July 9, 2010

U.S. Job Growth Driven Entirely by Start-ups, Report Finds

Posted in Philanthropy at 7:27 pm by philanthropynews

Although conventional wisdom suggests that the annual net job gain at existing companies is positive, the fact is that net job growth in the U.S. economy occurs only through start-up firms, a new report from the Ewing Marion Kauffman Foundation finds.

Based on the U.S. Census Bureau‘s business dynamics statistics, the report, The Importance of Startups in Job Creation and Job Destruction (12 pages, PDF), found that both on average and for all but seven years between 1977 and 2005, existing firms were net job destroyers, losing a combined one million jobs per year. In contrast, during their first year new firms added an average of three million jobs. The report also found that while job growth patterns at both start-ups and existing firms were pro-cyclical, there was much more variance in job growth patterns at existing firms. Indeed, during recessionary years job creation at start-ups remained relatively stable, while net job losses at existing firms were highly sensitive to the business cycle.

(Read more via Philanthropy News Digest.)

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