Is the current economic situation just another in a long cycle of booms and busts, growth periods and slowdowns, and thus something that will correct itself in time? Or does it reflect something more long-term, something more fundamental gone wrong in the economy?
Personally, I think that’s the most important economic question of our times. And these new numbers out of the Bureau of Labor Statistics don’t encourage me much. They suggest that new business establishment, long considered the main driver of job creation, is no longer capable of playing that role. They also demonstrate that the phenomenon is not a product of our current economic struggles, but instead can be traced back more than a decade.
As the BLS commentary notes, “the number of jobs created by establishments less than 1 year old has decreased from 4.1 million in 1994, when this series began, to 2.5 million in 2010. This trend combined with that of fewer new establishments overall indicates that the number of new jobs in each new establishment is declining.”
I don’t know how to explain it, and without an explanation it’s impossible to recommend ways to reverse it. I do know that some will automatically try to blame it on government, because that seems to be the only kind of policy debate we can have anymore. But when fundamental economic change is taking place, it usually swamps any influence that government might wield one way or the other.
– Jay Bookman