Stagnant Startups

It might be a good time for startups… but the job creation is proving slow to follow.

We spent several years during and after the “Great Recession” lamenting the sorry state of startup businesses in America. Research has shown time and again that the real job creators aren’t small businesses as much as new businesses, less than five years old.

Late last spring, we perked up when we saw a new study from the Kauffman Foundation, the go-to source of information about startups. Its Index of Entrepreneurial Activity rose for the first time since 2009… although it’s still well below the long-term average.

Yesterday, the Census Bureau added some color with the annual release of its “Business Dynamics Statistics.” With the caveat that the numbers go only up to 2013, they’re not encouraging.

Startups’ contribution to job creation remains at multidecade lows… and the meager number of new jobs that are being created are dominated by companies that have been in existence at least a quarter-century.

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Hmmm… What we’re most eager to see is whether businesses are still going defunct faster than they’re coming into existence — a condition that’s afflicted the land ever since the Panic of ’08.

Regards,

Dave Gonigam
for The Daily Reckoning

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