Study Says Small Businesses Hurt Economy

Conventional wisdom says small businesses are the backbone of the economy, but a new study counters that mom-and-pop businesses are an economic cancer instead.

Newsweek reports the National Bureau of Economic Research found in a study that businesses with fewer than 500 employees that have been around for more than a decade stifle job growth, reducing salaries and shedding jobs between 1992 and 2005. Nearly all the growth came from startups that grew into giant firms.

It makes sense. Small businesses generally stay small because they don’t make enough money to grow larger, while the Googles and Facebooks of the world come along to change the paradigm and create competitive, high-paying careers.

The Capital Gets a Lesson In Job Growth [Newsweek]


Edit Your Comment

  1. ThinkerTDM says:

    Anything cited by Newsweek has to be a credible source, right? Anyways, my take is that, sure, small businesses can’t pay the big bucks that a giant multinational corporation can, but which actually has more people putting money back into the system- a giant corporation that has one employee to do job x, or 50 (one in each state) people doing job x at a small business.

    • sleze69 says:

      +1 on the Newsweek comment. Figures Phil is posting this.

    • TuxthePenguin says:

      There is that upside of small businesses over a large business (more people employed) but then you also have the problem that if fifty businesses have fifty accountants employed, rather than the large corporation with ten (you couldn’t have just one doing it), those fifty companies are spending a greater portion of their revenues on accounting with no appreciable benefit (to the company). In fact, it might be for poorer work from the accountants since you’re not likely to find a CPA working for a small business.

      There are trade offs… even though I own a small business (CPA firm), I’ve never totally believed the idea that small businesses are this miracle thing that people should aspire to. There is a certain thing to be said about specialization – I’ve set myself up as a one-stop shop – I’ll take care of your financial and tax accounting, as well as a bit of consulting. And I can usually do it for cheaper than what it’d take to hire someone to do it in-house…

      • ThinkerTDM says:

        It’s really what you are trying to measure. “Economy” means different things to different people. I do agree with you that small business aren’t the end-all that many people have cracked it up to be. You really need a system where there are many small businesses at the bottom and a few large ones at the top. Having only large businesses is bad; having only small ones are bad, too.

    • Gramin says:

      The NBER is a damn credible source. Hate on Newsweek if you want, but the NBER is a very reputable organization.

    • rushevents says:

      Yeah – I’m calling BS on that so-called study

    • BytheSea says:

      It’s a self-fulfilling prophecy. The study is condemning less than 500-employee sized businesses for losing a lot of jobs in the past five years, ie for not surviving the recession as well as big businesses.

  2. psyonn says:

    Paid for by big business…….so we should definately just keep letting them do whatever they want.

  3. OMAC says:

    What an idiotic statement. Small business does not hurt the economy. It is a part of the economy. There is a clear difference. What small businesses do is hurt the bottom line of LARGE COMPANIES. It does not stifle job growth. Not all small businesses will grow into huge massive corporations.

    Not every company has a Walmart or McDonalds in their backyard. Sometimes the communities keep them out, sometimes the communities are not worth the time to build there because the population density is too low. In these cases smaller businesses fill the gap. Not everyone likes to eat at Burger King. I personally prefer local restaurants over the mega-chains.

    Small business only hurts the larger corporations.

    • OMAC says:

      Bah, meant to say ‘Not every community has a Walmart or McDonalds…’

    • jessjj347 says:


      Also, how does corporations avoiding taxes help the economy? Maybe they should try paying for some of the infrastructure they use.

    • TouchMyMonkey says:

      It’s a corollary to the idea floated last year about locally-grown produce using more energy than that which was trucked across the country. Absolute balderdash.

      There are many reasons small businesses have for staying small. One of which being a certain quality of product or service that would be lost if the business was allowed to grow without restraint. Sometimes the product or service being produced is of a nature that places a practical limit on the size of the firms producing it.

    • evnmorlo says:

      Small business is almost by definition inefficient, which obviously is damaging to the economy.

    • Leksi Wit says:


      The The Washington Post Company with revenues of over $4.5 Billion owns, so of course they’re not going to say the reverse how big business is bad for the economy. Is any legit business bad for the economy? By definition, business is what runs the economy and keeps it going.

