High-Growth Entrepreneurs are America’s Solution to the ‘Jobless Recovery’
It seems our elected officials – on both sides of the aisle – are playing a game of chicken and we, average Americans, are caught in the middle. So, you say, “what’s new?”
Well, what’s new is that this particular game is especially pernicious, as no one seems to have the political courage or will to tell us the truth about the economy.
And in this case, what you don’t know will surely and severely disadvantage you.
I have little doubt that leaders on both sides know the truth, but they seem to be waiting to see who blinks first. It’s like they’re playing a game of who will be the first to tell the American people that high unemployment, as we currently define it, is a structural economic dilemma.
Okay, perhaps I’m a bit cynical, but I have to believe that our political leaders know what we face. They simply have to know. But they seem unwilling to tell us the hard truths about the kind of economy that will be our “new normal,” for the very real fear that if they blink first, then the other side will bludgeon them with ridiculous accusations like “you don’t believe in America” and “you’re betting against America,” blah . . . blah . . . blah.
Well, I unalterably believe in America. As I often say, no country incents and rewards the innovator like America. I believe in our ability to, as President Obama recently said, “out-compete any nation on earth.”
However, the truth of the matter is that forces beyond any of our control are conspiring to render our economic rebound a “jobless recovery.” Past economic recoveries were triggered by national productivity gains and increased productivity, which generally meant new hiring. That is no longer the case.
Jobless Recovery Challenge
Today’s “jobless recovery” is significantly the consequence of dramatically increasing productivity of American businesses, enabled by the adoption and integration of new technologies. This results in untold efficiency gains and production of ever more goods and services with far fewer workers.
The challenge: There exists a competitive imperative for technology adoption and integration throughout our economy. No doubt, businesses must increasingly adopt to remain globally competitive. However, fewer people producing more goods and services will inevitably lead to a lot of talented people without a job. What’s to become of these wonderfully talented Americans?
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Did you know? MIT entrepreneurs alone produce $2 trillion. That’s the equivalent of the world’s 11th largest economy. The U.S. GDP is $14 trillion. Black America produces $137 billion.
Did you know? From 1980 to 2005, nearly all net new jobs were produced by companies less than five years old.
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The solution: Many talented Americans will become high-growth entrepreneurs (HGEs). Despite their relatively small numbers, these entrepreneurs nonetheless account for a disproportionate share of job and wealth creation. For example:
▪ In any given year, the top-performing 1 percent of firms generates roughly 40 percent of new job creation.
▪ Fast-growing young firms, comprising less than 1 percent of all companies, generate roughly 10 percent of new jobs in any given year.
To succeed, HGEs require access to leadership/management talent, risk and growth capital, clusters of peer networks and a robust infrastructure of service providers and institutional/governmental support.
As a 21st century economic prosperity tool, America should embrace, incent and nurture HGEs. To be sure, high-growth entrepreneurship is an idea whose time has come.
- Johnathan Holifield, Trim Tabber