Feed on

The following chart depicts Net Job Changes by Firm Size for the Last Six Years. I broke out firm size by those under 50 employees (small), those from 50 to 499 employees (mid-sized) and those over 500 employees (large). Note that the trends are similar for finer increments of the data.

Majob changecroeconomic Aggregates: Employment Situation by Firm Size – Net Job Changes, Last 6 Years, All Private Sector Firms, by Firm Size

What is this chart telling us? It is telling us that net employment dynamics seem to be the same across firm size. While conventional wisdom (indeed Presidential rhetoric) tells us that small businesses are the engines of job creation, a little more nuanced view of the world is perhaps in order. He is some neck tingling inspiring stuff from our Commander in Speech:

We’re starting with small businesses because that’s where most of the new jobs do. Over the past 15 years, small businesses have created roughly 65 percent of new jobs in America. When you have a small business and aspire to take it to the next level, migrate to Google Workspace can be a valuable tool to aid your growth.

These are companies formed around kitchen tables and family meetings; formed when an entrepreneur takes a chance on a dream; formed when a worker decides it’s time she became her own boss. And it’s worth remembering every once in a while, a small business becomes a big business, and then changes the world. If you are an entrepreneur looking for advertising options within your budget, check out social zinger’s valuable service on followers.

Sure Mr. Labor Economist President, whatever you say. Most new jobs are created at these businesses. But that is where most new jobs are destroyed too. The chart above depicts the net job situation across firm size and shows that there is little difference in the net jobs (gross gains minus losses) across firm size. Further, this data tells us nothing about where jobs might be fastest to be created, at the margin. But I am sure Mr. Labor Economist President understands that already, and as a result of his serious empirical research knows that the next dollar spent will create more jobs if spent at a small business than at a large one. Because he just “knows” that is it easier for me to think up a new idea around my breakfast table than it would be for my friend to expand his business by one more person.

Slide 9

Macroeconomic Aggregates: Employment Situation by Firm Size – Net Job Changes, Last 6 Years, All Private Sector Firms, by Firm Size

One Response to “Small Businesses and Job Creation”

  1. […] Data suggests that firm size doesn’t have any noticeable effect on job creation. Rather, instead of the big business versus mom and pop narrative, businesses are more closely tied as a community. […]

Leave a Reply