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Small Businesses May Suffer from Census Funding Cuts

Small Businesses May Suffer from Census Funding Cuts

By | 05.30.12
Small Businesses May Suffer from Census Funding Cuts

A lack of data is bad for small businesses, making it harder for entrepreneurs and owners to make decisions. That’s why it’s worrisome to some small business owners that an appropriations bill slashing funding for the American Community Survey (ACS) recently passed the House of Representatives and will soon be considered by the Senate.

The ACS, which costs $240 million a year and gathers data on 3 million people, has become an integral part of how academics, lawmakers and businesses understand trends within the US population. The data gathered in these surveys is used to interpret demographic shifts so policy makers and business owners can know how best to allocate resources and focus their policies or lobbying.

Without the ACS, small businesses would be forced to hire private data collection agencies, a step that many cannot afford.

Supporters of the bill feel that cutting the program would save money and help preserve privacy. But critics fear that passing the bill would adversely affect small businesses in three main ways:

1) Without ACS data, the impact of proposed and existing government policies on businesses would remain largely unknown. The government would not be able to define zones of economic empowerement nor know which zones should be subject to special incentives for entrepreneurs and investors.

2) Entrepreneurs often use ACS data to make business decisions like where to locate their stores or what franchise opportunities to pursue. Without the necessary demographic data for these decisions, entrepreneurs and business owners would be operating largely in the dark.

3) The ACS data is also used by local economic development officials to determine which policies best promote growth, including those that have the potential to help or hinder small businesses. Not having access to current data would limit development officials’ ability to make accurate and effective decisions.

The good news for small businesses is that the bill as passed by the House will most likely be defeated in the Senate as too extreme. However, the Senate may pass a version of the bill that would allow only for a considerably weakened survey.

Resource:

Shane, Scott. “Cutting Census Funding Hurts Small Business.” Businessweek.com. May 29, 2012. http://www.businessweek.com/articles/2012-05-29/cutting-census-funding-is-bad-for-small-business

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