Last week’s Department of Labor report showed a drop in the unemployment rate from 9.1% to 9.0% but the fewest number of jobs – 80,000 – added in four months.
The issue of job creation remains the primary focus of policy makers nationwide, but more and more discussion is centering around where exactly are the jobs coming from?
Recently, Minnesota Secretary of State Mark Ritchie addressed a joint audience of the Twin Cities North Chamber of Commerce and the American Association of Microbusinesses (the latter of which yours truly serves as President) and discussed the statistics coming out of his office as to the increase in business filings over the past several years. Secretary Ritchie also stated that 90% of the jobs created today are coming from 0-10 employee businesses. A recent StarTribune story referenced that same figure.
What the statistics show is not necessarily a depressed employment market, but rather a paradigm shift from medium to large size companies with hundreds of employees to outsourced independent contractors networking together to accomplish a project or series of projects.
I’ve seen the same trend play out for the last 3-4 years while overseeing my firm’s INCuabtion Center program for new and emerging businesses. Among my clients are numerous individuals who have voluntarily or involuntarily left the employment of another and have made the conscious choice to be their own boss, and many of them have experienced tremendous success.
This paradigm shift does not mean that we have no issues which must be resolved; to the contrary, an economy founded on small businesses requires a discussion about how our tax and regulatory structure affects them in comparison to larger business. For example, Minnesota overhauled its environmental permitting process earlier this year with the expressed intent to simplify and accelerate the process for proposed projects. Minnesota also made headlines with a change in a law which prevented breweries from selling pints of their product onsite, a law change pushed by Surly Brewing, one of the state’s many craft breweries.
Nobody likes uncertainty, and any paradigm shift creates some; still, having a proper understanding of the trends will only help foster constructive debate on what needs to be done to get our economy moving again.