What Happens When The Pace Of Startups Slows Down
Since the financial crisis hit five years ago, there aren't as many Americans starting new businesses. In uncertain economic times, it's harder for entrepreneurs and investors to take the risk.
And if you look back over the past 25 years, it turns out the overall trend is toward fewer new businesses getting started, too — and that's not good at all when the country needs more jobs.
The Next Google
New businesses are really important for the economy. For one thing, they often come up with new technologies and better ways of doing things. And when they do that, a small percentage start growing very fast and hiring hundreds or thousands of people.
"Out of this vast number of startups, about 10 percent take off, and they create an enormous number of jobs," says John Haltiwanger, a professor at the University of Maryland. He's an economist who studies these young, high-growth companies.
"If you add up the job creation in the United States from just the fast-growing businesses, they account for over 50 percent of all job creation in the United States," Haltiwanger says.
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