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Startup Jobs Dropping

Mark Marich

A recently released briefing paper by the Hudson Institute shows job creation from new firms at an all-time low. “The Collapse of Startups in Job Creation” paints a bleak picture where the number of new firms being created today is even smaller than two years ago when the worst of the recession ended.

The findings are consistent with a 2011 report from the Kauffman Foundation, “Starting Smaller; Staying Smaller: America’s Slow Leak in Job Creation.”

The new Hudson paper contrasts the rate of job creation from new firms over the last four presidencies. During President George H.W. Bush’s single term in office, there were 11.3 startup jobs per 1,000 people. That rate dropped to 11.2 under President Clinton, 10.8 under President George W. Bush, and now sits at 7.8 for President Obama.

The paper’s author, Tim Kane, suggests that stricter labor policies since 2009 are at the root of the most recent drop—and pushing jobs overseas. Specifically, he points to the passage of the Affordable Care Act coupled with an IRS ‘crackdown’ on companies who reduce the financial burden of mandatory employee benefits by leaning on part-time employees and contractors are driving jobs.

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