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Small businesses are not our economic backbone
Salon ^ | 7-19-2012 | Jared Berstein

Posted on 07/20/2012 7:20:04 AM PDT by Sir Napsalot

I like small businesses. I like medium-size and large ones too. I like ‘em all, and while size matters — small firms face different, and often more challenging, hurdles than large ones — I fear we risk systemic distortions if our policies are too dependent on firm size.

But aren’t small firms the job creators? As I’ve stressed before, not especially, despite the fact that you hear this mantra hourly from policymakers of both parties. Some new data on private sector employment by firm size from the Bureau of Labor Statistics is especially revealing.

...

The first figure, from the BLS link above, just shows the time series in jobs by firm size, with the three size classes in the new series as 1-49, 50-499 and 500+: so small, medium and large. Over the full period the average shares for each don’t change much: 29% of jobs are at small firms, 27% at medium, and 45% at large. There’s been a small shift — a few percentage points — from medium to large since 1990, but the small shares have been roughly constant at 28-29%.

So, the question is, do any of these size classes contribute disproportionately to job growth? In fact, they do, and the winner is… not small firms. Whether in business-cycle expansions or the full run of these data, large firms — 500+ employees — contribute disproportionately to job growth. The small firms — fewer than 50 workers — in fact, contribute proportionately less than their share.

That may surprise you if you’re used to hearing the opposite, which you hear a lot. There’s a reason for the different findings: establishments versus firms.

...

(Excerpt) Read more at salon.com ...


TOPICS: Business/Economy; Philosophy
KEYWORDS:
charts are not included here.

The full article is on Jared Berstein's blog On The Economy (2nd article as of today)

1 posted on 07/20/2012 7:20:10 AM PDT by Sir Napsalot
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To: Sir Napsalot

Er, and how did they get to be 500+ employee companies?


2 posted on 07/20/2012 7:22:44 AM PDT by ibytoohi (What the hell has happened to my country?)
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To: Sir Napsalot

Jared Bernstein is a freedom-hating Commie who hates capitalism and America. Of course he hates small businesses. They are the lifeblood of our economy and of capitalism and our nation.


3 posted on 07/20/2012 7:24:36 AM PDT by WashingtonSource
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To: Sir Napsalot

Jared Berstein is not someone I’ve ever heard of.


4 posted on 07/20/2012 7:25:53 AM PDT by Steely Tom (If the Constitution can be a living document, I guess a corporation can be a person.)
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To: Sir Napsalot
There's a valid point here; it's all in how you look at the numbers.

If I open up a restaurant with 6-8 employees, and call it the IzzyBurger, it's a small business.

If I open up a restaurant with 6-8 employees, and call it McDonald's, it's a large business.

5 posted on 07/20/2012 7:28:27 AM PDT by Izzy Dunne (Hello, I'm a TAGLINE virus. Please help me spread by copying me into YOUR tag line.)
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To: Sir Napsalot

How many of those 500+ firms were once 1 man, 10 man, 50 man firms?


6 posted on 07/20/2012 7:28:38 AM PDT by Raycpa
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To: Sir Napsalot

Apple computer
Microsfoft
Facebook


7 posted on 07/20/2012 7:30:29 AM PDT by Raycpa
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To: ibytoohi

Er, and how did they get to be 500+ employee companies?

You have to start big. All of a sudden you get 500+ employees from the start. You start with high market shares and expand./S


8 posted on 07/20/2012 7:31:40 AM PDT by mountainlion (I am voting for Sarah after getting screwed again by the DC Thugs.)
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To: Sir Napsalot

He is inventing a new catagory—medium. 55 % of all jobs are in companies with fewer than 500 employees. That has always been the standard for defining small business.


9 posted on 07/20/2012 7:35:30 AM PDT by csmusaret (I will give Obama credit for one thing- he is living proof that familiarity breeds contempt.)
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To: Sir Napsalot
Whether in business-cycle expansions or the full run of these data, large firms — 500+ employees — contribute disproportionately to job growth.

If that's true, then that shoots down the leftards' argument about why high-earners' taxes should be hiked.

