Startups Critical for Job Creation in U.S.

I've written before about how small businesses will be the most likely drivers of an economic turnaround. According the U.S. Small Business Administration, small businesses:

• Employ about half of all private sector employees.
• Pay nearly 45 percent of total U.S. private payroll.
• Have generated 60 to 80 percent of net new jobs annually over the last decade.
• Hire 40 percent of high tech workers (such as scientists, engineers, and computer workers).

A new U.S. Census Bureau study funded by the Kauffman Foundation strongly suggests that it is not just small businesses, but new businesses, that hold the key to reversing the current record unemployment trend. The Business Dynamic Statistics (BDS) indicate that without job creation from new firms, the U.S. net employment growth rate is negative on average.

Robert E. Litan, vice president of Research and Policy at the Kauffman Foundation, which funded the BDS, had this to say about the report:

"Job growth is essential for our economy to rebound, and this study shows that new firms have historically been an important source of new jobs in the United States. Our research into the early years of business formation consistently shows how vital new firms are to our economy, and this data should give policymakers and budding entrepreneurs alike great hope for how we can solve our current crisis-create and grow jobs through entrepreneurship."