A Lost Decade? Look to New Firms for Growth
A new story in the Washington Post paints a pretty grim picture of the 2000s. Consider the fact that since the Great Depression, there have been six decades of continuous job growth -- and that it just ended. The decade that began with extravagant millennium celebrations around the globe registered a big, fat zero for job-growth.
Looking at the bright-side--or what will have to qualify as one--it took a perfect storm to push us back 10 years. The tech and housing bubbles both burst and paved the way for a global credit crunch. But the worst appears to be behind us. And while President Obama has called for a "post-bubble growth model" -- he should look at the policies to promote entrepreneurial growth as a primary means to create jobs. Census Bureau shows that from 1980-2005, nearly all net job creation in the United States occurred in firms less than five years old and that without startups, net job creation for the American economy would be negative in all but a handful of years. Further, 2007 Census data shows that young firms (defined as one to five years old) still account for roughly two-thirds of job creation (8 million of the overall 12 million new jobs added in 2007).
The key takeaway message: size doesn't matter... age does.