Small Business – Creating New Jobs

Small businesses make tremendous contributions to the U.S. economy and to society in whole. One impressive contribution is the number of new jobs created each year by small businesses. Three of every four new jobs created over the last 10 years were at companies with fewer than 500 employees. A significant share of these jobs was created by the smallest companies – those with four or fewer employees. Small firms are dominant factors in many of the industries that have added the most jobs: engineering and management services, construction trade contractors, wholesale trade, amusement and recreation, social services and restaurants.

In an economy slowed by recession, a sizable number of new jobs are created by entrepreneurs who decide to launch new business ventures. During the first years of the 21^st century, employers hired 20 percent of fewer new college graduates than before the recession began. Instead of spending his final year at Texas A&M University job hunting, James Ewing launched Northgate Vintage, a retail store that offers vintage clothing. “In my classes, everybody is talking about how hard it is to find a job,: says Ewing. “I don’t have to worry about that because I can focus on this.”

Even if you never plan to start your own business, you will probably work for a small business at some point in your career. Not only do small firms employ about half of U.S. workers, but they are more likely than large firm to employ the youngest (and oldest) workers. In addition, as detailed in a later section of this chapter, small businesses offer significant opportunities to women and minorities.

Small businesses also contribute to the economy by hiring workers who traditionally have had difficulty finding jobs at larger firms. Compared with large companies, small businesses are more likely to hire former welfare recipients. Driven in part by their limited budgets, small businesses bay be more open to locating in economically depressed areas, where they contribute to rehabilitating neighbourhoods and reducing unemployment.