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Grow the Economy... Support Entrepreneurs

Mark Marich

New firms create more jobs--if they survive--than older, established firms.

That's a pretty important message with the national unemployment rate at 8.5% and on the rise for six consecutive months. That translates to 13.2 million people out of work (according to seasonally adjusted figures released recently by the Department of Labor)... many of whom are presumably looking for a job.

A new report from the Kauffman Foundation, High Growth and Failure of Young Firms, shows that very young firms (one year old) have a net employment growth rate of about 15 percent, if they survive, but about 20 percent of jobs at startups are lost due to business establishment closings in the first year. Older firms (age 29 and older), on the other hand, create jobs at a rate of about 4 percent, conditional on survival, and have a similar rate of job loss due to business establishment closings. Among surviving firms, average employment growth rates decline with the age of the firm.

Report: "High Growth and Failure of Young Firms" by John Haltiwanger, Ron Jarmin and Javier Miranda.

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