In the Jan. 27 Buffalo News, a letter writer expressed dismay over Trump supporters. She made many good points and I’d like to add some data to what she said. Some years ago, the Economist reported on a study of job creation in the United States between about 1984 to around 2012.
The analysis showed that around 98% of all jobs created in the United States between those years were created by new businesses. And about 40% of those new businesses were started by first- and second-generation immigrants.
The reason our economy is only growing at about 2% even though the government is throwing money at anything that moves, is because job growth does not come from established companies. Unnecessarily restricting immigration hurts job growth.
The article actually concentrated on three factors affecting job growth: immigration policy, public equity funding and the restrictions on start-ups.
We continue to force Ph.D., graduates who would like to turn their thesis into a business to leave. We have restricted public funding making start-ups rely on private funding. New businesses have a very high failure rate, over 80%, so private funding logically is held for those that appear to be the safest investments.
The article quoted start-ups near the beginning of the study, and it said over 700 new companies were started in one year. In the years following only about 150 new companies were created.
So, our job growth has been slow for some time. Remember they are talking about new jobs, not companies bringing back laid-off workers.
If we want good job growth, we need to seriously do a couple of things. Make it easier to start a business. Be more intelligent in whom we offer a path to citizenship. And provide public funding. The 43North business plan competition is a perfect example of what can happen. Unfortunately, it only funds the ideas deemed best and illustrates how hard it is to get adequate funding today.