  4. apd09 says:

    I did not read the article yet, but will say this, job growth in big businesses is slowed because of the need to produce high revenue for the executives and share holders, where as a small business is not hiring because they do not have enough revenue to pay for another employee.

    There is a big difference there.

    On a related note, Retail sales rose 0.4% on the month, and consumer spending up was about 2% over the last quarter.

    • RandomHookup says:

      Hiring may also be stifled because of capacity issues. If you run a pizza shop and you produce the maximum number of pizzas that your facilities allow, hiring more employees won’t increase revenue (at least enough to cover the costs of the new employee).

      • balthisar says:

        Big businesses have the same concerns, and yes, it’s about maximizing shareholder value. It’s called “productivity” and isn’t some plot to not hire people. Just like the little pizza place that only needs x people to run the store, VW only needs y people to build a car.

    • john says:

      Retail sales will be back down in September. Back to school is what drove most of the miniscule increase in sales.

    • 99 1/2 Days says:

      Small businesses are too worried about what the government will do to them next to hire anyone. They don’t have the lobbyists to mitigate meddling. The tax hike on the rich is one of these things that small businesses have to deal with.

  5. parkj238 says:

    Dumb. Small businesses are required just for the reason that corporations cannot employ most everyone. Small businesses also guarantee that jobs stay local.

    • TouchMyMonkey says:

      To explain it so that even the densest teabagger can understand:

      Mom and Pop business does good.
      Gigantacorp buys Mom and Pop business; Mom and Pop go to Miami to retire.
      Employees of Mom and Pop’s former business are all fired as everything gets packed up and shipped to China.

  6. sir_eccles says:

    Most big businesses started off as small businesses.

    • RandomHookup says:

      Not sure there is any other way, unless you count combining two already large businesses as making a new business.

      • sir_eccles says:

        True, I’ve been trying to think of an example since I wrote that comment. I guess there may be some heavy industry where it just isn’t feasible to run a steel rolling mill without a big number of people.

        In the end though it is just a truism that people often forget.

        • Gramin says:

          Agreed… but I think you missed the article. The NBER supports those small businesses that grow into larger ones. What they do not support are those small mature businesses that aren’t growing and are instead lowering salaries and shedding employees.

  7. Loias supports harsher punishments against corporations says:

    I’m sorry, but 200 mom-and-pops stores with 10 employees each, versus One Mega-conglomerate with 200 locations with 10 employees each… where exactly is the loss of employment?

    • drizzt380 says:

      Well, if you’ve got 200 locations you’ve got to factor in all the ancillary jobs. The regional managers, the assistants to the regional managers, in many cases probably a higher need for dedicated IT professionals, accountants, lawyers, etc. etc.

      Of course, 200 mom and pop shops each having needs for services from some of these groups (IT, lawyers, accountants) might lessen the difference. But, as an example, what 10 employee mom and pop shop is going to have the needs of a web designer? Or someone to produce financial statements for stock holders? Now, a single corporation with 200 locations most likely has stock holders and would benefit from a well designed website.

      The very fact that corporations have these sort of bloated needs would make more jobs.

      Of course, I’m just playing devil advocate here. I haven’t actually done a study on it. I’m probably making quite a few assumptions.

      Also, newsweek doesn’t link to the actual study. What I saw was “In 2005, for example, small businesses lost about a million jobs, even as the overall economy expanded by about 2.5 million. Startups accounted for nearly all the growth.” That doesn’t necessarily say to me that small companies hurt the economy. It says to me that small companies are a dieing breed. I like to see the figure on how many of those 2.5 million jobs were created by pushing smaller companies out of business or buying them out. It also says startups accounted for nearly all growth. Don’t most startups start small then become corporate if they do well? How many of these lost jobs refer to a startup changing over from a smaller business to a larger business? Probably not all but at least a few.

      It also says “On average, between 1992 and 2005, they destroyed more salaries than they created.” What exactly does that mean? How do you destroy a salary? Does that mean pay cuts? Does that refer to the loss of jobs to big business or specifically to removal of salaries among people who remained in small business? Or does it mean some sort of change over to hourly work? I don’t know. I find it ambiguous and lacking in facts. If only they actually showed me the study.

