Blood in the Water; Can Startups Fill the Void?

STRAIGHT TO THE POINTS
– From 1980-2005, startups accounted for more than 3% of all annual new hires.
– High unemployment rates provide startups with a large pool of qualified talent.
– Startup companies could play a pivotal role in getting Americans back to work.

Some experts believe that despite a series of dismal job reports, startup companies will play a pivotal role in getting Americans off the streets and back to work. This is welcome news for a faltering economy where more than half a million jobs have dried up since last Thanksgiving.

A new study released Wednesday by the U.S. Census Bureau reports that both startups and qualified people in need of jobs could be the perfect match for one another. Private sector start-ups accounted for more than 3% of new employment per year between 1980 and 2005, according to the Business Dynamics Statistics gathered by the Census Bureau and funded by the Ewing Marion Kauffman Foundation.

That 3% growth may not sound like much – but it represents a huge piece of the labor pie. Excluding jobs created by new firms, established domestic companies often lose more jobs than they create, according to Forbes Magazine. On average, tiny companies with less than five people account for a staggering 20% of new jobs created nationwide.

“Job growth is essential for our economy to rebound, and this study shows that new firms have historically been an important source of new jobs in the United States,” said Robert Litan, Vice President of Research and Policy at the Kauffman Foundation.

“Our research into the early years of business formation consistently shows how vital new firms are to our economy, and this data should give policy-makers and budding entrepreneurs alike great hope for how we can solve our current crisis — create and grow jobs through entrepreneurship.”