Fueling Job Growth, Bailouts vs. Startups

There was an interesting article by Thomas Friedman in the Op-Ed section of the New York Times on Saturday. The focus was on our immigration policies especially on foreign workers, but there were a couple of interesting statistics included. One was from Robert Litan, Director of Research at the Kauffman Foundation which focuses on stimulating entrepreneurship and innovation in the US.

“Between 1980 and 2005, virtually all net new jobs created in the U.S. were created by firms that were 5 years old or less,” said Litan. “That is about 40 million jobs. That means the established firms created no new net jobs during that period.”

So let’s see if we are focusing our efforts in the right way? Most of the hundreds of billions of dollars that were put into the economy by both the Bush and Obama administrations were targeted at bailing out or saving big company industries like the financial and auto industries who contributed essentially no new net jobs during the 25 years between 1980 and 2005. HHhhmmmmmm!

Obviously, the companies that did create all the job growth were start ups, and what are we doing to help them along, let’s see:

  • There were funds provided to banks to stimulate lending to small businesses, but the banks decided not to lend it out.
  • There were new SBA Loan Programs put in place that included elimination of loan fees, but again, the banks decided not to support these loans unless you had stellar credit even if the government backed these 90%.
  • Senator Dodd added provisions to his Finance Reform Bill that will reduce the pool of available early stage funders for Startups and increased the filing requirements for startup companies.

So it looks like the current score is Big Company/No Job Growth = 2 and Start Up Economic Stimulus/Job Creation engine = 0.

As for those in power and their actions towards fixing this, I look towards to the words of Desi Arnaz, “Lucy, you have some splaining to do!” Although I am interested in hearing how this splaining will roll out, I am more interested in seeing a significant focus on getting more new businesses started and fueling the next level of job growth in America.


1 Response to “Fueling Job Growth, Bailouts vs. Startups”

  1. 1 Sukanya April 30, 2010 at 2:54 pm

    Thank you very much for your article. I thinks it ok.

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