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Starting Smaller; Staying Smaller: America's Slow Leak in Job Creation

15 points by marchustvedt 15y ago

bootload 15y ago
"... The study also found that as a group, recent cohorts of new businesses have been adding jobs at a slower pace than earlier cohorts even when they do well and grow, but that growth hasn't made up for lower employment levels at inception. ..." Possible reason(s): improved productivity, better technology, higher employment costs?
- tomjen3 15y ago
  All of the above. If you think about it, a programmer with a computer can replace hundreds of workers typing on typewriters, thousands working on mail delivery and essentially infinitely many people who would previously be required to produce books (if we allow for ebooks). That kind of productivity isn't limited to programmers at all, even a temp worker with basic excel skills can outdo essentially all math geniuses from before the twentieth century (as far as computations go) put together. I won't even mentioned how much more efficient email is compared to the two or three days it takes to send a regular letter (and more to the point, getting a response back). Now a huge part of this improved productivity isn't realized because it isn't necessary and another huge part is lost because most of these things have diminishing returns (it takes a ton of computations to do the nice charts that are part of many simulation programs but it might not change more than a single percent of how you do business) and another huge chunk is given to the buyers (because if you don't your competition will). But interestingly enough even jobs that have not seen very large improvements in productivity (say childcare, doctors, classical music players) also see an increased salary. It takes about as many doctors to do a surgery today as it did 50 years ago, it takes about as many people to look after the same amount of kids and it takes exactly as many people to play Beethoven's fifth today as it did when he wrote it. The reason they have seen their salaries go up (aside from government meddling with things like AMA) is that as the general productivity increase the salaries that a company can afford to pay workers increase too and if the salaries paid to the other workers don't increase then there will be nobody to play the classical music. Incidentally that is also the cause behind the higher salaries to teachers, some of the increased cost of health-care as well as the generally increasing cost of living.
  - bootload 15y ago
    "... the study found that the number of new employer businesses has fallen 27 percent since 2006. ..." that's the bit I couldn't explain with technology. why the sudden drop over such a short time. has technology really improved productivity in just 5 years?
    - tomjen3 15y ago
      Not really but a crises or recession is typically when the no longer needed employees are laid of. As long as the times are good, people are willing to hire more than they nedd and unwilling to fire those they don't need. When the times turn bad, they can no longer afford the luxurery and the companies fire all those they can - which are more than those who have recently been made obsolete, essentially it is everybody who has been made obsolete or redundant since the last crises. The last crises was in the early 00, which means that everybody who has been made redundant between then and now are being fired in the current crises. If you recall how the internet was back then and compare it with how it is today, and you can start to see just how large a productivity increase we should be able to see.
nhebb 15y ago
Direct link to PDF: http://www.kauffman.org/uploadedFiles/job_leaks_starting_smaller_study.pdf http://www.kauffman.org/uploadedFiles/job_leaks_starting_sma...

15 points by marchustvedt 15y ago

"... The study also found that as a group, recent cohorts of new businesses have been adding jobs at a slower pace than earlier cohorts even when they do well and grow, but that growth hasn't made up for lower employment levels at inception. ..." Possible reason(s): improved productivity, better technology, higher employment costs?

tomjen3 15y ago
All of the above. If you think about it, a programmer with a computer can replace hundreds of workers typing on typewriters, thousands working on mail delivery and essentially infinitely many people who would previously be required to produce books (if we allow for ebooks). That kind of productivity isn't limited to programmers at all, even a temp worker with basic excel skills can outdo essentially all math geniuses from before the twentieth century (as far as computations go) put together. I won't even mentioned how much more efficient email is compared to the two or three days it takes to send a regular letter (and more to the point, getting a response back). Now a huge part of this improved productivity isn't realized because it isn't necessary and another huge part is lost because most of these things have diminishing returns (it takes a ton of computations to do the nice charts that are part of many simulation programs but it might not change more than a single percent of how you do business) and another huge chunk is given to the buyers (because if you don't your competition will). But interestingly enough even jobs that have not seen very large improvements in productivity (say childcare, doctors, classical music players) also see an increased salary. It takes about as many doctors to do a surgery today as it did 50 years ago, it takes about as many people to look after the same amount of kids and it takes exactly as many people to play Beethoven's fifth today as it did when he wrote it. The reason they have seen their salaries go up (aside from government meddling with things like AMA) is that as the general productivity increase the salaries that a company can afford to pay workers increase too and if the salaries paid to the other workers don't increase then there will be nobody to play the classical music. Incidentally that is also the cause behind the higher salaries to teachers, some of the increased cost of health-care as well as the generally increasing cost of living.
- bootload 15y ago
  "... the study found that the number of new employer businesses has fallen 27 percent since 2006. ..." that's the bit I couldn't explain with technology. why the sudden drop over such a short time. has technology really improved productivity in just 5 years?
  - tomjen3 15y ago
    Not really but a crises or recession is typically when the no longer needed employees are laid of. As long as the times are good, people are willing to hire more than they nedd and unwilling to fire those they don't need. When the times turn bad, they can no longer afford the luxurery and the companies fire all those they can - which are more than those who have recently been made obsolete, essentially it is everybody who has been made obsolete or redundant since the last crises. The last crises was in the early 00, which means that everybody who has been made redundant between then and now are being fired in the current crises. If you recall how the internet was back then and compare it with how it is today, and you can start to see just how large a productivity increase we should be able to see.

nhebb 15y ago

Direct link to PDF: http://www.kauffman.org/uploadedFiles/job_leaks_starting_smaller_study.pdf http://www.kauffman.org/uploadedFiles/job_leaks_starting_sma...