Tuesday, July 12, 2011

Small Firms and Job Creation

Following on the heels of last week's disappointing jobs report, there's a new study out from the Kauffman Foundation looking at longer-term trends in job creation, and why it's been over a decade since we've had really robust job growth in this nation. The problem, according to the report, is that newly emergent small businesses, which have been such a potent job creator throughout recent history, are no longer creating jobs like they used to.

The report found that young companies have been "starting smaller" for the last decade or so. That means that they've hired fewer workers upon entering into business, and have been slower to add jobs even as the business begins to mature.

And those newer, smaller firms are crucial to our economy. More than 60 percent of all jobs are created by companies that are five years old or less. More than half the jobs are created by companies with fewer than 50 employees. We need that job-creation engine to be strong if we're to fully emerge into recovery.

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