Economist Robert Litan of the Kauffman Foundation likes to recall that half of today’s Fortune 500 companies began as start-ups in a recession or a bear stock market. And why not? During a recession, it’s cheaper to hire new workers, rent office space, buy supplies. But Litan suspects the same process may not be working now. In contrast to earlier slumps, when the number of start-ups barely fell, there’s been a steep decline. From 2006 to 2009, start-ups dropped 27 percent.
That’s one cause of weak job creation, which depends heavily on start-ups. “It’s not encouraging,” says Litan. “It looks like more risk aversion.”
Read Full Article »