10 posted on 07/20/2012 7:36:39 AM PDT by ScottinVA (Buying Drain-O requires photo I.D... yet voting doesn't???)
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To: mountainlion
You have to start big. All of a sudden you get 500+ employees from the start. You start with high market shares and expand./S

Yeah, like Solyndra. :)

11 posted on 07/20/2012 7:36:49 AM PDT by TruthShallSetYouFree (I didn't write this by myself. Obama helped me. Everyone helped me.)
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To: Sir Napsalot

Besides ignoring the lifetime cycle of small business creating jobs, he makes another mistake in attributing job creation to small business. Most small businesses contract out the support they need rather than hiring employees. They will seek payroll services, bookkeeping, legal, advertising, printing, etc from other businesses. Indirectly, each small business is adding staff to other businesses. when the business gets large enough it will hire full time accountants, lawyers, marketing people, human resource people etc because it becomes cost effective. The small business is still creating jobs outside its 4 walls.


12 posted on 07/20/2012 7:37:13 AM PDT by Raycpa
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To: ibytoohi

He is a small busness, a whore for Obozo.


13 posted on 07/20/2012 7:37:34 AM PDT by boomop1 (term limits will only save this country.)
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To: Sir Napsalot

While it is interesting, the article he wrote carrying water for Obama on the auto bailouts is pretty sad. The chart that he uses to make his point talks to all auto industry workers (about 2.4 million workers), yet he claims the bailout saved more than one million jobs. I think that claim is dubious at best, especially considering the vagueness of the chart’s data set. Based on that, I have a hard time believing the author isn’t at least intellectually dishonest.


14 posted on 07/20/2012 7:37:40 AM PDT by jurroppi1
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To: Sir Napsalot

Really?

Take away all those ‘small’ businesses and see how fast the economy collapses..

What a putz..


15 posted on 07/20/2012 7:37:40 AM PDT by Bigh4u2 (Denial is the first requirement to be a liberal)
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To: Izzy Dunne

Riiiiight.

The numbers and ‘definition’ games Berstein played, he can make any claim he wants.


16 posted on 07/20/2012 7:37:58 AM PDT by Sir Napsalot (Pravda + Useful Idiots = CCCP; JournOList + Useful Idiots = DopeyChangey!)
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To: WashingtonSource

I wonder if Jared is cognizent of the reason that small business stops at 49 employees? (Cue the Jeopardy music)

It’s because labor laws in this country all kick-in as soon as you hire that 50th employee. At that point a business needs a full-time personnel director to keep track of the flood of government paperwork & regulations.

This is a serious distortion of our economic marketplace.


17 posted on 07/20/2012 7:38:51 AM PDT by Tallguy (It's all 'Fun and Games' until somebody loses an eye!)
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To: Sir Napsalot

Behold the perversion of the self-acclaimed libtard economic “intellectual”, Jared Berstein. Typical anti-capitalist communist demonizing the capitalist system as a zero sum game... tell me economic “genius” Jared, how many companies strat out with 500+ employees, you ignorant $hit for brains moron?


18 posted on 07/20/2012 7:39:52 AM PDT by Common Sense 101 (Hey libs... If your theories fly in the face of reality, it's not reality that's wrong.)
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>> 1-49, 50-499 and 500+: so small, medium and large

Go pound sand, jackass. 1-100 is small business.


19 posted on 07/20/2012 7:41:46 AM PDT by Gene Eric (Demoralization is a weapon of the enemy. Don't get it, don't spread it!)
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To: WashingtonSource

These people are so dang conflicted. They hate the Walmart’s of the world because they drive mom & pop business out of business, but then enact or support those that enact policies that destroy small business. They really hate free enterprise, small or corporate.


20 posted on 07/20/2012 7:46:18 AM PDT by ican'tbelieveit (School is prison for children who have commited the crime of being born. (attr: St_Thomas_Aquinas))
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To: Sir Napsalot

Salon gibberish.


21 posted on 07/20/2012 7:47:09 AM PDT by FrankR (You are enslaved to the extent of charity that you receive!)
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To: Sir Napsalot

Fascists prefer few, very large corporations that are easily and willingly controllable over many small scattered and uncontrollable businesses.

The large businesses willingly cooperate because of the carrot (regulation that keeps out competition) and stick (we’ll punish you if you don’t cooperate).


22 posted on 07/20/2012 7:47:40 AM PDT by MrB (The difference between a Humanist and a Satanist - the latter knows whom he's working for)
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To: ibytoohi
Er, and how did they get to be 500+ employee companies?

i think this could be construed as an "economic hate message".

23 posted on 07/20/2012 7:49:09 AM PDT by InvisibleChurch ( if you love, you will not condemn, and if you condemn, you cannot love)
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To: Sir Napsalot
So the big-government/big-corporate criminal monopoly is the backbone of our economy?

