Why Young Entrepreneurs Are Crucial to Growing the Economy

This article was originally published in Ashoka’s column on Forbes.com. It has been reprinted here with their permission. Ashoka is a partner of the Entrepreneurs’ Organization.

By Alex Amari

Since mid-September, Uber has been rolling out its first platoon of self-driving cars in Pittsburgh. While they’re not technically driverless (for now, there’s someone sitting in the front seat, just in case), these cars have proven remarkably effective at traversing the hilly and narrow streets of Pennsylvania’s second-largest city with little or no human help. The technology still shows room for improvement, but according to tech experts and carmakers, self-driving cars could be standard nationwide in just a few years’ time. While in some ways good for consumers, this could spell bad news for truckers, cab drivers and other service providers at all levels of the transportation industry.

This example shows how rapid technical advancements are changing the very fabric of employment. And it’s not just about jobs lost.

Not too long ago, a single job or employer would often last a lifetime. But in 2014, the average job tenure was a mere 4.6 years, and the average lifespan of Fortune 500 companies is falling at an accelerating pace. One widely read study projects that 75% of the companies in the S&P 500 in 2015 will be off the index in 15 years. Indeed, young people joining the job market today enter into an increasingly dynamic space. According to the World Economic Forum, 65% of children entering primary school will ultimately end up working in new job types that don’t yet exist. We stand on the verge of profound advances in artificial intelligence, robotics, health sciences and nanotech that will precipitate even greater changes in the nature of employment.

Back in 1930, John Maynard Keynes saw this coming. In The Economic Possibilities for Our Grandchildren, Keynes wrote, “We are being afflicted with a new disease of which some readers may not have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment.”

Keynes was among the first to describe the link between technological advancement and rising levels of unemployment and predicted that the trend would intensify over the following century with problematic consequences for the world economy. Yet, in an optimistic vein, Keynes looked forward to the point when societies would adapt to this accelerating rate of change. He foresaw an era when people would require entirely new skillsets and outlooks for work and life success. And indeed, today there is at least one group of people who feel at home in the unstable domain of the modern economy.

Enter the entrepreneurs.

Entrepreneurship has long propelled the American economy. Startup activity represents one of the highest correlations with strong economic performance. New businesses account for nearly all new net job creation and 20 percent of gross jobs created, accounting for roughly 1.5 million jobs per year in the United States over the past three decades. And these new businesses are particularly important in times of economic uncertainty and comparative stagnation in GDP growth: Between 2006 and 2009, young firms remained a net positive source of employment growth, whereas older and larger firms shed more jobs than they created.

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