What is Microenterprise?
Microenterprise in the United States
Small business is the backbone of the U.S. economy, accounting for 53% of all jobs (Office of Advocacy, Small Business Administration.) Though often overlooked, the smallest of these firms, self-employed individuals and microenterprises employing fewer than ten workers, are playing an increasingly vital role. The U.S. Small Business Administration reports that while firms of five to five hundred employees in all industries experienced a net loss of 2,065,000 jobs from 1989-1991, firms with fewer than five employees experienced a net increase of 2,624,000 jobs.
Diversity is the hallmark of microenterprise development in the United States. While the individuals and communities that need and benefit from microenterprise assistance are quite varied, most microenterprise development programs target their services to low-income people. Programs are tailored to meet the needs of specific target groups such as welfare recipients, minorities, women, the working poor, and individuals or business sectors that, for these and other reasons, lack access to credit. Some programs also target young people, refugees, homeless individuals and rural areas.
Microenterprise as a Holistic Strategy
Microenterprise development is seen as a holistic approach, embracing poverty alleviation, human development and economic development strategies. For this reason, a wide range of institutions - including stand-alone microenterprise development organizations, community development corporations, loan funds, community action agencies, women's organizations, community development banks and credit unions, housing and social service programs, and government agencies at the local, state, and national levels - are involved in microenterprise development.
After a decade of operation, microenterprises programs in the U.S. are creating jobs, generating income, building assets and enhancing skills. These results are particularly impressive considering the fact that a significant proportion of assisted microentrepreneurs are individuals facing barriers presented by race, gender, ethnicity, income, job market fluctuations, or location. Whether the business is the sole source of family income or a crucial supplement to family earnings, microenterprise development has put many low-income families on the road to self-sufficiency.
By generating new economic activity, microenterprise also increases public tax revenues and private incomes, thereby reducing dependence on public assistance, which helps to shrink public budgets. These significant social and economic benefits far outweigh the cost of public and private investment in microenterprise development.
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