First, regarding Mr. Immelt’s proposal that companies should stop whining about government and just start hiring – keep in mind that GE has shed about 10% of its workforce in the last two years (roughly 37,000 out from a base of roughly 320,000 in 2009). Mr. Immelt is welcome to his opinion, but when you get what appears as a do-what-I-say-not-what-I-do, it’s a bit hard to just sit and take it.
Second, the United States lost 1.29 million jobs between March 2009 and March 2011. During that same period, three Venture Capital (VC) backed internet firms (LinkedIn, Zynga and Groupon) hired over 11,000 and other giants in that market (Facebook, LivingSocial and Twitter) did as well. Andrew Parker takes this analysis a bit further:
- Facebook has “over 2000 employees” according to a February press release (found via Quora). Lets be generous and interpret that as 2500 employees since they’re growing so quickly.
- According to this page on Twitter’s website, they have 585 employees. (Disclosure: I’m an insider here, but I have no idea how many employees Twitter actually has, and I’m strictly using publicly available information).
That totals 14,228 jobs created by these 5 companies.
In the “long tail” of job creation in the web services VC industry, I’d argue that these companies represent the fat head on the curve. The general rule of thumb for estimating the area under the curve of a long tail is that 20% resides in the fat head, another 10% is in the chunky middle, and 70% is in the long tail. Given that there are tens of thousands of businesses listed in CrunchBase, I believe that the distribution of employment in the web services sector has the shape of a long tail, but I’d love to hear disagreement in the comments.
So, applying this rule of thumb (20% in the fat head), you can extrapolate (crudely) the total number of jobs created by the this wave of VC web services investing: 71,140.
My take: you’ll note that this is is Venture Capital backed efforts NOT government stimulus backed. So pull the string and figure out where Venture Capital derives its capital – again, not from the government but rather from private investors putting their money forward looking for a return. That money, in turn, is used to create these jobs which create products and services that we consume. This is wealth creation. Something that liberals tend to not understand. We need more of this and it is exactly why we should not raise taxes on those that primarily invest in these types of investment vehicles and why having more capital available to the individual is important. Having the government take that money instead will not create jobs…shovel-ready or not.
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