The BLS’ employment report for August is a grim reminder of the severity of America’s ongoing jobs emergency – and the reality that Washington is desperately in need of new ideas. More than four years after the end of the Great Recession, nearly 24 million Americans remain either unemployed, underemployed, or have left the workforce discouraged. According to Friday’s report:
- Only 169,000 jobs were created in August – 175,000 to 200,000 new jobs are necessary to merely absorb new entrants into the labor market, with many more new jobs needed to reduce unemployment;
- Job gains posted in both June and July were revised downward by a combined 74,000;
- 40 percent of the jobs created in August were in hospitality (bartenders, waitresses) and low-wage temporary services;
- For the 40th month in a row, more unemployed workers left the workforce discouraged (312,000) than found jobs; and,
- The labor force participation rate – working-age Americans either working or looking for work – fell to the lowest level since August of 1978.
As the Wall Street Journal pointed out:
Labor force participation essentially measures the share of the country that finds it rewarding enough to seek or get a job…Defying modern economic history, the rate has continued to decline during this expansion and has now reached levels last seen in the Carter Presidency. If the participation rate merely returned to what it was at the end of the recession, nearly four million more Americans would be collecting a paycheck. And if those who have stopped looking for work were counted as unemployed, the jobless rate would be closer to 10 percent.
Clearly, policymakers need new ideas and new policies to effectively combat an historic jobs emergency.
Here’s one – why not listen to the actual job creators about what they need to more effectively launch new businesses, expand those young firms, and create jobs, careers, and wealth for their fellow citizens? Recent research has demonstrated that virtually all net new job creation over the past three decades has come from new businesses less than one year old – true start-ups.
If the policy target is job creation, new business formation is the bull’s eye.
But, alarmingly, the vital signs of America’s job-creating entrepreneurial economy are flashing red alert. After remaining remarkably consistent for decades, the number of new businesses launched each year – and the average number of new jobs created by each new firm – have declined significantly in recent years.
In other words, new businesses are America’s engine of job creation, and in recent years that engine has been breaking down.
Given the ongoing jobs crisis, Courtney Geduldig and I wanted to know why. After considering a number of investigative alternatives, we decided the best way to find out what’s really going on was to get out of Washington, DC and ask American entrepreneurs face to face: “What’s in your way?”
In Where the Jobs Are, we recount the findings of a remarkable summer we spent traveling the country to meet and conduct roundtables with entrepreneurs in a dozen cities. More than 200 entrepreneurs participated – from a web-based software company in Seattle to an industrial construction firm in Orlando, from a developer of bioscience technologies in Boston to a distributor of glow-in-the-dark fluorescent fish in Austin – all explaining in specific and vividly personal terms the issues, frustrations, and obstacles that are undermining their efforts to launch new businesses, expand existing young firms, and create jobs.
In Where the Jobs Are, we:
- Explain how start-ups are different from existing businesses, large or small, and why they represent the engine of job creation;
- Reveal how policymakers’ failure to understand the unique nature and needs of start-ups has undermined efforts to stimulate economic growth and job creation following the Great Recession;
- Assess the critical obstacles to new business formation and job creation identified by America’s entrepreneurs, including a dangerously underperforming education system, self-defeating immigration policies that thwart the attraction and retention of the world’s best talent, access to capital difficulties, unprecedented regulatory burdens, debilitating tax complexity, and severe Washington-produced economic uncertainty; and, importantly,
- Present a detailed, innovative, and uniquely credible 30-point policy agenda based on what America’s job creators told us they urgently need.
Despite the downward trend in the rate of new business formation in recent years, and despite very challenging economic circumstances, entrepreneurs all across America – driven by a desire to create and build, and enabled by the development of new technologies – continue to launch new companies, build those businesses, and pursue their dreams of independence and wealth. Having witnessed such dynamism and commitment first hand, we are more optimistic about the future of the U.S. economy – and its job-creating capacity – than ever.
But for that tremendous potential to be fully unleashed, America’s entrepreneurs need help. Fortunately, our journey also provided a roadmap for success. The policy proposals presented over the course of our book amount to an altogether new, uniquely credible, and vitally important game plan for unleashing the job creating capacity of America’s entrepreneurial economy, and putting our beleaguered nation back to work.
Our sincere hope – not only for the nation’s entrepreneurs, but especially for the 24 million unemployed or underemployed Americans and their families – is that policymakers in Washington will hear the urgent message sent by job-creators, and give serious consideration to the policy proposals we have recommended in response.
The details of what we have proposed can and should be debated, and no doubt we have overlooked important issues or underestimated certain political realities. But given that our recommendations respond directly and specifically to what our participating entrepreneurs told us – indeed, a number of the recommendations were offered by the entrepreneurs themselves – there is little doubt that the policy ideas offered, if implemented, would dramatically enhance the circumstances for new business formation, survival, and growth and, therefore, significantly accelerate economic growth and job creation.