Health & Fitness
Entrepreneurs Create Jobs, Not the Wealthy
According to the Kauffman Foundation, entrepreneurs create 100% of new jobs in our country, so why do politicians keep giving credit for job creation to the wealthy?
Driving home today I was listening to the radio and yet another discussion of the politics of the debt ceiling and financial challenges facing our country. On more than one occasion I heard the comment “wealthy people create jobs” as an argument to against increasing taxes on the wealthiest Americans.
The tax policy debate aside, the statement is just wrong. Entrepreneurs create jobs, not the wealthy. There is a good argument that demand creates jobs, but demand requires an entrepreneur to realize the opportunity. It is not to say that wealthy people cannot create jobs, in fact many do build companies and create many jobs. But the vast majority of companies, entrepreneurs and ultimately job creators in the country are not wealthy.
Only a very small fraction of companies raise money from investors, angel investors or venture capital firms. According the Venture Capital Association, VCs invested in 1,001 new companies in 2010, which is about 1/2% of the new businesses launched each year. And according to research from the Kaufman Foundation, 100% of net new jobs were created by start-up companies less than five years old. 100%! So the argument that that wealthy people, directly or indirectly, create jobs is true only if you ignore the facts, the research by Kauffman, reports from the Congressional Budget Office, etc…
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It is good old American entrepreneurs - tapping into their savings, borrowing money from friends and family, taking out a second mortgage - that are creating the vast majority of jobs in the United States. I am not sure a tax cut ever created a job or a tax increase prevented one from happening, but I do know that the more we can change our policies to support innovation and entrepreneurs, the more jobs, wealth, growth and opportunity we will have in this region and across the country. Go entrepreneurs!