How Small Businesses Affect the U.S Job Market

  • July 25, 2019
  • By Aidan Dwyer

Small Businesses account for more than 95% of companies in the U.S. In fact, more than 99.7% of businesses employ less than 500 people. It makes sense that small businesses are responsible for the majority of job creation. This mindset has fueled policy making on both sides of the political spectrum. Both Republicans and Democrats agree that job creation in the small business sector is one of the keys to sustainable economic growth.

Small Businesses Or New Businesses?

The U.S Small Business Administration, the government agency that aids in the growth of small businesses throughout the country, constantly puts out reports on the state of small businesses in the U.S. In a recent study they found that the small business sector was responsible for 64% of new jobs created over the past 30 years. Some found this surprising, given the percentage of businesses that are considered small. The Small Business Administration found that it is not necessarily the size of the business that correlates to job creation, but rather the age of the business. New businesses, meaning businesses that are under a year old, are responsible for the creation of 1.5 million jobs annually.

This could lead to a change in policy.  Policy makers are moving away from the standard mindset that small businesses mean new jobs.  The new mindset is that new businesses mean new jobs. In the future, we may see a change from job creation to business creation oriented policies. This could mean more funding towards innovation and expansion as well as policies to deter U.S Firms from outsourcing jobs and processes. Unfortunately, we have to think about the fact that new business don’t always last. A majority of startup businesses fail within 5 years which does not necessarily affect the job creation number but does affect how sustainable jobs are in the market.

How Small Business Owners Can Help Sustain the Economy

Due to the vast majority of businesses in the United States being small businesses, they still account for an extremely large amount of jobs created in the United States. The best way for small businesses to help the U.S economy grow is to hire. In turn, hiring will also help your small business growth. Whether it be an increase in production or a reduced workload on other employees. You will see your business flourish. Maybe your business doesn’t have the budget to hire someone. Still, you believe that hiring could benefit you in the long run. There are financing options to help you make hiring employees realistic. Here at REIL Capital, we have many business financing programs that can help make hiring easier. If you want to see what kind of financing you qualify for, fill out our commitment free application today. 

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