When economists describe the need for new job growth, most people envision big business swelling to absorb an expanded workforce. But as admirable and inspiring as IBM, HP, UPS, Wells Fargo, Google, Microsoft, Rubbermaid, Apple, SunTrust Banks and 970 other household name companies might be, this is simply not where we can find enough good jobs to employ a nation.
Where are America's jobs?
Of the 26 million business entities in America, less than 1,000 employ 10,000 people or more. And most of these large companies don't define economic growth as "hiring more people."
Government is a big employer, but it only accounts for between 8-13 percent of jobs in the U.S. economy. The rest come from the private sector.
Remarkably, 70 percent of all jobs in the U.S. come from companies with 500 employees or less–and even more surprising, 50 percent of all jobs in America come from businesses with 100 employees or less. That's right–half.
There you have it; small businesses, entrepreneurs, start-ups, and what are called "shoot ups"–the businesses responsible for most job growth–account for the majority of jobs in America.
Small business sector in trouble
Now here's the rub. For the first time since 1978, we have more small business "deaths" in America than small business "starts," or start-ups. For nearly 40 years, the trend for start-ups has been heading in the absolute wrong direction. We are no longer giving birth to those start-ups that beget more start-ups that keep the prosperity train–and good jobs–going.
A recent story in the Washington Business Journal reiterated this alarming decline. It reported: "Start-ups aren't creating as many jobs as they used to in the United States, and business failures now outnumber new businesses." The story describes the work of a commission on entrepreneurship and middle-class jobs led by AOL co-founder Steve Case and Hewlett-Packard Former Chair and CEO Carly Fiorina.
John Hope Bryant is the Founder, Chairman and CEO of Operation HOPE and Bryant Group Companies, Inc. Magazine/CEO READ bestselling business author of LOVE LEADERSHIP: The New Way to Lead in a Fear-Based World (Jossey-Bass). His newest bestselling book is How The Poor Can Save Capitalism (Berrett Koehler Publishing).
Bryant is a Member of the U.S. President's Advisory Council on Financial Capability for Young Americans, and co-chair for Project 5117, which is a plan for the rebirth of underserved America.
Bryant is the only bestselling author on economics who is also African-American.
Posted by Natasha Eldridge, Office of the Chairman