Bull manure.

24 posted on 07/20/2012 7:51:21 AM PDT by E. Pluribus Unum (Government is the religion of the sociopath.)
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To: Sir Napsalot

These guys first three sentences all begin with the word I. The world revolves around the progresso.


25 posted on 07/20/2012 7:56:05 AM PDT by justa-hairyape
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To: ibytoohi
Er, and how did they get to be 500+ employee companies?

spun off from a mega Corp. Sheesh. /s

26 posted on 07/20/2012 7:57:41 AM PDT by the invisib1e hand
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To: Sir Napsalot
Nuts! to Bernstein. I am 77 and have realized since undergraduate school that what a sociology prof told us is true. She said the statistics can be massaged or selected to prove anything we wanted to.

SO TRUE!

vaudine

27 posted on 07/20/2012 8:00:25 AM PDT by vaudine
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To: Sir Napsalot

Hmmm, let’s see.....HEWLETT-PACKARD STARTED IN A GARAGE, SO DID APPLE. Microsoft once had 10 employees. Albertsons was once a grocery store run by two brothers.

Point is, every LARGE corporation STARTED OUT as a SMALL corporation, because somebody took a risk..........

Liberals don not understand this because they are, by definition, risk averse. They want to take all risk away in every sector of life. Nature doesn’t work that way, and neither does business...........


28 posted on 07/20/2012 8:02:24 AM PDT by Red Badger (Think logically. Act normally.................)
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To: Sir Napsalot

Easiest way to own a small business in today’s economy... buy a big one and wait.


29 posted on 07/20/2012 8:02:45 AM PDT by fatrat (extremely extreme right-wing radicalized veteran)
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To: vaudine

There is even a book on the subject explaining just how to do it. I have a copy from the 50's that is just as true today as when it was first printed. Very informative. You could even call it the Liar's Bible...........

30 posted on 07/20/2012 8:05:16 AM PDT by Red Badger (Think logically. Act normally.................)
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To: fatrat

Wanna buy some old GM stock?...........


31 posted on 07/20/2012 8:06:12 AM PDT by Red Badger (Think logically. Act normally.................)
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To: Sir Napsalot

What are those figures like if you eliminate the 1 person companies? If I own some apartment buildings and form a corporation (or even one corporation per building) to limit my legal liability, I am unlikely to hire a second person.


32 posted on 07/20/2012 8:06:15 AM PDT by KarlInOhio (You only have three billion heartbeats in a lifetime.How many does the government claim as its own?)
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If I ran a small business, I would pay close attention to how many employees I had. Certain employee levels can trigger some expensive compliance issues, and add on additional HR regulations.


33 posted on 07/20/2012 8:13:55 AM PDT by vollmond (I'm an issues voter. If you're a Democrat, I've got issues.)
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To: Sir Napsalot

It’s much easier to exercise political control over a few very large businesses than it is to control thousands and thousands of Mom’n’Pops.


34 posted on 07/20/2012 8:15:21 AM PDT by Paine in the Neck (Socialism consumes everything)
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To: Sir Napsalot

He just arbitrarily created a new “medium” classification to bleed numbers away from small businesses. Most have traditionally lumped what he calls “medium” in the “small” class and used two classifications: Large and small businesses.


35 posted on 07/20/2012 8:17:59 AM PDT by circlecity
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To: Sir Napsalot

The numbers and ‘definition’ games

That is the name of the game today. They changed the way fat and obesity are counted by lowering the threshhold. They have revised the way they count mentally challenged people and suddenly we have an epidemic. I hate when they do this and I hate it more than people buy into it...


36 posted on 07/20/2012 8:28:46 AM PDT by napscoordinator
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To: MrB

SO, Big Government / Big Business is Good

Small employers are unimportant

The same regulations are forced on both

Makes it near impossible anymore for the small guys to start a business, to grow it or to compete


37 posted on 07/20/2012 8:38:41 AM PDT by jcon40
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To: jcon40

I don’t like concentration of power, period, whether it’s in government or business.


38 posted on 07/20/2012 8:45:56 AM PDT by dfwgator (FUJR (not you, Jim))
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To: Sir Napsalot
The following is the best explanation I've found for why there is a discrepancy in business size vs. employment models:

http://www.stlouisfed.org/publications/re/articles/?id=2087

Using Business Employment Dynamics (BED) dataset from the Bureau of Labor Statistics, there is a table which demonstrates average gross and net job gains at all private business establishments from the third quarter of 1992 through the first quarter of 2010.5 Over this roughly 18-year period, gross job gains per quarter averaged a little less than 2.8 million, or about 929,000 per month. Since the 2007-2009 recession was extremely severe, the table includes a separate column that excludes the data from that period.