    • pb5000 says:

      Economies of scale, typically a larger business can get certain things done more efficiently because of their larger network of resources. Therefore it would be more like 200 mom and pops with 10 employees each and 200 mega corp locations with 6 employees each and doing more total output than the 200 mom and pops combined.

      • drizzt380 says:

        Well, economies of scale generally benefit from purchasing, financing, marketing, technology, etc. etc. Many of these things are based around manufacturing. I think unfortunately, we aren’t so much a manufacturing country anymore. More of a service economy. A properly trained tax preparer can probably prepare as many returns when working for a corporation as working for a smaller business.

        I really think the diseconomies of scale probably apply in many situation. The bloating by becoming bigger that I mentioned.

    • Bunnies Attack! says:

      Because a big corporation can do the same job with 150 employees.

      Although front end employees for a large corp. might be the same as 20 mom and pop stores, 20 mom and pop stores will hire 20 different accountants to do their books, shop at 20 different office supply companies, hire 20 different architectural/engineering consultants to expand etc. Corporations are more “efficient” because all of that admin is taken care of at the head office and they have large contracts with other large companies for support and supplies which makes it cheaper.

      Basically, small businesses feed each other and big corporations feed each other.

      • drizzt380 says:

        Why would 20 mom and pop stores higher 20 accountants to do their books. I would argue that a small mom and pop store (10 employees), probably cannot afford to hire a full time accountant.

        More likely, the 1 accountant is a business owner of his own and handles several different clients.

        • Bunnies Attack! says:

          Well, I didn’t feel like saying 10-20 accounts for each one, the point was clearer with “20”. If you’re talking about 20 different geographical locations, its not unbelievable that they’ll have 20 different accountants. I agree, most accountants will have multiple clients but you’re still likely supporting 20 different accountants with the 20 different stores rather than say, 1 corporate accountant doing it all.

          • drizzt380 says:

            Yes, but the way you state it makes it sound like small businesses use up 20 times as many resources to perform the same actions.

            The big difference is that small businesses do not hire accountants as employees. They pay them to do whatever amount of accounting work they need. Big businesses hire accountants as employees

            Saying that 20 small businesses pay for a full 20 accountants, while a big business only has to pay for a single accountant. Thats like saying the people on my street pay enough money to sustain 40 ISPs but the big office building only sustains 1 ISP so its way more efficient.

            • thisistobehelpful says:

              It was just an example of how a big company will combine redundant positions into one where several small companies that equal the big company in revenue will hire several people in the same field to get the job done.

  8. goodpete says:

    NEWS FLASH: Children are a sap on GDP!

    In a related story, it has been reported that children are a huge sap on GDP. Their rampent consumption of national resources with little actual return in economic value has effectively reduced the GDP by 20%.

    Researchers explain that these “small people” generally don’t have jobs and are fed, housed, and educated at the expense of the adult population. When asked for comment on potential solutions to this economic cancer, the researchers suggested people simply stop having children.

    Okay, sarcasm aside, how exactly do we determine which small businesses are worth keeping around? Some small businesses might remain “small” for years (or decades) before turning into the big businesses that drive (and occasionally bring to the point of collapse) our economy.

    Next story, please.

    • goodpete says:

      Also, as for the statement “It makes sense. Small businesses generally stay small because they don’t make enough money to grow large,” — that is a conclusion with very little foundation. What about small businesses that stay small simply because that’s what the owners/employees want? Maybe they don’t want to be big businesses?

      It’s a fact of pre-bailout capitalism: businesses that don’t make enough money fail.

      So a business that’s still a business should generally be considered to be a “successful” business, even if it doesn’t grow to be a huge business.

    • Thassodar says:

      I’m all for having less kids. I somehow manage with my -4 kids just fine.

  9. mythago says:

    I guess it would have been too much trouble to link to an abstract of the study, instead of Newsweek’s second-hand interpretation? On the other hand a lot of people are commenting without having read the article, so I guess it cancels out.

    Surprise, Newsweek’s take is not quite what the abstract said.

    • Grungo says:

      Nice work posting the abstract. “Our main finding is that once we control for firm age there is no systematic relationship between firm size and growth.” That definitely sounds different than the attention grabbing Newsweek headline.

