Oct 13, 2015

Startups Creating 50% Fewer Jobs

Post by Freedom Partners

Despite claims by President Obama that “we’ve recovered faster and come farther than almost any other advanced country on Earth,” evidence continues to show that big-government policies are hurting the economy. Case in point: Job creation from new companies has hit a historic low, according to data released in September by the U.S. Census Bureau.

The data shows that by 2013, startup firms in their first year of business were responsible for only 2 percent of all jobs, dropping from 4 percent in 1982. Since 2007 alone, that number has fallen from 3 percent to 2 percent.

startup job creation chart

Additionally, the Census numbers indicate that startups failed to recover following the recession – with job creation continuing to decline from 2008 to 2013.

Why is this trend so worrisome? Apart from the increased innovation and consumer choice that startups contribute, research shows they are also the most powerful generator of new jobs.

A study published in the National Bureau of Economic Research, for instance, found that younger firms actually create more jobs than larger, older firms. From 1992 to 2005, while only accounting for 3 percent of employment, startups created nearly 20 percent of all new jobs during that time period.

The Congressional Research Service found this year that the federal government has created 13,000 new regulations since 2009. Rather than continuing to weigh down businesses across the country with regulations and restrictions, we should turn to policies that drive job creation and encourage innovation. Taking the handcuffs off startup firms—and freeing up innovators—is a great place to start.