New Business Creates Most Jobs

  • Share
  • Read Later

Small businesses are the economy’s great job creators. Or are they? Last year a group of economists digging through new Census data, including a relatively rare measure of firm age, concluded that it’s actually young companies, especially start-ups, that drive the effect normally attributed to small firms. At least that was the take-away from looking at data from 1992 through 2005. Now the researchers—the Census’s Ron Jarmin and Javier Miranda, and University of Maryland’s John Haltiwanger—are back with a new finding. Start-ups haven’t been pulling their weight during the most recent economic recovery. The likely reason? This recession wasn’t just about slack demand, but also about a massive credit crunch. That particularly hurt young companies, the sort often financed by credit card and home-equity loan. It may also be part of the reason jobs have been so slow to return.

0 comments
Sort: Newest | Oldest