I don’t know what to make of the data, as the economy overall seems to be all over the place. First, looking at people’s debt levels causes alarm. Since the pandemic, both housing and non-housing debt, skyrocketed to $18 trillion from around $14 trillion.
If you look at what has happened with the housing market, median property values also jumped significantly since the pandemic, from a median value of $320k to roughly $420k in only five years!
Well, looking at employment by firm size, although the unemployment levels are “low” hovering 4-5%, the share of employees working at large firms – those with more than 1,000 employees – is consistently increasing, going from around 35% in 1993 to more than 40% in 2024. This implies that any variation of employment at large firms due to efficiency gains from using new technologies (GenAI, I am looking at you), may put additional downward pressure on salaries and employment.
However, looking at the number of new business starts we can see a significant jump during the pandemic, from around 320k in 2020 to 440k in 2024. This means that people are starting more businesses per year while larger companies employ increasingly more people.
But this increase of new business starts seems to do little to the concentration of employment issue happening at larger firms. As the next two graphs show, large firms are a tiny fraction of the number of total firms in the U.S., but account for an increasing share of employment.
So, I am not sure what to make of all this seemingly conflicting data. My approach is to continue supporting founders, helping them build great companies that make a difference in society. People are still eager to make a mark and entrepreneurship is a path for doing so.