UW study: Startups driving job growth, but policies favor big business

By Steven Elbow, The Capital Times

Meeper_CapTimesA couple of University of Wisconsin-Extension economics researchers have a message for the state: It’s the startups, stupid.

Tessa Conroy and Steven Deller recently completed a study showing that Wisconsin job growth is fueled by newer, smaller businesses. But the report says state policies tend to boost larger, more established businesses.

That might help explain why job growth in Wisconsin lags well behind the national average — 7.6 percent for the state versus 11.2 percent for the U.S. over the past five years.

“Given the importance of new startups to job creation, the relatively low ranking for Wisconsin helps us better understand why Wisconsin’s recovery from the Great Recession has been one of the slowest in the U.S.,” the authors write.

In discussions about job creation, talk often turns to types of industries. In Wisconsin, policymakers often blame dismal job numbers on slowdowns in the manufacturing sector or the decline of the paper industry. Conroy and Deller sought to change the focus of the discussion from the types of industry to the age and size of the business venture. Their findings showed that newer, smaller businesses rule. And without new startups, according to the study, Wisconsin would be “experiencing a significant job loss.”

In the study, Conroy and Deller found that nearly 50 percent of job creation in Wisconsin is done by businesses between 0 and 5 years old, about half of them from businesses less than a year old, and which have few employees. Read more …

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