Kauffman Foundation News (7/11/11): Kauffman Study Finds New Firms are Starting Smaller and Growing Slower
New Firms are Generating and Holding onto Substantially Fewer Jobs in the U.S.; Kauffman Foundation Study Finds that U.S. Jobs Problem Pre-dates Great Recession
Companies established in 2009 could employ one million
fewer people than historic norm
Public discussion of the jobs shortfall in the United States has tended to focus on the Great Recession of 2007-2009, but new research released today by the Kauffman Foundation suggests that the country faces a far more fundamental employment challenge that pre-dates the recession by many years: A long-term trend that the researchers call a slow jobs “leak.”
The new study, the next in a continuing series on firm formation and economic growth, found that the new businesses that continue to generate the bulk of the economy’s net job gains in recent years have been starting up with fewer workers than historic norms and are also adding fewer workers as they grow. Starting Smaller; Staying Smaller: America’s Slow Leak in Job Creation said its analysis of government data shows that since the middle of the last decade and perhaps longer, the growth path and survival rate of new businesses means they are generating fewer and fewer new jobs.The cohort of new firms that started in 2009, for example, is on course to contribute one million fewer jobs in the next decade than historical averages would suggest.