      • goodpete says:

        Without reading the whole article, it’s hard to confirm this, but I think that the Consumerist is right on this one (even if the headline is misleading).

        It’s not “small businesses” that hurt the economy. It is (as Phil writes) “businesses with fewer than 500 employees that have been around for more than a decade”.

        The abstract says “when controlling for age.” However, if you don’t control for age, and instead introduce it as a variable in the system, than it’s possible they found that “old and small businesses” hurt growth. Which would seem to imply there’s a point of diminishing returns on small businesses. Essentially, if a business doesn’t grow or fail within a certain time period, it tends to sap growth.

        Of course, that’s all just the statistical trend. And big businesses are (almost by definition) outliers (since there are so few of them compared to small businesses). So it would be interesting to hear some more about the transition from small to large business, when that generally happens, and how likely it is to happen as time goes on.

        • mythago says:

          It’d especially be nice if Consumerist flexed its awesome investigative powers more than once in a blue moon, you know, such as tracking down the original source (which took me all of 30 seconds) instead of merely parroting everything said second-hand in elsewhere.

      • Rectilinear Propagation says:

        After reading the abstract I can’t figure out how Newsweek came to a different conclusion.

  10. Loias supports harsher punishments against corporations says:

    Small business lost jobs because corporations took them from them.

    This is like saying small business hurt the economy and prove it by showing how Walmart put them out of business. “See, small businesses hurt the economy because they lost jobs….. to Walmart.”

  11. mommiest says:

    Even if a small business isn’t growing sufficiently to hire new employees, the owners of the business can earn much more than they would by shutting the business down and going to work for a large company. Small businesses can provide personal wealth to many more people.

  12. Zydia says:

    Q: Why did God create economists?

    A: In order to make weather forecasters look good.

  13. KillerBee says:

    Perhaps if it were easier and there was more incentive for those small businesses to grow. Many of them stay small intentionally because of the immense rise in expenditures, taxes, and other requirements that kick in when they reach a certain size.

    • RandomHookup says:

      Capital (and to an extent, talent) constraints enter in to limit growth. To get bigger as a pizza place, for example, you either need to expand your hours (difficult after a certain point), add a location, expand (or relocate) your current operation, pump money into advertising and/or promotion or make some other capital improvement (bigger ovens, better computer/phone systems). Taxes shouldn’t be a huge constraint because those rise with income (and taxes rates go up on a marginal basis), not expenditure (usually) — though businesses can find themselves cash poor if they have invested their current cash/reserves into improvements which have to be depreciated over years.

  14. stormbird says:

    Wow. You can see why the Newsweak company was bought for a whole dollar by the spouse of a Democrat congresscritter. The same magazine whose editor stated that Obama was ‘sort of God.’ The same magazine that had a cover saying ‘We are all socialists now’. The same magazine that reported the military flushed a Koran down a toilet (didn’t happen) and people died in the resulting riots.

    Of course larger corporations can do many things more efficiently than a small business. It’s called ‘economy of scale’ and it’s why Wal-Mart works. What small businesses do, though, is give normal people a chance to get small-town rich. I grew up with a kid whose dad started off as a roofer, started his own crew, worked hard and did well. Several members of my family support themselves with a small business. Microsoft and Apple were small businesses 35 years ago; I hear the owners did okay.

    Large corporations, however, can afford to give money to political campaigns so that laws are written to favor them at the expense of their competitors. The housing bubble happened in part because people went from Fannie/Freddie to the government and back again, writing laws and then getting paid tens of millions of dollars for having written the laws. Large corporations can afford to pay the staff necessary to comply with regulations that will kill smaller companies. The 1099 tax ‘reform’ under Obamacare will theoretically raise 17 billion in revenue while demanding every company of over 25 employees track every purchase to see if $600.01 or more was spend in a year; don’t track whether the gas station is owned by which franchise and you can pay thousands in fines or go to jail.

    The government that can’t balance their budget, that didn’t even bother to make a budget this year, that can’t estimate next week’s jobless claims within 50,000 people is an expert on economics.

    • Jerim says:

      You are right, the owners of small businesses can do quite well, for themselves. It is there employees who suffer. I have worked for small mom and pop companies, but I thankfully moved on to large corporations.

