The Importance of Start Ups
When it comes to U.S. job growth, startup companies aren’t everything. They’re the only thing.
That is the key message from a recently released Kauffman Foundation report entitled "The Importance of Startups in Job Creation and Job Destruction."
The findings echo testimony given earlier this month before the Congressional Joint Economic Committee as well as a briefing done in late June. The new report incorporates information from a U.S. government dataset called Business Dynamics Statistics (BDS), which confirms that start-ups are vital to job growth.
Each year, start-ups add an average 3 million new jobs to the American economy. Firms of all other ages lose an average 1 million net jobs per year. Therefore, "states and cities with job creation policies aimed at luring larger, older employers can't help but fail, not just because they are zero-sum, but because they are not based in realistic models of employment growth. Job growth is driven, essentially entirely, by startup firms that develop organically." Removing restrictions that inhibit business startups and encouraging entrepreneurs to start businesses of their own can add jobs to the economy at a time when we need them most.