Business Incorporations and Start-Ups Surge…and Boost Hiring

The difficult economy has certainly changed the way Americans view jobs. Those who have them are hanging onto them dearly and those who don’t are turning away from traditional corporate jobs in favor of starting their own businesses. New start-ups and business incorporations are reported at a 15 year high which is boosting hiring in some studies, but the results may depend on what group you talk to.

Here are some fast facts:

• Last year, 565,000 start-ups were created each month
• Business incorporation numbers have risen steadily since 2006
• Immigrants, particularly Latinos, are twice as likely to start a business as someone who is American born
• High School dropouts are among the most likely to start their own business
• Construction businesses consistently rank at or near the top for new start-ups

So what does this mean? “It certainly appears that the recession and its resulting high unemployment are driving the majority of this trend” said Scott Weddle, Manager of an online business filing firm. “Our customers are largely driven out of necessity. They simply can’t find employment in many cases.” Businesses started out of desperation don’t typically drive hiring growth. Instead, these new business owners tend to stay self-employed and hire few, if any, employees.

Small business as a whole, however, is continuing to improve. This sector of the economy lost around 2.7 million jobs since last March, but has added around 100,000 in each of the last three months. While I wouldn’t call that a recovery, I would be willing to call it a start.

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