JTF JobCreationJTF
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string(4561) "SMALL BUSINESSES A ND JOB CREATION MARCH 2008 ? ? FEDERAL AND STATE POLICIES TRY TO ASSIST SMALL BUSINESS DEVELOPMENT AND GROWTH. Paralleling1federal1efforts,1California?s1Department1of1General1Services1offers1a1number1of1 advantages1?1most1importantly1bidding1preferences1?1to1small1and1micro1businesses.11Many1state1 agencies1also1employ1a1small1business1advocate1to1help1resolve1contracting1issues1with1the1state.11 Such1policy1efforts1presume1that1small1businesses1are1an1important1source1of1employment1growth.11 In1addition1to1these1explicit1attempts1to1help1small1businesses,1proposed1business1taxes1and1 regulations1in1California1are1frequently1discussed1in1terms1of1their1likely1effects1on1small1businesses.1 ? ? ? C? ALIFORNIA?S SMALL BUSINESSES CREATE JOBS AT A FASTER RATE THAN LARGE BUSINESSES The1gross1rate1of1job1creation1?1the1absolute1number1of1jobs1generated1due1to1business1births,1 expansions,1and1migration1into1the1state,1as1a1share1of1employment1?1is1generally1higher1at1 businesses1that1employ1fewer1workers.11Between119921and12004,1the1annual1gross1rate1of1job1creation1 was1141percent1at1establishments1with10,191employees,1compared1to17.51percent1at1establishments1 with11,0001to12,4991employees1and13.71percent1at1establishments1with15,0001or1more1employees.11 ? ? ? 119921 1 sses1with10,191employees1was11.41percent,1falling1 to10.41percent1for1those1with1100,2491employees.1 ? ? 1 with1250,4991 employees1and1?2.11percent1among1businesses1with15,0001or1more1employees.11 ? ? 1 b1 1 t1decline1(?1.91percent)1 occurring1among1establishments1with15,0001or1more1employees.11111 ? BUT THEY ALSO SHED JOBS AT A FASTER RATE. Between119921and12004,1California?s1annual1gross1rate1of1job1destruction1(jobs1lost1due1to1business1 contraction,1closure,1or1out,migration)1was112.61percent1at1establishments1with10,191employees1but1 only15.71percent1at1establishments1with15,0001or1more1employees.11However,1outside1the1smallest1size1 categories,1the1relationship1between1gross1job1destruction1rates1and1establishment1size1is1less1clear,1 with1rates1rising1and1then1falling1again1among1businesses1of1various1size1(see1figure).11 THE NET JOB CREATION RATE HAS BEEN HIGHEST AMONG SMALLER BUSINESSES? Net1job1growth1is1the1difference1between1gross1job1creation1and1gross1job1destruction.11Between and12004,1the1net1job1creation1rate1was1highest1at1the1smallest1establishments,1implying1that1 ultimately,1smaller1establishments1contribute1more1than1larger1ones1to1employment1growth.11In1this time1period,1the1annual1net1job1growth1for1busine ? WHILE IT HAS BEEN NEGATIVE AT LARGER BUSINESSES. On1average,1between119921and12004,1business1establishments1with1more1than12501employees1lost jobs1?1with1a1negative1net1job1creation1rate1of1?0.41percent1among1establishments1 SIZE-GROWTH RELATIONSHIPS DIFFER ACROSS INDUSTRY SECTORS. In1manufacturing,1businesses1in1all1size1categories1lost1jobs1in1the11992,20041period,1with1smaller manufacturing1establishments1contracting1at1about1the1same1rate1as1the1largest1manufacturing1 establishments.11In1the1services1sector,1however,1small1businesses1played1an1important1role1in1jo growth.11The1smallest1business1establishments1in1the1services1sector1gained1jobs1at1a1rate1of11.8 percent,1while1larger1service1establishments1lost1jobs,1with1the1sharpes www.ppic.org Job Creation and Destruction, 1992-2004 -3 -1 1 3 5 7 9 11 13 15 0-19 20-49 50-99 100-249 250-499 500-999 1,000-2,499 2,500-4,999 5,000+ Employment size category Rate (%) Gross job creation Gross job destruction Net job creation Net Job Creation by Industry Sector, 1992-2004 Source: David Neumark, Brandon Wall, and Junfu Zhang, ?Do Small Businesses Create More Jobs? New Evidence from the National Establishment Time Series,? NBER Working Paper No. 13818, Cambridge, Massachusetts, 2008. -8 -6 -4 -2 0 2 4 0-19 20-49 50-99 100-249 250-499 500-999 1,000-2,499 2,500-4,999 5,000+ Employment size category Rate (%) Overall Manufacturing Services Note: Rates of job creation and destruction from year t to year t+1 are computed relative to average employment in the two years. www.ppic.org"
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