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Start-ups Create Jobs

Start-ups Create Jobs

Start-ups and younger companies created 42 percent of the new jobs in New Mexico last year.

BY DENNIS DOMRZALSKI

Everybody from politicians to radio talk show hosts like to talk about jobs and how most every community needs more of them. But ask them where those jobs actually come from, meaning, which kinds of companies create them, and you’ll likely get a blank stare.

But now, thanks to the U.S. Bureau of Labor Statistics, information is available about how many jobs large and small, and young and old companies create. And it’ll probably surprise some people.

Nationally, start-up firms, or those less than one year old, created 1.7 million jobs, or 60 percent of total employment growth, in the year that ended March 31, 2015, the BLS said. Firms 10 years or older created 800,000 jobs, or 29 percent of the net new employment for the year.

And older companies close down at a faster rate than younger ones do. In 2015, 788,000 establishments closed. Of those, 55 percent were from firms 10 years or older; 16 percent were from firms five to nine years old; and 28 percent were from firms less than four years old.

New Mexico Stats

While net job growth by company age and size is difficult to calculate for New Mexico, one thing that’s certain is that start-ups and younger companies created 42 percent of the new jobs in the state last year. Firms less than a year old accounted for 17,973, or 25 percent of those jobs, while firms one to four years old created 12,562 jobs, or 17.5 percent.

Companies 10 years or older created 31,842, or 44.3 percent of the state’s new jobs.

Established companies, or those five to nine years old, created 13.2 percent of the state’s new jobs.

A Constant Churn

Another thing people don’t realize about economies is that they’re in constant flux, with new companies opening and older ones shrinking or shutting down. That means jobs are constantly being created and lost.

In New Mexico in 2015, 71,846 jobs were created by new or expanding companies. But 60,386 jobs were lost through company contractions and closings.

Pretty Even

As of March 2015, the U.S. had 115.6 million private sector jobs. Of those, 54.5 million were from companies that were more than 22 years old. And 3 million of all those jobs were from companies that were less than a year old.

 

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Dennis Domrzalski is managing editor of ABQ Free Press. Reach him at dennis@freeabq.com.

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