People like to think the recovery from the 2008 recession will be like others before it. It won’t. It hasn’t been so far. This article is an example of a small reason why. More new businesses are not hiring big staff, if any.
But there was tremendous growth in businesses like Leap2 that are operated by one person, partly reflecting the fact that more Americans are going it alone as consultants and contractors.
NYTimes: When Job-Creation Engines Stop at Just One http://nyti.ms/T7dqc0
For decades, new companies have produced most of the country’s job growth. Without start-ups, the country would have had a net increase in jobs in only seven years since 1977. The number of people employed by new businesses peaked in 1999, the height of the tech bubble, and has fallen by 46 percent since then, to 2.5 million in 2011, creating a slow leak in job creation that has proved difficult to plug.
“There’s this idea that we can somehow rely on entrepreneurship to get us out of the job crisis,” said Scott Shane, an economics professor at Case Western Reserve University. “That’s getting harder and harder, considering there are fewer and fewer of them, and they’re each employing fewer people.”
The decrease in start-up size is probably driven by some combination of technology, changes in management philosophy and tighter financing.
While much attention has been devoted to stoking entrepreneurship and job creation through tax breaks, entrepreneurship may be more influenced by other factors, such as the risks that come with starting a company, Mr. Ries said, including the loss of health insurance.
A study last year found a spike in business ownership at age 65, and attributed it to access to Medicare. Some economists have said that the Affordable Care Act’s expansion of health insurance options could help increase entrepreneurship.