      Small businesses are there to take care of the owner and their family. Profits are not invested in better salaries and healthcare. They are invested in getting the owner a brand new truck or the wife a trip to the Bahamas. The owner isn’t really looking to grow the business so that his employees can prosper and move on to better positions. The owner is just simply trying to provide income to support their way of life. Owner’s are not usually interested in growing. Why grow, when you have good income supporting your comfortable lifestyle? It doesn’t really matter to most employer’s if there employees are provided with a good way of life.

      Large corporations pay really good and excellent benefits. There are many people at the top of the organization and while they may look out for one another, you don’t have one singular person sucking up all the money for their needs. They have more concerns than just making sure the owner is provided for. Until I went to work for a large corporation I was never even offered 401k, health insurance, etc.

      In fact, I worked at a small company once, with many long time employees who had been there since the business opened. The owner sold the company for millions of dollars, and after making a $2 million donation to the local university, he gave absolutely nothing to his employees. Small businesses are small because they are run by greedy, self-serving individuals.

  15. jimmyhl says:

    Assuming this is true (accurate, reliable, whatever), there is a compensating factor. When a small business goes under for whatever reason, it usually doesn’t take an entire industry sector or geographical area down with it.

  16. u1itn0w2day says:

    OMG Small business equals that ever dreaded competition. OMG

    That if you are not working for one big monolithic organization you are not under a corporate executives control. And that’s a bruised ego and a threat to job security. OMG

  17. fatediesel says:

    “Small businesses generally stay small because they don’t make enough money to grow larger.”

    I disagree with this statement. Some companies choose to stay smaller. My company has stayed around 50 employees for a long time. The company is very profitable and could grow, but we’ve decided we are comfortable with our size and don’t see a need to get larger and deal with the headaches that come with larger companies, and thanks to this decision my company didn’t have to lay off any of our employees when the economy worsened, whereas some competitors laid off 50-75% of their employees.

    • Gramin says:

      That’s what happens when Phil pretends he’s an economist. Perhaps he should let the experts make the assumptions and hypothesis and he can stick to writing fiction.

  18. DarrenO says:

    More leftist / socialist crap. Newsweek is nothing more than a mouthpiece for the left. If you’re not a union business they are against you because you’re not contributing to the ponzi scheme that union pensions are. Insanity.

    • VanessaNYC says:

      Huh?? In your mind the Left are for big business and against small business? I think you’ve got it backwards.

    • u1itn0w2day says:

      It does sorta sound like someone is trying to push the idea/concept that everyone should be part of bigger business and/or big bureaucratic structure. But it also sounds like they’re trying to push everyone into a big business in which a FEW have control and that’s not union or true conservative either.

      I’ll admit unions love big bureaucratic structures because that’s a lot of people to represent and union dues for themselves. And the left would prefer you are part some hiearchy ie socialism were everything is based on your status with-in that structure.

      But I don’t think the left or unions are pushing this. Its BIG business. The current big business corporate mentality is have an expense free business as you can-‘ darn those pesky things like safety & benefits’. And competition can drive up cost as far as they’re concerned because now they have to do research and developement and market which needs more employees and salaries.

      Small business might not be the magic cure for this economy but big business had it’s chance as far as I am conerned. Decades of outsourcing and globalization/intermeshing of finance destroyed this economy.

  19. Rocket says:

    I usually try to shop at small mom-and-pop stores before I go to the big retailers. For video games for example, I go to a locally owned video game store before GameStop. Support small businesses!

  20. costanza007 says:

    Right, because businesses that are “too big to fail” are in no way a drain on the economy.

  21. quijote says:

    I can’t find a link to the study. I think you have to subscribe to the “bureau’s” digest. Till then, I can’t really comment, except to say that it sounds like some Ayn Rand bullshit.

  22. balthisar says:

    Economically speaking, yes, it could be feasible. Unfortunately there’s no specific mention of the economy in the article, nor any link to the study. Mentioning a trailing economic indicator (employment) instead of a leading indicator is disingenuous. I’d go so far as to suggest that they’re trolling.

  23. Extended-Warranty says:

    Nowadays, small business often means having a company with 1-10 people shipping out items over Amazon dirt cheap and avoiding sales taxes. Big companies offer lots of room for advancement such as human resources, accounting, managerial positions, director positions, etc. These small online businesses have one person running it and collecting all of the money. They drive down prices which used to create margins and actual jobs.

