Economists have long suspected that the industrial planning mentality is a dead end. That hasn’t stopped Vice President Joe Biden from campaigning about keeping General Motors alive. In fact, the GM bailout was a triumph of special-interest economics that did nothing to help Michigan’s entrepreneurs. Did the White House’s focus on saving old companies come at the expense of startups?
Just last month, the Commerce Department released new data that allowed me to update my research on startup jobs through 2011. What I found is a U.S. startup scene even more troubled in 2011 than it was when the great recession ended in 2009. There were 170,000 fewer startup firms in 2010 than in 2009. As for the steady 3 million annual startup jobs created in previous years, that number fell to 2.5 million in 2009, then 2.3 million in 2010, and even lower in 2011 based on quarterly data.
Annually, there were 11 new entrepreneurial employees for each 1000 Americans from 1988 to 2008. This startup jobs rate for the three previous presidents was 11.3, 11.2, and 10.8, respectively, which. The rate has fallen by a third to 7.8 during the Obama presidency. Some might blame this drop on the recession, but the rate declined further in 2010 and lower still in 2011, supposedly years of recovery.