1. Net job growth is driven by new businesses. Existing establishments tend to shed jobs. But according to the Labor Department’s new Business Employment Dynamics report, “the trend has clearly shifted. In 12Q3 opening establishments added 1.27 million jobs. In the last cycle this figure averaged closer to 1.5 million jobs per quarter, and in the 1990s the figure averaged 1.75 million per quarter.” Down, down, down.2. Feroli notes that employment “births” — a subset of openings not including reopenings of seasonal businesses — are also weak. Employment births in 12Q3 as a percent of all employment held at 0.7% in 12Q3 for the fourteenth consecutive quarter. In contrast, this figure stood between 1.1% and 1.3% during the 1990s.
Surf on over to the AEI page for some striking graphs and for Pethokoukis’ own speculations as to what might be going on.One of America’s greatest strengths has always been its entrepreneurial culture and the willingness of its citizens to take risks on new ideas and new businesses. That culture isn’t gone, but this data sure does suggest that it is at least in trouble. Hopefully this is only a side-effect of the recession and not the sign of anything permanent. If it lingers on as a trend, however, we’ll have to do some serious thinking about what we can do to reverse it.[Store closing sign courtesy of Shutterstock]