Internet Driving the Economy and Helping Small Businesses Grow

Evidence that the Internet has had a profound effect on the way people live and do business is all around us. We can find anecdotal proof in almost everything we do—most people’s lives have been changed indefinitely by the technology that has cropped up in the past several decades. And small businesses, even more so, have changed the way they conduct commerce. A new study just out by the Internet Association confirms what we’ve known for so long—the Internet is a major driver of part-time businesses in the US. The study, aptly titled Internet Enabled Part-Time Small Businesses Bolster the U.S. Economy, explores how Americans, in an attempt to find more revenue during an economic downtown, have turned to the Internet to start small businesses and earn extra income.

According to the study, the Internet contributed $141 billion dollars to the US economy in 2011, with the Internet helping to drive nearly all part-time businesses, with 90% of all those surveyed using the Internet to conduct at least some of their business, and over half saying that they couldn’t conduct their business at all without the Internet. These businesses employ 6.6 million people, producing wages of $797 million. According to the survey, most small businesses owners that rely on the Internet say that if the Internet didn’t exist, at least half of their income would go away.

Of note in the study is a few of the reasons driving the rise in part-time businesses. First, the technology available to the average business owner makes the barrier to entry lower than it ever has been. From apps to cloud storage to cheap hardware to the ability to run a virtual storefront, starting a business has never been cheaper and easier. Second, many people have turned to part-time business ownership as a necessity. The economic downturn has hurt people from all walks of life, with the unemployment rate currently at 7.3% and the “real” unemployment rate (which includes those who have dropped off the roles or only found nominal part-time work) somewhere around 14%. Starting a small business has been integral in earning extra money in a time of economic hardship. Of course, many of the part-time business owners start their businesses because they want to—43% say they do it because they love it.

The Internet is obviously a wonderful innovation that has empowered people to create new companies and support themselves. The platform provided by the Internet, and the larger companies that provide many of the platforms, are integral to the infotech economy. Companies like eBay, Amazon and Etsy provide a platform to the hundreds of thousands of small business owners who sell their goods. Etsy, a platform for selling handmade crafts and vintage goods, just reached the 30 million member mark. In 2006, eBay claimed it had over 1.3 million sellers at that time—and Amazon claimed 1.6 million sellers in 2009. The Internet is a necessity to many of the businesses springing up. Policymakers should keep this in mind as new regulatory opportunities arise and understand that a stricter regulatory environment could have a detrimental effect on the new, vibrant part-time business economy.

Zack Christenson writes on digital tech issues for the American Consumer Institute Center for Citizen Research.

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