The Surprising Truth About Who Creates New Jobs

We often think of small business as the employment engine of the economy and in many ways that is true.  The restaurant/bar/hospitality business is a big mover in job creation.  But when it comes to job-creating power, new research indicates it is not the size of the business that matters as much as it is the age.

New and young companies are the primary source of job creation in the American economy. Not only that, but these firms also contribute to economic dynamism by injecting competition into markets and spurring innovation.

Representing 95 percent of all U.S. companies, businesses with fewer than fifty employees are undoubtedly important to overall economic strength. So too are the relatively few large companies, which employ millions of Americans.

Yet, neither group contributes to new job creation in the way young, entrepreneurial firms do. In fact, between 1988 and 2011, companies more than five years old destroyed more jobs than they created in all but eight of those years.

Read the research and conclusions here from the Kauffman Foundation, which shows how Start Ups are a prime job driver, how there’s a dangerous trend toward fewer new enterprises, and what can be done to encourage new businesses that drive more jobs.

netjobcreation
Click on this graphic to see larger version.

Here’s some more info on what’s needed to enable entrepreneurial firms to drive innovation and prosperity.

Please remember it is important to job growth and local economic health to support small businesses, local companies and start ups whenever possible!

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