Start-ups' Contribution to Job Market

Startups are not only characterized by innovation, but also their contribution to the job market. Simply put, new businesses mean more jobs, which contribute positively to net job creation. More specifically, 414,000 startups have created 2.5 million jobs in 2015.

But recent studies, as well as data collected by the Census Bureau’s Business Dynamics Statistics (BDS) claims that despite the rising number of business startups, there is a downward trend in the share of jobs created by startups before the 2006-2009 recession. In the period before the recession, namely 2002-2006, 524,000 startup firms created 3.3 million jobs.

In 2015, startups and firms less than six years old (young firms) accounted for 11% of employment and 27% of job creation. Relative to existing employment, the job creation rate by young firms equated to 20%, a rate above the Great Recession low of 15% in 2009, but equals the average rate from 2002-2006.

Negative job creation, or job destruction rates, are shown in the graph as well. This indicates jobs lost through failed startups and firms within the first few years of opening. While overall contribution by startups for jobs is positive, our job market still seems to be recovering from the recent recession.


Sophia Kim

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