Top-performing companies are the most fertile source of new jobs... so ignore the rest?
This study confirms my comments in Start-Ups Are A Waste of Time and Money
In any given year, the top-performing 1 percent of firms generate roughly 40 percent of all new jobs.
- so-called "gazelle" firms (ages three to five) comprise less than 1 percent of all companies, yet generate roughly 10 percent of new jobs in any given year.
- The "average" firm in the top 1 percent contributes 88 jobs per year, and most end up with between 20 and 249 employees.
- The average firm in the economy as a whole, on the other hand, adds two or three net new jobs each year.
"Because fast-growing young firms account for a disproportionate share of net job creation, policymakers who are worriedly poring over unemployment projections might instead seek to foster the creation of more high-growth firms," said Robert E. Litan, vice president of Research and Policy at the Kauffman Foundation. "While some new companies will undoubtedly fail, high-growth firms must be started somehow, and the more quickly they are launched and in larger numbers, the faster both output and employment will grow."
See High-Growth Firms Account for Disproportionate Share of Job Creation, According to Kauffman Foundation Study