Economies are categorized on their ease of doing business which is ranked from the index of 1-189. The high ranking index suggests that the regulatory environment is safe to the operation and starting of the local businesses or firms. This ease of doing business index averages the country’s percentile rankings based on a variety of indicators. This safe environment is determined by several factors such as physical aspects, government security, and human resource issues in a given country. This paper presents an analysis of human resource issues such as educational and health aspects that negatively affect the ease of doing business in the United States of America.
According to the non-profit organization of pro-literacy, 14 percent of adults in America cannot read well enough to complete job application (Alemu, 2013). This is one of the major human resource aspects that have made America to fall below countries like Singapore, China, and others in ease of doing business index (Alemu, 2013). The country has been ranked fifth among other industrialized nations based on education and literacy level. The issue of low education enables individuals not to perform basic calculation problems using information printed in written documents and they are unable to cope up with the technology at the workplace.
Low level of education costs the United States society and businesses close to $225 billion yearly, because of loss of workforce productivity, employment, and crime (Sara et al. 2011). The firms take a lot of valuable working time training workers to know and interpret basics methods of production in a business setup. Workers who cannot read and interpret basic instructions compromise safety of production, cause errors, and slow down the rate of production. This affects the profit, compliance with regulatory and law, and customer satisfaction.
Another way in which low education affects the ease of doing business in America is workforce development and global competition. Here, workers with at least a two-year college education are most in need, according to the pro-literacy study (Sara et al. 2011). Businesses compete in a global economy that needs the high levels of training and education. Low education of individuals threatens the ability of firms to compete on global ratings and levels. This, in turn, threatens individuals who want to start small businesses, as the available workers are less educated while the educated ones are very expensive to employ.
Health issues have also contributed negatively to the ease of doing business in America, especially in small-scale ventures. The United States health care system enacts heavy taxes on small businesses and their workers. High broker payment, adverse selection, and fixed administrative costs force small firms to pay up to more than 18 percent than large firms for the same insurance policies (Alemu, 2013). These higher costs are put on small firm workers in form of small wages. These aspects discourage one from starting a small business since the firm can incur many losses instead at the expense of the expected profits.
Following the above discussion, the ease of doing business is determined by its index, which indicates whether it is safe to start business in certain countries, or not. Factors that influence this index vary from the physical aspects to human resource issues. Low education level and strict laws imposed on health sectors have threatened some individuals from starting their own business in fear of incurring losses. This fear has put America below countries like China in the ease of doing business index.
Alemu, A. (2013). The Nexus between Governance Infrastructure and the Ease of Doing Business in America .International Journal Of Global Business, 6(2), 34-56
Sara, M., Amaya, P., Angel M. Echeverría, L., & Pedro, V. (2011). Project risk management methodology for small firms.International Journal Of Project Management, 32327-340