According to Charles Gascon, an economist at the St. Louis Federal Reserve, startups may be responsible for a significant number of jobs created in recent years, but they often do not last. While many people believe that most startups are tech companies, the reality is that restaurants, small businesses, and professional service firms like law or accounting firms also make up a large portion of these companies.
Despite making up about 2% of total employment in the U.S., startups have had a significant impact on the economy during the COVID-19 pandemic years. While there was positive net job creation from these businesses, it did not show up in the same way as larger firms that laid off workers due to the pandemic before starting to ramp up again.
Overall, while startups create a significant number of jobs, their high likelihood of closure within five years and low pay contribute to small, sometimes negative net job creation. According to Gascon, this highlights the importance of considering both new and old businesses when analyzing job creation in the United States.