Kudos to the Real Job Creators: Small and Mid-size Businesses

Job Creators: Small and Mid-size BusinessesWe all know that job creation is critical for increasing economic growth. The question is: Is it big business or small business that is creating jobs? The answer: It’s not big business.

Let’s first take a look at job growth since the end of the recession, July 2009. Since that time, according to Federal Reserve Economic Data, 2.6 million net new jobs have been created in the private sector. Small companies (those with fewer than 50 employees) have added 1.3 million new jobs. Mid-size companies (those with 51-500) have added 1.4 million new jobs. Big businesses (those more than 500) have cut payrolls by 100,000 people.

The U.S. Small Business Administration (“SBA”) also knows how important small businesses are. They tell us that businesses with fewer than 500 people represent 99.7% of all employer units and about ½ of all private sector employees. In addition small and mid-size businesses have generated 60 to 80% of net new jobs annually over the last decade and have created more than half of non-farm private GDP.  Ronald Reagan knew this. Back in 1981 he said “Let us not overlook the fact that the small, independent business man or woman creates more than 80 percent of all new jobs and employs more than half of our total work force.”

Just last week, the L.A. Times ran an article by John Bunzel suggesting that we need to “nurture the real job creators-big business.” His article, along with others we have seen recently, would like to have us believe that, according to Mr. Bunzel, “big business remains the primary driver of economic growth and job creation.” The facts, as outlined above, just don’t support that conclusion.

If there is any nurturing to be provided, let’s give it to the real job creators in our country- small and mid-size businesses.  Kudos to them!