Who Creates the Jobs?

My former colleagues at Southern Growth Policies Board noted in their Southern Compass newsletter today, the release of a new Kauffman Foundation report on job creation and young businesses. The report is called "Where Will the Jobs Come From?" and is available as download on the Kauffman Foundation website.

The Foundation and others have reported over the years on the importance of smaller firms in the job creation mix. The new report focuses on firm age rather than firm size. According to the study, "...an analysis of the 2007 Census data shows that young firms (defined as one to five years old) still account for roughly two-thirds of job creation, averaging nearly four new jobs per firm per year. Of the overall 12 million new jobs added in 2007, young firms were responsible for the creation of nearly 8 million of those jobs." Add this to the previous finding that from 1980-2005, "...nearly all net job creation in the United States occurred in firms less than five years old." That's quite a case for a focus on entrepreneurship.

In releasing the report, Kauffman President and CEO Carl Schramm said, "If the U.S. economy is going to have a sustained recovery, it will be up to entrepreneurs to lead the way." Similarly, if Central Louisiana is to have a bright economic future, it will be up to entrepreneurs to lead the way.

That's why Cenla Advantage Partnership focuses on entrepreneurship in the Cenla economy. The Entrepreneurial League System (funded by The Rapides Foundation) that we manage is the gold standard for entrepreneurial support initiatives and is the centerpiece of our entrepreneurial development system. During the past year, we have been working to build the remainder of the system around the ELS effort.

With our partners, we have held two entrepreneurial resource fairs. We have taught classes for entrepreneurs ranging from Entrepreneurship 101 to Quickbooks for beginners. And we will be expanding those efforts substantially in the coming year. With support from the Small Business Development Center, the Manufacturing Extension Partnership, LSU-A and others, we hope to create a range of education and training opportunities that will help reshape lifelong learning in the region.

We've had substantial victories on the capital access front in recent months, with Accion locating here and the Red River Valley BIDCO expanding its service area into Cenla. There's been a notable uptick in small business lending in Cenla banks as well.

So much of economic development focuses on recruiting the next big deal, so it's important to remember the findings of the Kauffman report: the next big deal is all those new, potentially rapidly growing businesses that are all too easily ignored.