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Are Startups Creating Fewer Jobs?

Published: 4/21/2014 12:27:43 PM


There's an interesting piece just out by Samuel Rines at The National Interest, where he utilizes U.S. government figures show that startups are creating fewer jobs per capita than previously.

America's Startup Problem

Deriving his figures from data from the Bureau of Labor Statistics, the punch line is compelling: "During the 90s, newly birthed businesses came with six new jobs. By 2007, they came with four." That comes out to a reduction of 33% in new job creation from this critical source of economic growth.

Unfortunately for the reader, Rines doesn't offer any insight as to why this is the case. My own take is that it may be a function of the shift to more services and technology-oriented new businesses being formed.

As software "eats the world", service companies can accomplish more business activity with fewer employees, relying on technology has a force-multiplier of their efforts.

Rines sees the trend continuing. I foresee that labor-intensive manufacturing and construction oriented industries will continue to dwindle in significance during the coming years as the US proceeds along its services-focused economic path.

If so, an even greater number of startups will need to be created to help the economy return to robust growth.

 

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Don Jones
CEO, VentureDeal

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