Kauffman Foundation-Funded U.S. Census Bureau Data Highlight Importance of Business Startups to Job Creation in the

KANSAS CITY, MO, Jan 14 (MARKET WIRE) --
In the midst of record unemployment, a new Kauffman Foundation-funded
U.S. Census Bureau study reports that startup companies are a major
contributor to job creation. The Business Dynamic Statistics (BDS) also
indicate that while business startups decline slightly in most of the
cyclical downturns, startups remain robust even in the most severe
recession over the sample period (in the early 1980s).

"Job growth is essential for our economy to rebound, and this study shows
that new firms have historically been an important source of new jobs in
the United States," said Robert E. Litan, vice president of Research and
Policy at the Kauffman Foundation, which funded the BDS. "Our research
into the early years of business formation consistently shows how vital
new firms are to our economy, and this data should give policymakers and
budding entrepreneurs alike great hope for how we can solve our current
crisis -- create and grow jobs through entrepreneurship."

The BDS data show that employment accounted for by U.S. private-sector
business startups over the 1980-2005 period was about 3 percent per year.
While still a small fraction of overall employment, these jobs from
startups reflect new jobs, which is a large percentage compared to the
average annual net employment growth of the U.S. private sector for the
same period (about 1.8 percent). This pattern implies that, if you exclude
the jobs from new firms, the U.S. net employment growth rate is negative
on average.

Micro firms (firms with one to four employees) accounted for a large
percentage of new jobs in any given year -- about 20 percent on average.
Although substantially larger startup firms (those with 250 to 499
employees) created a considerably smaller percentage of jobs in any given
year -- about 1.3 percent of employment in this firm-size class -- their
numbers still are substantial relative to net growth.

Although the overall business startup rate in the BDS does not exhibit
much of a trend, the data do reveal a declining trend in the micro-firm
business startup rate. This may reflect compositional changes in sectors
such as retail trade, where there is ample evidence of substantial shifts
away from small, single-establishment firms to large, national firms.

This report is the first of three study briefs to be released that
highlight BDS data; the next reports will be released in January and
February 2009. BDS includes measures of business startups, establishment
openings and closings, and establishment expansions and contractions in
both the number of establishments and the number of jobs. The BDS data
provide these new statistics on an annual basis for 1977-2005, with
classifications for the total U.S. private sector by broad industrial
sector, firm size, firm age and state. Further information about the BDS
can be found at http://www.ces.census.gov/index.php/bds/bds_home.

About the Kauffman Foundation

The Ewing Marion Kauffman Foundation is a private nonpartisan foundation
that works to harness the power of entrepreneurship and innovation to grow
economies and improve human welfare. Through its research and other
initiatives, the Kauffman Foundation aims to open young people's eyes to
the possibility of entrepreneurship, promote entrepreneurship education,
raise awareness of entrepreneurship-friendly policies, and find
alternative pathways for the commercialization of new knowledge and
technologies. It also works to prepare students to be innovators,
entrepreneurs and skilled workers in the 21st century economy through
initiatives designed to improve learning in math, engineering, science and
technology. Founded by late entrepreneur and philanthropist Ewing Marion
Kauffman, the Foundation is based in Kansas City, Mo. and has
approximately $2 billion in assets.

Contact:

Rossana Weitekamp
516-792-1462
Email Contact

Barbara Pruitt
816-932-1288
Email Contact
Kauffman Foundation

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