Small Businesses, Start-ups and Hiring in America

With jobs being difficult to come by these days, The Washington Post wrote an article about job creation in America; they asked which type of business actually created the most jobs in our current marketplace. The argument is that usually start-ups, small businesses, and large corporations create jobs in the private sector and that each provides a certain percent of employment yearly.

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To what extent do small businesses and start-ups impact job creation?

Examining strictly small businesses first, the article reveals that the claim small businesses are the “backbone” of America derives from the statistic that small businesses employ about half of the private sector’s workforce while also creating an enormous amount of the country’s jobs during the last decade. It’s safe to say small businesses equal job creation, but how small or large does a company need to be in order to qualify as a small business?

The Washington Post points out that the discrepancy between perspectives on small business sizes leads to issues figuring out how many jobs small businesses are creating in reality. If some Americans consider a small business to be 30 employees while others see a small business as 200 employees, then a company with 30 workers will create less jobs than a company that employs 200.

This is true if the small business with 30 employees caps their growth. Existing small businesses can still add to job creation as long as they continue hiring and pursuing an expanded business model. Start-ups, on the other hand, have high hiring rates, but their employees typically earn lower salaries than established businesses.

In Washington, lobbyists for small businesses seek tax cuts on the premise that smaller companies will hire more if they can afford to. Therefore, small businesses need to pay lower taxes in order to promote job creation. The Post discusses the argument on whether policy-makers should focus on small companies trying to grow into large job creating corporations for these tax cuts?

It seems that start-ups and small businesses do have the potential to be America’s backbone as long as they do not cap their growth and remain small. As long as they continue hiring and aspire to be big businesses in the long run, Americans will have more opportunities to compete for jobs.