Entrepreneurship was once the backbone of the U.S. economy, but another sign its role in the economy is diminishing comes from the Labor Department, which showed job gains from startups are at the lowest level in the past 20 years.
According to a report by The Wall Street Journal, job gains from opening new businesses declined 1 percent in the first quarter, marking the lowest level since 1992 when the Labor Department started collecting data. During the 1990s, the rate stood between 1.6 percent and 2 percent. Since 2009, when a recovery in the U.S. economy began, job gains have stayed around 1.1 percent and 1.3 percent.
The slowing rate is worrying economists that fear it signals the economy is becoming less competitive, with big companies controlling more market share than they did in the past. There’s also concerns it could hurt productivity in the country since startups are typically innovators and are at the forefront of technology advancements. Often, their technology prowess leads to productivity gains across the economy. WSJ also pointed to data from the Business Employment Dynamics report, which was released Wednesday (Nov. 8). It showed the number of establishments that have just started declined by 26,000 to 220,000 in the first quarter of this year. The number of jobs from new businesses dropped by 161,000 sequentially to 734,000. It marks the lowest level since 2011, reported WSJ.