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Small business creating few jobs

A job seeker removes a resume from his briefcase as he meets with a recruiter during a HIREvent job fair at the Hotel Whitcomb on July 10, 2012 in San Francisco, Calif.

Jeff Horwich: When candidates are speaking at a mom & pop diner or a small manufacturing company, you will almost unfailingly hear this platitude: small businesses are the engines of growth in our economy. The conventional wisdom holds that these firms create the most jobs.

But here's Marketplace's Jeff Tyler with a little truth check.


Jeff Tyler: Does size matter? In the last few years, bigger companies created more jobs than smaller ones.

Ross DeVol is chief research officer at the Milken Institute.

Ross DeVol: We have seen larger firms account for disproportionate share of the increase in employment since the recession bottomed-out.

That’s unusual. DeVol says, historically, small businesses have created the majority of jobs. But ever since credit dried up during the recession, it’s been harder for little guys and start-ups to borrow money.

DeVol: Entrepreneurs have been really constrained in their ability to create jobs.

Others make a distinction based less on size. Robert Litan is vice president for research and policy at the Kauffman Foundation, which promotes entrepreneurship.

Robert Litan: It’s not small or big that matters. It’s young or old that matters.

He says new companies -- firms that have been around for less than five years -- account for the bulk of new jobs created in this country.

I’m Jeff Tyler for Marketplace.

About the author

Jeff Tyler is a reporter for Marketplace’s Los Angeles bureau, where he reports on issues related to immigration and Latin America.

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