Our start-up problem

by Ryan Streeter on February 1, 2013. Follow Ryan on Twitter.

Noting that small businesses per se are not the engine of job growth we often think they are, the Wall Street Journal points out what I’ve repeated on this blog and in my other writings: real growth comes from young, fast-growing companies.

Once we understand that, we realize why we’re in a bit of trouble right now:

The trouble for the economy is that start-up activity has been weak since the recession ended. New companies (a category that includes seasonal businesses reopening their doors) accounted for 15% of all new jobs in the second quarter, the smallest share since 2001. Newly opened firms created an average of 5.5 million jobs per month from 1992 through the end of 2006. Since then, they’ve created just 4.7 million per month. There’s evidence that this is a longer-term trend, pre-dating the recession.