Newspaper article THE JOURNAL RECORD

Small Employer Businesses Responsible for Most Growth

Newspaper article THE JOURNAL RECORD

Small Employer Businesses Responsible for Most Growth

Article excerpt

From 1990-95, small employer firms (those with fewer than 500 employees) accounted for 90.1 percent of net new establishments, and 76.5 percent of net new jobs, according to a study by the U.S. Small Business Administration's Office of Advocacy.

During this same time period, according to the report, Small Business Growth by Major Industry, 1988-95, the service sector alone was responsible for 58.9 percent of net new establishments and 84.8 percent of net new jobs.

The report, based on data collected by the Census Bureau, takes a look at the continuing cycle of business creation, growth and death that is vital to the U.S. economy.

In releasing the report, SBA Chief Counsel for Advocacy Jere W. Glover noted it "shows clearly the role played by small firms in the 1988-95 time period as they were created, as they died off, or as they grew into large firms. This so-called `churning' is at the heart of the cycle of change that is continually reallocating the nation's financial, human, and material resources. Small business, it should come as no surprise, is at the vital center of this process."

Other findings of the report include:

* Within the services sector, the business services and health services industries seemed to be among the most active -- they represented 49 percent of service-sector employment in 1990, but accounted for 63.8 percent of the net new jobs in the services sector from 1990-95.

* Of U.S. employment, 13.3 percent in 1995 was in firms that did not exist before 1990, while 12.6 percent in 1990 was in firms that had ceased to exist by 1995.

* From 1990-95, the difference between jobs generated by firm births and those lost to firm deaths accounted for 21.8 percent of net new jobs. Expansions less contractions of continuing firms accounted for 78.2 percent of these net new jobs. Small firms accounted for 67. …

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