DC: The engine of job growth, the engine of job loss

Posted on: August 18th, 2010 by The American Independent No Comments

The Wall Street Journal takes a look at a new Bureau of Labor Statistics analysis of what kind of businesses are gaining and shedding jobs. As is often true, small businesses are both the biggest creators of new jobs and the biggest destroyers of existing positions. Small businesses are managing to create some new jobs right now, but poor demand, constrained access to credit and many other issues mean they are lagging in recovery in comparison with large businesses — currently enjoying record-high profits.

Businesses with fewer than 50 employees accounted for 61.8 percent of all job cuts in the private sector in the fourth quarter, the Labor Department reported Wednesday, while the same sized businesses created 54.1 percent of new jobs. Companies of this size employ roughly 29 percent of all workers. The numbers are a reverse from the same time a year ago, when small businesses made up a larger share of jobs that were added as opposed to lost. Small firms made up half of all jobs lost at the end of 2008 but also comprised 53.9 percent of all job gains. …

Taken together, firms of all sizes cut a net of 200,000 jobs in the fourth quarter—as they added 6.6 million jobs, while shedding 6.8 million. That represents progress from a year earlier period, when firms shed a net 1.8 million jobs. Companies with 50 to 249 workers made 17.8 percent of all job cuts in the fourth quarter, and nearly the same percent of job gains, while mid-size companies with 250 to 999 employees added 9.9 percent of new jobs and accounted for 10 percent of job losses.

For a lot of small businesses, the ability to avoid layoffs and to expand depends on access to credit. For that reason, President Barack Obama is urging the Senate to take up a stalled small business bill when they return from recess on Sept. 14.

(Photo: FreeFoto.com/Ian Britton)

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