No Growth in business

From the U.S. Federatl Reserve in Atlanta (ht MR)

The piece starts by noting that business start ups have been way down in the Great Recession.  Since I personally know of a number of start ups that were only started because people lost their "employment" job and started a small business doing what they were already doing, the number of start ups may be inflated even at that low number.  If you layoff a construction project manager, and he cannot find work, eventually he is going to start a small construction firm and start bidding on work for himself.  Why not?  He knows the subs and one-hundred percent of construction work is sub-contracted out today even on a hard bid construction project.

A disturbing trend: No growth in total business establishments in U.S.

The Quarterly Census of Employment and Wages (QCEW) data...showed that the number of business establishments with payrolls in the United States has remained stuck at around 9 million since late 2007. By comparison, in the early 1990s there were about 6.5 million establishments, a number that rose to close to 8 million in 2000 before peaking at 9 million 2007.

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The net creation of business establishments—that is, physical locations for conducting business such as manufacturing plants, retail stores and business offices—has in the past been a key ingredient in job growth in the United States. This growth is driven partly by demand from newly created businesses and by mature firms expanding their footprint by opening additional locations. The demand for physical space is also clearly important to the commercial real estate industry, which has been burdened by elevated vacancy rates in many markets and generally low demand for new space.

Another trend from the QCEW data is striking—the number of employees per establishment is much lower than it used to be. The average size of U.S. establishments was relatively stable during the 1990s, at around 16.5 employees per physical location. The 2001 recession was associated with a decline in the average size to about 16 workers per establishment, and the average size continued to track lower during the last decade, moving down to about 15 employees per establishment in 2007. The latest reading for the second quarter of 2010 was 14.3 workers per establishment, up from 14 workers in the first quarter.