Click to Print  Startups Creating Fewer Jobs -- Not a Problem
August 2, 2013  Many policy makers and entrepreneurship
advocates are worried. Startups are creating far fewer jobs than
they used to, according to analysis of the Census Bureau's
Business Dynamics database. New firms' share of employment fell
by nearly two-thirds between 1977 and 2011.  In large part the
decline in job creation stems from a decline in the new-firm
share of businesses. Despite ticking up in 2011, the new company
fraction has been trending mostly downward for the past 35 years
and in 2011 was roughly half (8.2 percent) of its 1977 level
(16.5 percent).  But the decline in new business job creation
might be less of a problem than many entrepreneurship advocates
and policy makers think.  Consider what else is correlated with
startup rates and employment by startups and you will see why.
Sure the startup rate is down substantially over the past 35
years, but so is the business failure rate, or the number of
companies that go under eve