The Missing Jobs

A new study sponsored by the Kauffman Foundation suggests that part of the reason we are in the mess that we’re in is that, sometime early this century, start up companies stopped producing as many jobs as they had in the past:

The new study, the next in a continuing series on firm formation and economic growth, found that the new businesses that continue to generate the bulk of the economy’s net job gains in recent years have been starting up with fewer workers than historic norms and are also adding fewer workers as they grow. . . . 

The study also examined young companies’ size at birth, jobs created and survival patterns of new firms. They found that historically, new firms in the United States have generated about 3 million new jobs every year, but that recent cohorts have performed much worse, creating only 2.3 million jobs in 2009. At the level of individual businesses, one data series (BLS establishment data) showed that in the 1990s new establishments opened their doors with about 7.5 jobs on average, compared to 4.9 jobs today.

This may be a manifestation of technological innovation making administrative/support occupations less necessary.  You can read the write up at the Kauffman Foundation website here.  The full study, “Starting Smaller, Staying Smaller,” is here.

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