Thursday, October 8th, 2015

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Smaller Start-ups Slowing Job Growth

Start-ups are hiring far fewer people than they did in decades past.Xconomy reports that start-ups in the U.S. are hiring fewer people, substantially slowing the growth of new jobs.

Many American see their country as exemplifying the entrepreneurial spirit and, while many countries certainly see the same drive from their people, start-ups have accounted for a substantial portion of America’s economy and particularly long-term jobs growth. Moreover, a new report from the Kauffman Foundation attributed job growth in the U.S. entirely to start-ups.

However, the report also notes that the number of jobs per start-up has fallen dramatically to 4.9 per company from 7.5 per company in the 1990s. Part of this development has been the growth in productivity tools.

“Clearly technology is at play because you need fewer people to run a company nowadays,” Dan Strangler, research director at the Kauffman Foundation, explained. “And one of the most prominent places you see it is in the tech sector.”

In addition to the shrinking size of companies, the number of new companies has declined by 27 percent in the past five years.

In response to this research, The Boston Herald reports that the Kauffman Foundation has suggested increased green cards for entrepreneurs as a means of sparking economic growth.

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