Advocacy Report Explores Why a Firm Hires Its First Employee
Report gives three top policy directions to increase employment.
WASHINGTON – Today, the Office of Advocacy, an independent office within the Small Business Administration, released a report entitled, Crossing the Employer Threshold: Determinants of Firms Hiring Their First Employee. The research analyzes the factors that lead to small businesses’ hiring their first employee, which is a significant aspect of small business job creation.
“As our economy continues to recover, it is job creation that will bring employment back to pre-recession levels. This report illustrates some areas where policymakers can focus to improve employment numbers in startup companies and small firms,” said Dr. Winslow Sargeant, Chief Counsel for Advocacy.
The report strives to answer three critical questions of the employer:
- First, what owner characteristics are associated with a business’s decision to hire its first employee in the first several years of operation
- Second, what business conditions are associated with that decision (for instance, assets, sales, or intellectual property)?
- Finally, does entrepreneurship training increase the likelihood that a non-employer will hire its first employee?
Highlights of the report include:
- Employers are more likely to hire their first employee in the first three years after startup.
- Incorporated firms with available assets and/or intellectual property are more likely to hire their first employee.
- Wholesale trade, transportation, manufacturing, and professional industries are more likely to hire employees compared to other industry sectors.
- Entrepreneurial training may lead firms to hire their first employee.
The full report is available on the Office of Advocacy website at http://www.sba.gov/advocacy/7540/772191.
Background: Policymakers have enacted legislation to support small businesses in recent years. The Small Business Jobs Act of 2010 and the Jumpstart Our Business Startups of 2012 both focus on increasing financing for small businesses, which is an important component of small businesses’ ability to create jobs.
The Office of Advocacy of the U.S. Small Business Administration (SBA) is an independent voice for small business within the federal government. The presidentially appointed and Senate confirmed Chief Counsel for Advocacy advances the views, concerns and interests of small business before Congress, the White House, federal agencies, federal courts and policymakers. Regional advocates and an office in Washington, D.C., support the Chief Counsel’s efforts. For more information, visit www.sba.gov/advocacy, call (202) 205-6533 or get updates on Twitter (@AdvocacySBA) or Facebook at www.facebook.com/AdvocacySBA.