/*snip*/...businesses with fewer than 20 employees provided the largest percentage of gross job gains (about 30 percent). Businesses with between 20 and 99 employees accounted for the next largest share (about 27 percent), with the largest firms (500 or more) accounting for a somewhat smaller percentage (about 26 percent). The remaining category—businesses with between 100 and 499 employees—accounted for a smaller percentage of gross job gains. All of these percentages are little-changed if we exclude the recession period.

The analysis in the table seems consistent with the conventional wisdom that small businesses are the largest source of job creation in the economy. However, as suggested by previous studies, the conclusion tends to change when the focus switches to net job creation.

/*snip*/Finally, and perhaps most importantly, the BED data show that since 1992, net job creation tended to be largest among the largest firms: These firms accounted for about 38 percent of the total. The smallest firms showed the smallest percentage of net jobs created. This result does not change if the past recession is excluded from the sample.

In short, small businesses showed higher rates of gross job creation, but they also exhibited high rates of job destruction. Looked at from this standpoint, net job creation matters most. END OF ARTICLE QUOTATION

It all depends on how you want to interpret the data; and, of course, there is always the confusion of business size, especially when considering franchises. I think the real importance of small business is that it can be a vehicle for wealth creation (or destruction) and thereby has served as the incubator for America's upper middle class...therefore despised by the Regime.

39 posted on 07/20/2012 8:56:27 AM PDT by LoveUSA (God employs Man's strength; Satan exploits Man's weakness.)
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To: Sir Napsalot

Small businesses are not our economic backbone

Of course not! Everyone knows it's unemployment checks and food stamps - just ask Steny Hoyer!
40 posted on 07/20/2012 9:05:18 AM PDT by COBOL2Java (FUMR)
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To: Sir Napsalot

Then by his calculations your backbone isn’t really your backbone, since it accounts for a relatively small portion of your body.


41 posted on 07/20/2012 9:07:20 AM PDT by tacticalogic ("Oh, bother!" said Pooh, as he chambered his last round.)
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To: LoveUSA

Thanks, I’ll study it more in detail later.


42 posted on 07/20/2012 9:14:47 AM PDT by Sir Napsalot (Pravda + Useful Idiots = CCCP; JournOList + Useful Idiots = DopeyChangey!)
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To: Sir Napsalot
The only statistic you need to know is that there were more people working when Obama took office than are working now. (See Bold Below)

http://www.bls.gov/webapps/legacy/cesbtab1.htm

Data extracted on: July 20, 2012 (10:33:39 AM)

Employment, Hours, and Earnings from the Current Employment Statistics survey (National)


Series Id:     CES0000000001
Seasonally Adjusted
Super Sector:  Total nonfarm
Industry:      Total nonfarm
NAICS Code:    -
Data Type:     ALL EMPLOYEES, THOUSANDS

Download:
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
2002 130591 130445 130421 130337 130328 130375 130275 130264 130209 130330 130338 130175  
2003 130270 130111 129898 129849 129840 129840 129865 129820 129929 130126 130140 130259  
2004 130421 130465 130802 131051 131361 131442 131488 131610 131771 132119 132182 132316  
2005 132453 132693 132834 133194 133364 133607 133981 134174 134240 134320 134654 134814  
2006 135097 135413 135696 135877 135891 135967 136176 136359 136516 136507 136711 136882  
2007 137118 137211 137401 137473 137612 137687 137647 137629 137702 137781 137893 137982  
2008 138023 137939 137844 137636 137446 137248 137038 136764 136332 135843 135040 134379  
2009 133561 132837 132038 131346 130985 130503 130164 129933 129734 129532 129490 129319  
2010 129279 129244 129433 129672 130188 130021 129963 129912 129885 130105 130226 130346  
2011 130456 130676 130922 131173 131227 131311 131407 131492 131694 131806 131963 132186  
2012 132461 132720 132863 132931 133008(P) 133088(P)              
P : preliminary

43 posted on 07/20/2012 9:25:27 AM PDT by Anti-Bubba182
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To: circlecity

Small = <$50mm revenues
Medium = $50-100mm
Large = >$100mm

This article is bs.


44 posted on 07/20/2012 10:05:03 AM PDT by privatedrive
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