Oct 302011
 October 30, 2011  Posted by at 4:21 am  Add comments

Jobs. Jobs. Jobs.  In this stumbling economy and time of high unemployment, there is a lot of noise out there about how to stimulate the economy and create jobs.  Political parties have turned it into a ‘raise taxes’ vs. ‘cut spending’ debate.  However, it is clear that to get the economy back on track we have to create more jobs – and startups create jobs.

A report by the Kauffman Foundation in 2010 says it best:

 “Startups aren’t everything when it comes to job growth.  They’re the only thing.”


We often hear small business is the job growth engine in the US.  But it’s not small businesses – it’s NEW startups.  The report uses government data and shows that since 1977, in all but 7 years, existing businesses large and small have had net job losses.  Virtually all of the job growth has come from startups – to the tune of an amazingly steady average of 3 million jobs a year.

Sure, but don’t many of those new businesses go under in subsequent years?  Yes.  Half will go under in 5 years.  70% will go under in 10 years.  However, the same data shows companies 5 years old have about 2.24 million employees.  Simply put, netting job loss from the firms that go under and job creation from those that grow, about 75% of those 3 million new startup jobs will exist in 5 years.

Any strategy for job growth needs to start with a focus on new business creation.  The sooner our national and local politicians start focusing on what we can do to support startups, the sooner we will see the unemployment numbers go down.

  2 Responses to “It’s the Startups, Stupid”

  1. [...] I believe government investment in innovation and startups is necessary for job creation.  To find out why see my earlier post on startups and job creation.  That investment is most appropriate in areas where it is less profitable and there is less [...]

  2. [...] Many would say “So what… let them get a job with a big company or go home.” Anyone building a technology startup will tell you it’s increasingly hard to find great technical talent.  Opponents of these efforts cite concerns that immigrants take jobs from Americans.  Technology sector unemployment statistics in the most challenging economic times since the Great Depression does not support that position.  Recent Department of Labor statistics showed San Jose and Austin led the country in job creation in 2010 -no surprise given their strong technology startup ecosystems.  Immigration reform is necessary to keep jobs here, create new jobs, and maintain our innovation competitive advantage.  The jobs created in these sectors are good, high-paying jobs that unless filled here will go elsewhere.  Along with them, will go lost taxes generated from the wealth created and the overall expansion of our talent base.  If they join startups in another country, we lose out on the technical, sales, marketing, and other jobs that come along with the success.  In addition, their research is funded by not only by commercial sponsors, but federal and state grants as well.  I want the benefit of those taxpayer investments to stay here in the US.  Note:  Click here to read my earlier post It’s the Startups, Stupid on the importance of star… [...]

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