Do small businesses really create the jobs the mantra would have us believe?I hear it in Canada and the USA. usually when new tax breaks are being announced. I always felt it was overblown, but then I am not qualified to say.
Today's Lakeland FL The Ledger told me what I had guessed, in discussing a 2009 study by John Haltiwanger,University of Maryland; Ron S Jarmin and Javier Miranda of the
U.S. Census Bureau.
http://www.theledger.com/...
"Politicians like to say that small companies create two of every three jobs in a given year. That's less impressive when you consider that almost all the 6 million companies in the U.S. — 99.9 percent of them — are small businesses, with fewer than 500 workers.
What's more, two-out-of-three masks the fact that most small businesses eliminate more jobs than they create in a given year, either through layoffs, closings or bankruptcy."
"Many small companies — outfits like florists, hardware stores and barbershops — tend to grow with the U.S. population, not faster. So they don't speed the economic recovery the way an exploding new industry might."
So much for the job creators, and tax cuts for the rich/ trickle down economics. Politicians love to spout this stuff, but I like a new recommenation in Ontario to end all business subsidies and start over with only the ones that demonstrably work. It also suggest they automatically expire in five years.
Here is a link to the full study.
http://gcoe.ier.hit-u.ac.jp/...
In what could be a pitch for better support for higher education, another economist says:
"Economist Charles Kenny of the New America Foundation, a nonpartisan research group, goes as far as suggesting that Washington should stop offering certain incentives to small business owners, such as loan guarantees and write-offs on taxes for home offices. He says the money would be better spent subsidizing research and development.
"If you want jobs, you have to focus on the innovative firms trying to provide something new and different," he says."