New business not creating jobs, and hasn’t for a long time
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
Tell us what you think about the site
Customer Care »
Vacation stops, manage subscriptions and more
AJC Services
Sections
Other Editions
Visitor Agreement | Privacy Statement
© 2013 The Atlanta Journal-Constitution
305 comments Add your comment
Thulsa Doom
May 31st, 2011
5:09 pm
I think 10-15 years ago many/most economists would have agreed with your pro global free trade statement. But I’m sure many are now scratching their heads and wondering about that policy with respect to the whole of the American economy- Outside observer
Hmm. You think other economics are scratching their head and reconsidering? Um. No. Just because you think thats what economics professors think because you think it doesn’t make it so. You have no basis for your belief that other economics professors now believe as you do on a wide scale.
N-GA
May 31st, 2011
5:10 pm
Thulsa – You amuse me. Just because there is a truism that free trade DOES NOT lead to unemployment does not mean that the converse is true (That free trade leads to increased employment).
My MBA would suggest that I have a lot of coursework in macro and micro economics, and I learned my lessons well. There are many reasons for tariffs, some good and some bad. The idea that there should be no tariffs also suggests that there should be no farm subsidies. A completely FREE market where supply and demand are the only factors that matter. None of that works the way you say it does because the playing field is not level. The most obvious example is S. Korea. The import duties on american cars are prohibitive. Why does our government continue to allow Korean vehicle imports without requiring the same treatment on the other end. You seem to prefer putting American countries at a disadvantage. I am not surprised!
N-GA
May 31st, 2011
5:42 pm
That would be American “companies”…not countries. Delete and re-post.
Craig Spinks
May 31st, 2011
8:28 pm
What was the average hourly compensation paid to workers hired by new firms in 2010?
What was the average hourly compensation paid to workers hired by existing firms in 2010?
What was the average hourly compensation paid to workers laid-off/fired in 2010?
What percentage of the jobs created in 2010 required academic and vocational skills which their applicants lacked?
What is the unemployment rate among GA high school graduates in the 18-24 y.o. cohort?
More evidence of fundamental economic change | Jay Bookman
June 6th, 2011
9:09 am
[...] in the economy than by temporary changes such as recession followed by recovery. (For example, new business formation is no longer a major driver of job creation, and hasn’t been for more than a decade. And [...]