Startups key to growing jobs

For policymakers focused on creating jobs, a Kauffman Foundation study has the answer: startups. The study, The Importance of Startups in Job Creation and Job Destruction, is based on data from the U.S. Census Bureau. It shows that, both on average and for all but seven years between 1977 and 2005, existing firms are net job destroyers, losing 1 million jobs net combined per year. By contrast, in their first year, new firms add an average of 3 million jobs. "These findings imply that America should be thinking differently about the standard employment policy paradigm," said Robert E. Litan, vice president of Research and Policy at the Kauffman Foundation. "Policymakers tend to focus on changes in the national or state unemployment rate, or on layoffs by existing companies. But the data from this report suggest that growth would be best boosted by supporting startup firms." Job-creation policies aimed at luring larger, established employers will inevitably fail, said the study's author, Tim Kane, Kauffman Foundation senior fellow in Research and Policy. (Source: Kauffman Foundation, 07/07/10) Note: The Mississippi Enterprise for Technology is a business incubator at John C. Stennis Space Center.