Michelle W Bowman: Supporting entrepreneurship & small businesses

Speech (via pre-recorded video) by Ms Michelle W Bowman, Member of the Board of Governors of the Federal Reserve System, at the Uneven Outcomes in the Labor Market Conference, Washington DC, 7 February 2024.

Central bank speech  | 
09 February 2024

Mandate for Maximum Employment

Good afternoon and welcome to the third day of the Federal Reserve's Uneven Outcomes in the Labor Market Conference. It is a pleasure to join so many researchers, policymakers, and practitioners interested in understanding the labor market and its implications for the overall economy and the financial well-being of workers.

At the Federal Reserve, the labor market is often top of mind. As many of you are aware, the Federal Open Market Committee (FOMC) has a mandate to effectively promote maximum employment and price stability. My FOMC colleagues and I strive to find the balance between these objectives, and when considering how best to promote a healthy economy, it is important that the Fed supports a labor market that works for both employees and employers.

Today, I'd like to highlight the role of small businesses and entrepreneurship in the U.S. labor market and, in turn, the importance of access to capital in creating and maintaining jobs in those businesses. I'm sure many of us know business owners who put their own personal savings-even their homes-at risk to start or to grow their businesses. I will discuss why external sources of capital and financial institutions that provide access to capital are vital for both successful small businesses and a robust labor market.

There are many pathways for workers to find employment. For some, entrepreneurship offers the opportunity to fulfill a personal goal to create a new business or to have more control over their careers. While not all start-ups are successful, many grow into stable businesses that employ additional workers. In fact, small businesses currently employ nearly half of America's private sector workers and have accounted for over 60 percent of net new jobs since 1995.