According to Charles Gascon, an economist at the St. Louis Federal Reserve, startups have a significant impact on job creation in the United States. While these new companies do create many jobs, they often do not last long. A majority of the jobs created from 2020 to 2021 are from startups or new businesses, but the net job creation for these companies is small and sometimes negative due to their high likelihood of closing down within five years.

Gascon notes that while many people assume most startups are tech companies, this is not entirely accurate. In reality, a large portion of startups are actually restaurants, small businesses, and professional service firms like law or accounting firms. The composition of startups reflects the broader industry composition of the United States, with exceptions in industries with high barriers to entry such as manufacturing or utilities production.

In addition to startups, businesses that have been around for at least 11 years also contributed significantly to job creation during the COVID-19 pandemic years. While there was positive net job creation from these businesses, it did not show up in the same way because many large firms laid off workers due to the pandemic and then started ramping up again.

According to the Federal Reserve Bank of St. Louis, startups account for about 2% of total employment in the U.S economy. Overall, while startups create a significant number of jobs, their high likelihood of closure within five years and low pay contribute to small net job creation that can sometimes be negative.

By Editor

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