Where Have All the New Jobs Gone?

Part of the answer may lie in sputtering start-up stats . . .

I’ve been in Washington, DC, the last couple of days representing NAWBO at a health care summit hosted by the National Women’s Business Council. Leaders from women’s business groups met with policy experts, medical professionals, insurance providers, and representatives from the Obama administration to share insights on current challenges and policies surrounding health care reform.

During one period of open dialog, the immediate past chair of NAWBO referenced a recent Wall Street Journal article that reported on the downslide in start-up numbers during the current recession and its implications for job growth.

If you missed the article, here are some of the highlights:

  • Between 1993 and 2008, businesses 90 days or less old accounted for 14 percent of new hires.
  • Business starts fell 14 percent from the third quarter of 2007 to the third quarter of 2008.
  • The number of businesses launched in third quarter 2008 was the fewest since 1995.
  • When startup activity picked up in fourth quarter 2008, it created the fewest number of jobs since 1993.

The article offered several reasons for the downturn, including many that we’ve heard about over and over again during the last year: lack of access to bank funding, decreased venture capital activity, an increased risk aversion, inability to tap into home equity, etc.

All of these certainly play a role. But there’s another that’s not getting much attention from the media, although I’m hearing it from other sources: no access to affordable health insurance.

I told the group at the summit that health care used to be a competitive issue for small businesses; it was largely an employee attraction and retention problem. But now it’s actually become a barrier to business ownership. Some would-be entrepreneurs are choosing to stay in their corporate jobs, even under the threat of layoffs, because they can’t afford to buy health insurance for themselves or potential employees if they were to strike out on their own. In the face of tight credit markets and the other challenges of today’s economy, some folks just can’t carry the added risk that comes with no health insurance coverage and are stifling their entrepreneurial ambitions and, by extension, the creation of any new jobs their companies may have created.

So, I guess in a way, health care is still an “attraction” problem for small businesses. It’s just expanded. Now, it’s become a problem of attracting entrepreneurs, not just good employees.

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About Smart Companies Thinking Bigger®

Kelly Scanlon is the owner and publisher of Thinking Bigger Business Media. She recently finished a term on the national board of directors of the National Association of Women Business Owners, and was the national chair from 2010-2011. An advocate for small business owners, Kelly sits on numerous boards and committees to advocate on behalf of small business owners. She has won several awards for her advocacy. Among them are the 2011 United Nations NGO Positive Peace Award on behalf of Kansas City area small business owners, the U.S. Small Business Administration's Region VII Women's Business Champion of the Year in 2009, and the Women in Business Advocate of the Year from the State of Kansas in 2006. In 2002, she won the SBA's Region VII Small Business Journalist of the Year Award (Missouri, Iowa, Nebraska, Kansas). Whatever your business stage—aspiring, startup, established, mature—Thinking Bigger Business Media has the resources you need to grow to the next level. We are a resource organization dedicated to providing the strategic, "how-to" information small business owners need to become more productive and more profitable. We also provide information that helps owners connect with resources within the business community that can help them grow. We deliver that information through a variety of media products and other channels easily accessible to business owners.
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