Good news yesterday on the monthly jobs report. Not so good news in Friday's NYT story reporting the findings of a Kaufman Foundation study on job creation in startups. Previous Kaufman studies had found that job growth from startups was much slower in the 2000s than the 1980s and 1990s. This new study finds that the typical startup in 1999 had 7.7 employees, whereas in 2011 the typical startup had 4.7 employees. It also shows that the rate at which startups get started has fallen by 25 percent since 2006. In other words, we have fewer startups and startups have become much smaller.
There has been growth in nonemployer businesses since 2000. These one-person operations have become more prevalent as entrepreneurs take advantage of technology and a free-agent global market of available contractors. Or maybe they choose this route because they cannot get financing.
No matter how you cut the data, a consistent picture emerges: new companies, a key engine of economic growth, have not fared well since 2000.
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