Startups lead job growth
Contrary to popular belief, small businesses aren”™t the ones creating the most jobs in Connecticut ”” startups are.
Even at the height of the recession in 2009 ”” when companies in lower Fairfield County saw 88,000 jobs vanish ”” startups were the only source of growth in the labor force, adding 8,000 new jobs, according to the U.S. Census.
“What really creates jobs are the new firms, regardless of size,” said Daniel W. Kennedy, a senior economist at the Connecticut Department of Labor. “It could be a spinoff from an older company or someone going into business for themselves. But it”™s the new firms that create jobs, rather than mature firms.”
Every month the Labor Department releases how many net jobs were created, but the U.S. Census just recently released its 2011 Business Dynamics Statistics to give a more complete picture of how many jobs were created and destroyed by firm age and size.
In Bridgeport, Norwalk and Stamford, the job creation rate surpassed the destruction rate in 2011, which falsely promised a strong recovery right out of the gate.
Job cuts at older and larger firms were being sustained, while the largest gains in employment came from startups that year. Roughly 4,000 of the 6,800 net jobs created in lower Fairfield County came from startups with only one to nine employees.
As more recent data sets show, however, the recovery after 2011 was slower than expected. The state”™s net job creation rate hardly improved in 2012, adding only 17,000 jobs. Yet a preliminary analysis of the first half of 2013 looks much stronger, Kennedy said, though he hasn”™t finished reckoning the data.
“We”™re much stronger than we were last year over the same time period,” Kennedy said. “What we seem to have is a recovery with fits and starts.”
Fairfield County also appears to be leading the state”™s growth this year, he added.
During a recession, startup rates usually increase as people find themselves out of work, said Joseph McGee, public policy vice president at the Business Council of Fairfield County. But new firms took a harder hit immediately after the financial collapse, as access to capital was shut off, McGee said; if financing had been easier to attain, the unemployment numbers might have looked better.
Taking a hint from New York City, where both startup and job recovery rates are higher, Fairfield County has started to emphasize the role of startups as a part of its economic strategy, McGee said. Since 2011, innovation centers have opened in both Stamford and Danbury, and at Fairfield University.
“You really want to build into your economy more entrepreneurial risk taking,” McGee said, mentioning efforts to aid technology based ventures and business collaborations with universities. “That”™s what we”™re after ”” a place where ideas turn into companies.”