Chairwoman Bono Mack, Ranking Member Butterfield, and members of thissubcommittee, thank you for the opportunity to present testimony of behalf of my organization,the Competitive Enterprise Institute, in this hearing asking the important question of “where the jobs are.”
Another way of asking this question is, “where are new jobs most likely to be created.” In my testimony, I will focus not on particular locations or industries, but rather on characteristics of the firms for the past few decades have been most responsible for job creation. Scholars affiliated with the Ewing Marion Kauffman Foundation in Kansas City, Mo., an institution that has won widespread acclaim for the research it produces on entrepreneurship and its role ineconomic growth, have a convincing answer to this question, an answer that has been embraced by many in public policy including President Obama’s Council on Jobs and Competitiveness.
On net, where the jobs “are” or have been created, is at firms of all sizes from zero to five years old. As noted by the Obama Jobs Council report (available at http://files.jobs-council.com/jobscouncil/files/2011/10/JobsCouncil_InterimReport_Oct11.pdf), “over the last three decades, young firms less than five years old have created 40 million new jobs,”accounting for “all net new jobs” during that period. Especially important among these companies are innovative high-growth firms referred to as “gazelles” that are found to doubleboth their revenues and employment every few years and are found in every sector and region.
Unfortunately, a series of adverse financial regulations, many of which were enacted and promulgated in the supposed “deregulatory” era of the last decade, have stunted these firms growth by making it much more difficult for them to access to capital through means such as launching an initial public offering. As the Obama Jobs Council notes, “Well-intentioned regulations aimed at protecting the public from the misrepresentations of a small number of large companies have unintentionally placed significant burdens on the large number of smaller companies.”