The document discusses how entrepreneurship is key to job creation and economic growth. It notes that startups create the majority of new jobs, though established businesses growing or contracting account for most net job creation. The document advocates for policies like Hire One tax credits that support entrepreneurship and business growth. It argues Idaho should develop a comprehensive strategy using low-cost initiatives to promote an entrepreneurial culture and make it easier to start and grow businesses.

1. Growing resilient, self-renewing
local economies:
How Hire One Can Help
Entrepreneurship:
THE Key to Job Creation
Idaho Senate Local Government & Taxation Committee
Norris Krueger, PhD
March 2011
Norris.krueger@gmail.com
208.440.3747
@entrep_thinking

2. Are you surprised?
Record levels of job NON-creation
In 2009, we hit a 29
Year LOW in job creation;
we've got a loooong way to
go unless we can light a
fuse

3. Where do jobs come from?
• Net job creation =
• Jobs Created minus Jobs Lost
• Which is more important? Aren't they
equally important?
• It's job creation that drives the boat...
• And “churn” is healthy
• Shouldn't we ask WHO creates the jobs?
• And shouldn't we help them?

4. 58-40 or Fight?
Gross job creation – only three sources:
• Businesses moving in
• Businesses growing
• Businesses starting
• They contribute 2%, 40% & 58% of gross
job creation

5. Yes, in THAT order
• Startups create 58% of new jobs (gross)
• Expanding firms create 40%
• [In-migrant firms only 2% ]
• BUT... what about NET job creation?
• Startups – Business Exits = ~10% of net jobs
• Growing firms – Shrinking firms = ~90%
• Implication: Growing firms matter (so do
startups, especially with growth potential)
– (shall we look at Idaho's numbers?)

6. Where Did Idaho's Jobs Come From? (2000-2007)
• New businesses created around 297,000 jobs [58%]
• Expanding businesses created around 200,000 jobs [40%]
• Businesses moving in created around 10,000 jobs. [2%]
• but now… let's look at the net job figures:
• Businesses opening: created 296,983 jobs
• Businesses closing: destroyed 291,824 jobs
• Net jobs from business creation: +5,519 jobs [8%]
• Business expansions: created 200,383 jobs
• Business contractions: destroyed 133,502 jobs
• Net jobs from business expansion: +64,781 jobs [92%]
• Businesses moving into Idaho: created 10,555
• Businesses moving out of Idaho: destroyed 10,757
• Net jobs from business attraction: -202 jobs
• (1977-2005, the US created 450 million jobs & lost 406 million jobs)

7. Every economy needs a steady in-flow
of job-creating businesses

8. Note the gap between the lines in 2009 vs 2001...and
the plummet in job creation from 2005 onward
Opportunity
Entrepreneurship
declining since 2005
Necessity entrepreneurship
at or near record levels

9. Starts and Terminations of Employer
Businesses
700
650
600
Thousands
550
500
Starts Terminations
450
400
90
00
10
19
20
20
Source: Office of Advocacy, SBA

10. Outlook for Expansion
Percent Next Three Months “Good Time to Expand” January
Quarter 1974 to January Quarter 2011
Again, a long way to go,
why not a nudge?

11. Good Time to Expand
2008/09 Recession Compared to Other Recent Recessions
30
25
Percent "Yes"
20 2008-09
2001-01
15 1990-91
1981-82
10
1973-75
5
0
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2
4
6
8
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Quarters After Recession Trough

12. EMPLOYMENT
Planned Next Three Months and Current Job Openings
January 1986 to September 2010
(Seasonally Adjusted)
40
30
20
Percent
10
Planned
0
Job Openings
-10
86 88 90 92 94 96 98 00 02 04 06 08 10
YEAR

13. So what can we do?
• Look for who is bucking the downtrend:
– What are the successful cities & states doing?
• Look at proven practices
• DO what successful states do
• USE the proven practices
• Integrate with our own positives
– How does Hire One fit in?
– (How does Project 60 fit in??)

14. Focus on GROWTH firms (“gazelles”) - but see which is lowest
on gazelles?

15. Three Keys to Growing
Entrepreneurial Communities
• From the Global Entrepreneurship Monitor
(GEM, over 10 years of study;~80 countries)
• #1 People believe they are personally
prepared to be entrepreneurs – they SEE
themselves as truly entrepreneurial.
• #2. Local social & cultural norms are seen as
supportive
• #3. Ease of doing (& starting) business

16. Hire One
• Regardless of any direct $ impact, imagine
the signal to growth-oriented entrepreneurs
that Idaho supports them.
• (But the signal must be credible, of course)
• Hire One could also contribute to the #3
predictor of entrepreneurial activity (ease of
doing business)

17. Project 60
• Includes “systemic”, “organic” growth as key
component – a positive signal for #2
(social/cultural norms)
• The Governor's Summits focused extensively
on #3 (ease of doing business)
• We still need strategy & tactics to promote
the #1 predictor, the “entrepreneurial”
component.... but we know how to do that
(and it need not cost much at all)

18. Hire One as First Step?
• A limited tax credit rewarding Idaho
entrepreneurs for growing will likely have
positive impacts, especially psychologically
• Telling entrepreneurs we appreciate them
cannot hurt unless...
• Entrepreneurs and citizens see it as a 'band-
aid' or, worse, a token gesture
• So how does Idaho avoid that?
• “Walk the walk”... create that strategy

19. Quick Overview: How to Grow a More
Entrepreneurial Idaho
• Never miss the opportunity to be supportive
– The “Bully Pulpit”
• Comprehensive strategy – broad AND deep
– Broad: in every corner of the state, in every
industry
– Deep: focus on where we are (or will) compete
the best
• Start with the Low Hanging Fruit (cheap, easy)
– And... Isn't Hire One exactly that?

20. Examples of Low Hanging Fruit
• Hire One inspires( us to look at more “tiles” to build our
entrepreneurial, job-creating “mosaic”!)
• Policy Briefings: Share with opinion leaders,
civic officials, media & taxpayers how we
really grow jobs
• Task Force: Marshal Idaho's own best &
brightest to implement Idaho's killer
comprehensive entrepreneurship strategy
• The Bully Pulpit: Preach the job creation
'gospel'! (and “walk the walk” with Hire One!)