ABSTRACT
Few ideas about the US economy reap greater homage in public discourse than the belief that small businesses are the fountainhead of job creation. Higher rates of job creation and destruction mean larger numbers of workers compelled to shuffle between jobs and, most likely, a greater incidence of unemployment. The job creation rate averages 16.5 percent of employment per year for firms with fewer than 20 employees, 9.3 percent for firms with 500-999 employees, and 6.3 percent for firms with 50,000 or more employees. Many claims about the job-creating prowess of small business appear to be based upon changes over time in the size distribution of employment. Public discourse about job creation rarely distinguishes between the small business share of gross job creation and its "share" of net job creation. In practice, determining how policy changes affect job numbers and quality poses considerable challenge.
