When Job-Creation Engines Stop at Just One


Coverage Type: reporting

For more than a decade, start-ups have been getting leaner and meaner. In 1999, the typical new business had 7.7 employees; its counterpart in 2011 had 4.7, according to an analysis of Labor Department data by E. J. Reedy at the Kauffman Foundation, a research organization focused on entrepreneurship.

The lean model bodes well for companies like Leap2 that hope to become power players with much less manpower. With a work force of contractors, Leap2 could “dial it up and dial it down” as business demanded without having to spend money unless it was necessary, improving the company’s chances of survival. But the implications for the American work force are worrisome, and may help explain why economic output is growing much faster than employers are adding jobs.

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