  24. midtower says:
  25. Hodo says:

    Boy is that misleading. It’s not just small businesses that don’t create jobs, it’s large businesses too. The only group of businesses that REALLY create jobs are start ups.

    The Kauffman Foundation has done extensive research on job creation. Kauffman Senior Fellow Tim Kane analyzed a new data set from the U.S. government, called Business Dynamics Statistics, which provides details about the age and employment of businesses started in the U.S. since 1977. What this showed was that startups aren’t just an important contributor to job growth: they’re the only thing. Without startups, there would be no net job growth in the U.S. economy. From 1977 to 2005, existing companies were net job destroyers, losing 1 million net jobs per year. In contrast, new businesses in their first year added an average of 3 million jobs annually. Vivek Wadhwa is an entrepreneur turned academic. He is a visiting scholar at the School of Information at UC Berkeley, a senior research associate at Harvard Law School, and director of research at the Center for Entrepreneurship and Research Commercialization at Duke University.

    “When analyzed by company age, the data are even more startling. Gross job
    creation at startups averaged more than 3 million jobs per year during 1992–2005, four
    times as high as any other yearly age group. Existing firms in all year groups have gross
    job losses that are larger than gross job gains. “Half of the startups go out of business within five years; but overall they are still the ones that lead the charge in employment creation. Kauffman Foundation analyzed the average employment of all firms as they age from year zero (birth) to year five. When a given cohort of startups reaches age five, its employment level is 80 percent of what it was when it began. In 2000, for example, startups created 3,099,639 jobs. By 2005, the surviving firms had a total employment of 2,412,410, or about 78 percent of the number of jobs that existed when these firms were born. So we can’t count on the Intels or Microsofts to create employment: we need the entrepreneurs.

  26. Consumeristing says:

    Didn’t Newsweek just become ‘small business’ now that it chased away every single one of its freethinking readers? Newsweak is hurtin Amerricuh.

  27. dolemite says:

    Makes sense to me. I work at a place with around 300 employees. The company grows, and profits grow, but as time goes on, they look for ways to cut benefits and pay.

    Basically, most floor people make minimum wage, or slightly above it, even if they have been here 10 years. All benefits have been cut in the past 2 years. Health insurance runs about $900 a month for a family of 3, because the company contributes the bare minimum to the plan, and the employee contributes about 80% (needless to say, almost no one can afford to have insurance here).

  28. wonderkitty now has two dogs says:

    I have worked for a small business that cut corners on staff and product every chance the boss had to do so. I used to say he’d whore himself out 49 cents worth to make the 51. He would sell people products they didn’t really need or weren’t safe for them (dance wear and shoe store). I didn’t enjoy this very much after a while. Also, all full-timers were required to work every weekend, all the time, even though the store employed high schoolers.

    I enjoyed selling wedding dresses at David’s Bridal much, much more. Yeah, it was a “big company”, but the store I was at was in a small town and we got to be really involved in a usually happy event. I didn’t care that the dresses were made in China so much when I felt like I was selling a decent product to someone who wanted and needed it.

    Not super related to the topic, other than to say working for mom and pop isn’t always so grand. I like it when Big Company acts like mom and pop.

  29. Chip Skylark of Space says:

    …so, how large are the companies that support the National Bureau of Economic Research? I’m betting that they are the economic dinosaurs that are dragging us to hell.

  30. Rawkus says:

    Is anyone else reminded of that “chocolate made with veg oil” is better than real chocolate article? I think it was in the NY times. You can make a study say anything you want.

  31. humphrmi says:

    The study (or at least Newsweek’s interpretation of it) fails to take into account the domino effect of small businesses – yeah, you have 1-500 employees “hoarding” all the income from the business, but those small businesses are more often than not reliant on bigger businesses to provide them with materials, sales, advertising, etc. The knock-on effect is much bigger and provides jobs all the way up through the food chain.

  32. jbandsma says:

    Study paid for by Wal-Mart.

  33. topher b says:

    What a sloppy, misconstrued, strange little articlelet. It’s almost like the posting of a madman. Though small firms may not be growth meccas, they still employ people.

