New Business Incorporations Grow Even As Jobs Return-Why?

New business incorporations and LLC formations are continuing at a record pace, even as the jobs market seems to be recovering, so what’s going on? Well, even though hundreds of thousands of jobs are being added back into the economy each month, they simply aren’t the kind of jobs we had before the Great Recession. Studies are showing that the new jobs pay less and are offering fewer hours. Here is a sampling of what I mean:

• High wage industries took a beating during the recession, with job loss rates of around 40%, but in the new job market they only account for 14% of the jobs gained. Lower wage industries fared somewhat better during the recession, accounting for only 23% of the jobs lost, however, 49% of the jobs created over the last year are in these same industries. For you and me, that means when we look for a job it is far more likely we will find openings in retails stores than in traditional corporate arenas.
• In addition to pay per hour changes, more of these open positions are part time instead of full time when compared to pre recession. A new Gallup poll shows that almost 20% of part time employees really want a full time job, but seem to have settled for less while they continue to look.

As we review the numbers of unemployed vs. employed Americans over the next few months (the traditional way to measure a return to normalcy following a recession) it may be worth digging deeper to see what the quality of those jobs is. Are people finding similar employment opportunities and pay to what they lost when the economy went south? So far, the numbers look grim and this is driving record numbers towards self employment and entrepreneurial opportunities, leaving new business incorporation and LLC formation starts at a 15 year high.

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