Microenterprise is now one of the most cost-effective job creation strategies in the US. Studies show that poor Americans can be launched into self-employment at a cost of less than $6,000 per job created. This is far less money than what the government already gives to large corporations to create jobs by opening factories.   The Program for Investment in Micro-Entrepreneurs (PRIME) Act would fund training and technical assistance for poor and low-income Americans starting or expanding very small businesses. Last year, Congress adjourned without acting on PRIME, but PRIME will be re-introduced for passage once again this year.

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Microcredit Means Real Jobs
In a series of articles on corporate welfare, Time magazine documented the cost to taxpayers of incentives given to major corporations to create jobs. For example, Time says, "In 1993 Alabama gave $253 million in economic incentives to Mercedes Benz to build an automobile assembly plant near Tuscaloosa and employ 500 workers. Subsidy: $169,600 for each job." This sort of incentive, despite its high cost, creates no new net jobs for the United States as a whole. In the example cited, Mercedes had already decided to locate a plant in the U.S. In fact, initiatives that aid the verv smallest businesses - self-employed individuals and microenterprises of five or fewer employees - may be the most effective way to create jobs.

Microenterprise programs create jobs at a much lower cost than the incentives states give to large corporations. One study shows a cost of less than $6,000 per job created or retained by microenterprise-and says that most of that money went to training to build workplace skills.

PRIME Act
The Program for Investment in Micro-Entrepreneurs (PRIME) Act will be reintroduced in the Senate by Senators Pete Domenici (R-NM) and Edward Kennedy (D-MA), and in the House by Rep. Bobby Rush (D-IL) and a Republican Congressman (to be determined). PRIME calls for $105 million over the four years for training and technical assistance for people starting or expanding microenterprises. Half of the funds provided by PRIME are for people living at or below 150 percent of the poverty line, which in 1998 would have been an annual income of $24,675 for a family of four.

The PRIME Act calls for the program to be administered by the Community Development Financial Institutions (CDFI) Fund of the U.S. Treasury Department. This fund is targeted to develop economically depressed areas, both rural and urban. Assisting microenterprise programs is a natural fit with this mission.

Need for Training
Why does PRIME provide funds for training and technical assistance? Poor and very low-income people who are engaged in microenterprise often need money to fund their businesses, and they often need training and other support. Many microenterprise support organizations provide both, with money for loans coming from established banks. For most organizations, however, money to support training and technical assistance is scarce. Why do microentrepreneurs need such assistance? In our complex society, people who want to start a business need help with business plans, license requirements, bookkeeping, tax returns, and other steps along the way.

Microenterprise Works
Good microenterprise progrms can really make a difference. A five-year study of over 400 entrepreneurs, conducted by the Aspen Institute, found that 78 percent of these entrepreneurs increased their household incomes an average of about $10,500. Fifty-five percent of the entrepreneurs raised their incomes above 150 percent of the poverty line.