National study confirms entrepreneurs are key to economic recovery
We’re all talking a lot these days about how new job creation will end the recession and get our country back on its financial feet again. The issue we don’t talk much about is where we expect all of these jobs to come from. Allow me to share some interesting research that addresses this query.
A recent research study by the Kauffman Foundation points out that when compared to all prior recessions since the end of World War II, the 2007-2009 recession ranks worst in terms of the number of jobs lost, which is more than eight million. On the flip side of the coin, the study also shows that from 1980-2005, nearly all net job creation in this country occurred in firms less than five years old. This indicates that without the aid of entrepreneurial startups, net job creation for the American economy would be negative in all but a handful of years.
If one excludes startups, an analysis of 2007 United States Census Bureau data shows that young firms still account for roughly two-thirds of job creation, averaging nearly four new jobs per firm per year. In fact, of the overall 12 million new jobs added in 2007, young firms were responsible for the creation of nearly eight million of those positions. Given this information, it’s clear that new and young companies and the entrepreneurs that create them are the engines of job creation and eventual economic recovery.
Now what does this kind of information mean in a practical sense? Simply put, we need to encourage, not hamper, entrepreneurial drive. To promote new business creation, there are affirmative steps that can be taken: create more viable paths to start-up capital and small business funding; decrease regulatory red tape that inhibits small business development; and encourage media and legislative attention aimed at removing roadblocks for entrepreneurs who will lead us out of our pessimism about jobs and sustain economic expansion over the longer run.
For these reasons, it’s important that Nevada – and the United States – continues to offer a legal, regulatory and educational environment that encourages and supports the entrepreneurs who will drive today’s and tomorrow’s economy. Fortunately, Nevada is continually proving itself to be an entrepreneur-friendly state. Let’s make sure we keep it that way and work together to encourage ongoing innovation in the Silver State.
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