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]