    • topher b says:

      My criticism is directed at Newsweek, not Consumerist. I don’t think they interpreted these data properly. Instead of actually trying to explain the study results, they make it into a sensational, inaccurate statement and a weird dig at the president for eating a sandwich.

  34. OnePumpChump says:

    Starving people are the cause of malnutrition! Just look at the nutritional deficiency rates among these populations of starving people! They’re making the overall numbers much worse!

  35. peebozi says:

    It’s about damn time we make businesses with less than 500 employees illegal!!

    I’ve been saying this all along. If we could only have a free market economy in the US we would end up with ONE MONOPOLY in the end…

    thank god for the free market system.

    pssssst – there is no free market in the USA.

    I wonder how this study was funded? Like the BP funded study stating, as scientific fact, that oil spills actually benefit sea life.

    this is good, it seems publicly traded corporations are feeling the backlash towards their PROFIT AT ANY AND ALL COST business philosophy. Morals and ethics have no place in a publicly traded corporations manual.

  36. human_shield says:

    Democracies are also inefficient. Dictatorships are so much better.

  37. joecoolest says:

    As long as you define a “career” as getting paid until they decide you are no longer necessary. In other words, you should invest your future in them, but don’t expect them to get overly concerned about your future if something changes.

    Employees are not valued in today’s economy… they are increasingly treated as just another commodity. How many companies offer a “pension plan”? This has been replaced by the business friendly 401K where they give you a pittance as a reward for you saving your own money.

  38. maruadventurer says:

    This is such trash —

    1) Most small business are in the retail or food service line. Not many are in manafacturing. So those that exist are not competing against the Fortune list.

    2) Most small business are a CONSUMER of what the larger firms produce. Fact I would offer the authors of this piece to go back and get the buyers lists of these big firms and see who is really buying their product.

    3) Nearly any job at this level of the economy is a net gain to the economy as a whole.

    It goes to Newsweaks incompetent that they would fall for this tripe.

  39. danstirling2000 says:

    I posted this on the Newsweek site, will post here as well:

    Seems to me the analysis is shoddy or biased. They are taking only those businesses which did not grow, and ignoring those which did. It’s like taking the bottom half of a class and wondering why it doesn’t achieve. And ‘destroyed salaries’? Many of these businesses are certainly stable and profitable, while others are losing income and shedding employees to competitors who don’t fit into the test criteria. It would be nice to know how many jobs were created by companies that haven’t been in operation for 10 years, to compare to the 1 million this study claims were destroyed.

  40. BytheSea says:

    This study funded by the Walmart Research Corp.

  41. burnedout says:

    Also…with all the tax breaks and employee law exemptions small businesses screw over workers and don’t contribute much tax revenue.

  42. bwcbwc says:

    And big corporations haven’t been shedding jobs? Or moving them offshore?

  43. grapedog says:

    I would say the bigger businesses are a larger problem in our economy than the small ones. Bigger business, as has been said a number of times, with economy of scale might make more money, but do it using less resources. Using resources employs people. Many big businesses farm labor out overseas as well. Big business gets tax write-offs/loop holes they can jump through. Big Business is also not held to the same standard of laws that the rest of the country, small business or individual, is held too.

    I’d say big business is one of the worst things about our current economy. I’d much rather 90% of our big business replaced by medium sized/mom and pop businesses. Profits would be lower, but more people would be employed, more companies would be held accountable, more taxes would be put into the system. Citizens of this country would be less fucked…

  44. grapedog says:

    And, how much of the population of the US is employed by sub 500 employee companies? How much of the population is employed by 1000+ employee companies?

  45. groc says:

    and the big massive error here is ….

    ignoring ‘quality of life’ – most of the people I know who are working for large companies HATE their jobs (and consequently their life) they feel under-valued – know they’re under-paid and just feel that they’re an easily replaceable cog in a massive machine, whereas anyone working for a small business know their bosses directly and feel part of an in ‘it all together’ close team.

    Guess which ones only get by on alcohol consumption and anti-depression medication…

    but which ones look better when presented on a spreadsheet…?

  46. maztec says:

    This article is based on the fallacious assumption that an economy must grow to be “healthy”.