Job Creation : The importance of startups

Interesting report from the Kauffman Foundation on job creation by startups in the USA and it’s importance.

The oft-quoted American sports slogan, “Winning isn’t everything. It’s the only thing!” could well be attributed to the economic importance of firm formation in creating jobs. A relatively new dataset from the U.S. government called Business Dynamics Statistics (BDS) confirms that startups aren’t everything when it comes to job growth. They’re the only thing.

Policy makers take note –

Job growth is driven, essentially entirely, by startup firms that develop organically. To be sure, Survivors create zero to 7 million net jobs (half of which are at establishment births), while Deaths account for a net loss of 4 million to 8 million jobs, which are large flows for the context of the steady job creation of 3 million startup jobs. But, in terms of the life cycle of job growth, policymakers should appreciate the astoundingly large effect of job creation in the first year of a firm’s life. In other words, the BDS indicates that effective policy to promote employment growth must include a central consideration for startup firms.

And if you haven’t seen it already Guy Kawasaki’s talk on The Art of the Start is well worth watching.