From the president on down to the frustrated worker standing in the unemployment line, getting America back to work needs to be job #1 if we want to get the U.S. economy back on track. But while everyone agrees on the need for job creation, there is little agreement on how to jump-start the job market and who should pull the trigger.
A recent Washington Post article provided a comprehensive review of the most promising job creation plans under discussion, along with their pros and cons. In our last post, we discussed the roll small businesses might realistically be expected to play in job creation. Today, we continue our discussion of this vital issue by turning the focus on start-ups and big business.
- If you look only at job growth statistics, start-ups and entrepreneurial enterprises would seem to be a significant driver of job growth. And they are, accounting for nearly all of the nation’s net job growth year after year. Also in their favor is the fact that start-up related job creation rates have remained constant through both good and bad economic times. But job creation is just part of the equation. When job longevity is factored in, start-ups start to lose their rosy glow. According to the Post, census data indicates that fewer than 50% of the jobs created by start-up companies are still around 5 years later. As a rule of thumb, it takes 5 years for a start-up to become established; and many start ups fail well before they reach that milestone. Additionally, fledgling companies typically generate only 70% as much income as established companies, leaving them little budget room for new hires.
- Which brings us to big business, the perennial heavyweight of U.S. job creation. As the Post points out, despite the fact that large corporations represent only 0.3% of all U.S. employers, they create 1 out of every 3 jobs.
Next time: More on big business and conclusions
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