Despite the fact that the headline unemployment rate dropped on Friday, it's clear that jobs growth in this country has been sluggish for a long time, and one thing that has held the recovery back over the past couple of years. One problem has been that new businesses have been opening at a slower rate in recent years. After remaining fairly steady at around 600,000 new businesses per year for about 15 years, the number dipped to around 500,000 in 2010, and has yet to fully recover.
But that's not the only issue. The average number of employees at each of those new businesses has declined even more sharply. Back in 1999, the typical new business employed eight people; by 2011, it employed fewer than five.
Put the two trends together, and the total number of people employed by new businesses has taken a real hit. New businesses employed nearly 5 million people per year in 2000, but that number dropped to 2.5 million by 2011. Note that this is not solely an artifact of the recession: The figure had dropped to 3.5 million by 2005.
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