individual business, you may dictate what you ought to do. You not must wait to your boss’s approval. Now you control your path. The sky is the limit and you will have the liberty to do what you ought to make a difference.

TO BE: What advice do you will have for young African-Americans about entrepreneurship?

HUNNICUTT: Put God first. Without Him nothing is feasible. Then be consistent and persistent. Finally, eliminate your plan B. If you will have something to fall back on, you will certainly do it. Make sure your corporation is all it’s worthwhile to focus and work on. If you haven’t got anything to fall back on, you will approach every day like a hunter intent on conquering all the pieces in your path!

Hunnicutt is considered one of the best-earning LIME Painting franchise members, showing which you can run a successful business while caring for your community and paying it forward.

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Business and Finance

Reginald Lewis’ daughter opens Beatrice Advisors




Christina Lewis, Reginald Lewis, Beatrice Advisors, Reginald Lewis

Daughter of a superstar Black financier Reginald Lewis followed in his father’s footsteps opening Beatrice Advisors to assist families like hers.

Christina Lewis opened an organization publicly on June 13 in New York. It is the primary multifamily office of its kind to be owned by a Black woman. Meredith Bowen, former partner at Seven Bridges Advisors, will function president and chief investment officer. With a few of their assets coming from the family business BFO21 and Lewis’ personal network, the band is pushing to maneuver away from the established order of occupying a particular area of interest.

Lewis’ goal is to spotlight the importance of getting a tax-efficient portfolio for the following generation of heirs, entrepreneurs and multiracial families like hers. He also desires to set a regular for having a solid team of investment managers, lawyers and accountants that clients can trust and never feel obliged to do.

“The next generation may be very uninformed, just like me and my whole family were when my dad died,” she said, recalling her father, who died when she was 12.

“He had all the intellectual capital around investing and financial access, and of course he never expected to die at 50.”

Her father was the one black person on Forbes’ list of the 400 richest Americans after appearing on the list in 1991 – with a net price of $340 million and an estimated net price of $400 million – which increased in 1992 that very same 12 months he was diagnosed with a terminal brain tumor and died in January 1993, aged just 50.

His estate was left to his wife Loida Lewis and daughters Christina and Leslie. Now, greater than 30 years later, she lives by the three mantras her father left her: do your homework and follow it, make a plan and follow it, and be good at your job.

Beatrice, apparently named after the landmark Beatrice acquisition, which was curated by Christina’s father and have become the primary Black-owned billion-dollar company, offers clients single-family offices and an progressive and technology-driven approach that encourages clients to tailor their investments to suit their individual goals. The current offer includes three key services: investment management, financial planning advice for clients and own investments.

However, Lewis doesn’t stop there and plans to expand his business over time.

Former vp and financial advisor at Shufro, Rose & CoMichael Hymes will function managing director and head of client advisory on the chief team. Bowen spoke highly of Lewis’s leadership she said she was excited to be a part of a “new level of autonomy”.

“Meeting customers where they are now and where they will be tomorrow, while giving them a new level of autonomy, makes Beatrice’s offering an exciting one,” Bowen said.

“Christina has demonstrated an exceptional ability to drive meaningful change, and I am excited to work with her and the team to build a truly differentiated set of solutions for our clients.”

The latest investment firm owner also serves as vp of the Reginald F. Lewis Foundation and is an executive producer of the upcoming biopic about her father’s life, named after his autobiography, “Why Should White Guys Have Fun?”

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Business and Finance

4 ways to protect your credit during the holidays




Black-Owned Credit-Building App, Michael Broughton

The holiday season is sort of here. But before you finalize your plans, stop and be certain that you are not practicing behaviors that might jeopardize your credit.

Falling into vacation mode – and the charging frenzy that comes with it – is what gets lots of us into trouble. Here are 4 ways to keep your credit in great shape during the holidays:

Don’t apply for retail credit cards

Getting 10% off your purchase really is not value it in the long term. Opening a brand new account could mean problems for your credit rating, as the length of your credit history accounts for 15% of your FICO rating. The older your credit age, the higher, because it shows you’ve a protracted history of credit management. Opening a brand new credit card account will lower your overall credit age and, subsequently, your rating. Applying for a loan also signifies that an inquiry can be processed on your report. Inquiries make up 10% of your FICO rating.

Be careful when shopping online

If you might be purchasing gifts online, remember to only visit sites you might be conversant in or have done business with in the past. Don’t share your credit card number with anyone.

Don’t overload

Be careful how much you spend. If at the end of the month you might be unable to repay the amount charged, reconsider your purchases. Overcharging your card will end in a rise in the amount due. Amounts owed are 30% of your FICO rating.

Don’t forget to pay your bills

It could appear obvious, but when traveling and visiting relatives, it is easy to forget to pay the bills. Set reminders on your calendar or automatic bill payments so you do not miss a payment and get a negative mark on your credit report. Your payment history accounts for 35% of your FICO rating.

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