The Big Companies Did It

Michael Mandel

We all thought (myself included) that the wellspring of economic growth in the New Economy boom of the 1990s was small innovative companies. We celebrated the eBays and the Yahoos of the world, and told a compelling story about the little guys taking on the big guys. Entrepreneurs rule!

Well, the Bureau of Labor Statistics has just published some new data on job creation, and it looks like the New Economy employment boom was driven by big companies--those with over 500 workers. Take a look at this chart.

The blue line represents the share of gross job creation coming from big companies (four quarter moving averages). You can see that big companies accounted for a bigger and bigger job of job growth as the boom heated up. The flip side (not shown on this chart) is that small companies accounted for a smaller share of job growth during the boom.

This is an awfully big surprise. It undermines my picture of the New Economy boom, and makes me think a bit more about the role of big and small companies in the labor market.

However, what Corporate America giveth, Corporate America taketh awayeth. During the bust, big companies accounted for an outsized share of the job losses (that's the purple line). This part is no surprise.

Before it's here, it's on the Bloomberg Terminal.