GOOD NEWS FROM SMALL BIZIts new jobs pay well
As employers, small companies are often portrayed as a mixed blessing: Sure, they hire a lot of workers, but most of their jobs don't pay well. David Birch, the former Massachusetts Institute of Technology economist who popularized the notion of small business as a job machine, begs to differ.
Establishments with 99 or fewer employees account for about half the jobs in America, says Birch, president of Cognetics Inc. in Cambridge, Mass. But among the 11.2 million net new jobs created from 1992 to 1996, these smaller outfits tallied 9.3 million, or 83.6%. And small companies were even better represented at the top of the pay scale. In that period, high-wage companies--those paying an average of $29,191 or more--created 4.9 million jobs. Of those, 4.2 million, or 87%, were in small companies. Low-wage employers, paying on average less than $18,732, created only 2.9 million jobs, of which 79% were at small companies.
Birch found that startups are major job creators: Some 75% of the net new small-business jobs were created in new establishments, vs. only 25% created in businesses that existed before 1992. Supersize businesses--those with 5,000 or more employees at one site--lost 2.1 million jobs.
By MIKE MCNAMEE
Updated Aug. 21, 1997 by bwwebmaster
Copyright 1997, Bloomberg L.P.