The #1 source of new jobs in any economy is the creation of start-up businesses.
In the 1980s, the percentage of new business start-ups to businesses in general was 13%. In 2010, it had fallen to below 8%. This was the lowest on record.
In 2010, about 400,000 new businesses began. As a result, there were over 2.2 million new jobs created. That is almost six jobs per start-up.
The rate of new business startups fell in 2010 to the lowest point on record, according to an analysis of U.S. Census Bureau data.
The decline of ew business start-ups is a long-term trend. It points to reduced entrepreneurship in the USA. Yet entrepreneurship is one of the nation’s greatest advantages in the world economy. Anyway, it was. We are losing this advantage.
In the early 1980s, firms that had been started five years or fewer earlier accounted for half of all businesses. Today, this is below 35%. In the 1980s, these young firms accounted for 40% of new jobs created. Today, it is down to 30%. Again, these are long-term trends.
This decline occurred in all states. It is not a regional phenomenon. But regions that used to be the growth leaders — in the West, South, and Southwest — were hit harder in the recession. This seems reasonable. The other regions had not been major centers for job creation. The recession scared off entrepreneurs. There used to be more of them in the high-growth regions.
These long-term trends indicate that we should not expect a sharp rebound in the jobs market. The #1 source of new jobs is fading as a factor in the American economy.