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.
Case points out, “…start-ups really are the seed corn that’s going to create the innovation, create the jobs and drive the growth.”
Helping youth think like entrepreneurs
The commission is promoting five important, achievable steps for boosting entrepreneurship in the U.S. Alongside appropriate ways for simplifying and clarifying regulatory procedures, it addressed the need to awaken a spirit of entrepreneurism in young people. This idea dovetails with my own mission for embedding the fundamentals of business into our educational system so that young people will learn to think like entrepreneurs.
We need to help our young people become bilingual in the global language of money. We need to give them high aspirations to not only pick up a paycheck, but to create one. We can teach them the positive powers of capitalism and free enterprise and how to take advantage of them. In this way, we give them the skills so that if they cannot find a job, they can create one.
As an appointee to President Obama’s Advisory Council on Financial Capability for Young Americans, I am fully committed to putting innovative approaches into practice so we can build financial knowledge and opportunities that empower youth. Toward this goal, my organization, Operation HOPE, has created “Business in a Box Academies” to dramatically increase business role models and mentors. Our 2015 HOPE Global Forum just convened in Atlanta showing “hundredaires” how to become billionaires.
Reversing the trend of small business failures in our country means sparking a new generation to innovate, to collaborate, to turn a buck into a billion as so many young entrepreneurs have done in generations before them. Frankly, this simply must become a new national norm.