Time to Try Something New? Job Creation in the United States Hits 29-Year Low

America’s largest companies are, more often than not, contributing to a disastrous trend: a decline in job creation.

When compared to 2006, in 2009, there was a 25 percent decrease in overall job creation and a 34 percent decrease in job creation among startups. These are the lowest levels in nearly 30 years (US Census Bureau).

One might wonder, then, why President Obama recently designated General Electric’s chief executive, Jeffrey R. Immelt, as his liaison to the business community and as the chairman of the President’s Council on Jobs and Competitiveness. Since 2002, GE has eliminated a fifth of its work force in the United States while increasing overseas employment.

There is a silver lining. New firms – those in operation for less than 5 years – and expanding firms still created more than 14 million new jobs.

“It’s heartening to know that, despite the economic obstacles, entrepreneurs were still finding ways to create jobs, though fewer than in past recessions,” said Robert E. Litan, vice president of research and policy at the Kauffman Foundation, which helped fund the research. “We hope these data prompt policymakers to clear away any rules and regulations that stand in the way of entrepreneurs and innovators who want to grow companies and jobs.”

In evaluating the job creation rates of startups and existing firms in recessions over the past three decades, a recent brief by the Census Bureau Business Dynamics Statistics (BDS) found that startups were more impacted by the 2009 recession than any other recession since the early 1980s. Full details of the study are available here.

We can’t simply wait to ride out the recession and return to business as usual. It’s time to try something new – a different approach to job creation and wealth building that is sustainable for the long-term.

A 2009 study by the Pew Charitable Trust attributes more than 770,000 jobs generated by 70,000 businesses within the green economy. And that’s just the beginning – by 2038, an estimated 4.2 million jobs can be created in the green economy, representing 10 percent of new job growth in the US (US Conference of Mayors, 2006).

Who is behind these numbers and statistics? There are small pockets of exciting economic activity happening across the country, from the Evergreen Cooperative in Ohio to WAGES in California. These are just a few of the models for the future of our economy.

17 comments

  1. GREAT ARTICLE. KEEP THEM COMING

  2. Laurie Burgess /

    Interesting. I am surprised that the 70,000 new green jobs will only add an average of 11 jobs. I know that this means some green companies will add 100 and 11 others will add 1, but it seems like a low number.

    I recently went on an MBA course in the UK and we visited a company called A4E. They help people (when the government cannot) find jobs. Their website is http://www.mya4e.com. A4E creates jobs (employees) as well as helps people find jobs. I was wondering how this model would work in the U.S. where even with the support and training, there are still not enough jobs. What if there was an organization like A4E but it trained green entrepreneurs.. hmm!

  3. I have little interest in job creation. I weep to think that all of this effort and expense ultimately only creates more minimum wage service jobs. How do we shift our thinking to create meaningful work?

  4. Tom D'Urso /

    Want to create more jobs? How about eliminating the capital gains tax. Capital is the first step in job creation. The tools, equipment, etc. need to be acquired prior to anyone being hired.
    Taxes hinder the efficient flow of capital and slows job creation.
    The difference between a man (or woman ) with a shovel, earning $8 an hour, and one operating a backhoe, earning $18, is the capital needed to buy the backhoe.
    Capital gains taxes are regressive and slow innovation and jobs.
    The money raised through cap gains taxes runs through a bureaucracy prior to being redistributed based on politics and lobbies. In private hands, efficiency, productivity and jobs are enhanced.

  5. myriam /

    I believe there is a return to “small” enterprise and that the trend to “exile” abroad by big companies is shifting too.
    I particularly appreciate the fact that many people feel empowered to invest in renewable, sustainable products like organic farming and alternative energy, though that probably requires larger investments. Still, maybe the answer to job creation is to bundle energies at the local level, maybe the strength of employment is in getting together in small communities and work toward a common goal. Vermont is a good example of what can be achieved on a smaller scale. Back to “small is beautiful” might actually be more empowering than waiting for a “big” job in a large company where people become numbers and are never certain they’ll still have a job in 2 or 3 year time anyway and where the level of commitment and/or involvement is practically non existant.

  6. Paul Ciofalo /

    Small business will be the engine of job creation and the green industry is positioned perfectly to be a catalyst of it’s own toward that end. But it will take business community investment on a large scale to get the funds to the risk takers and entrepreneurs who are out there. We have to stop waiting for the government or GE to fix the problem, Business leaders have to learn to lead again.

  7. Great post, but I think job statistics are the wrong framework: we need a focus on productivity, and value, not jobs. The only way to make our economy productive and meaningful again is to RE-LOCALIZE EVERYTHING. As Jeffrey points out, it’s the small innovative companies that are creating value.

    But the problem is that these small/innovative enterprises, especially those focused on re-localized production/distribution and “green” or sustainability, are severely capital-constrained.

    The new-normal for all the mainstream finance markets is that it’s easier to make money betting on failure (derivatives) than it is to invest in productive-growth because the earth’s energy resources are now flat/declining. This is why the capital resources for small/localized enterprises are so constrained and this issue is only going to get worse with peak oil and the cost of environmental degradation.

    We need aggressive development of micro-finance in a slow-money format that focuses on re-localizing production, especially for food and energy but ultimately for everything.

    Show me the money baby

  8. Darren /

    I think we need to shift from the mindset of “consumers” to “providucers”.
    Small to medium size businesses is the heart of all job creations. From cleaning to landscaping, investing in infrastructure, fixing roads, highways, communities, rail, etc create meaningfull, long time, job opportunities.

  9. It is incredible all the barriers that are against people for creating new jobs. Times are changing and people are turning to the internet for answers for work also.

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