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Photo: Fiat Chrysler

When optimists reassure the public not to fear the new age of robotization, they say that, as has always happened since the beginning of the industrial revolution, the economy will produce more than enough jobs to replace those destroyed. But the data are delivering a blow to that argument: the U.S. economy is producing comparatively few of the companies responsible for the bulk of new jobs — young startups.

We reported yesterday that new startups are forming at the slowest rate on record, according to an analysis by the Economic Innovation Group. But the additional point, made by McKinsey, the consultant firm, is that even when they are formed, they aren't lasting very long.

Why it matters: If there is not to be the mass unemployment feared by robot pessimists in the coming decades, the economy is going to have to churn out new entrepreneurs and their businesses. But, eight years into the recovery, the engine of the economy — the green shoots of new startups — is still idle, with no sign of a turn. "The trend is not going to break by itself," McKinsey's Sree Ramaswamy tells Axios. There is no indication that the economy is about to revert into a frenzy of new startup activity.

According to the EIG data, new businesses are responsible for nearly all the net new jobs in the U.S. economy. Older companies usually shed more workers than they hire.

  • Some readers came back to us yesterday with the comment that doesn't the data simply reflect the aging of the country — we are producing fewer startups because we are getting older. But, speaking with Axios, EIG's Steve Glickman notes that the opposite is true: "Forty is the prime age to start a business. Most people starting a new business are between 40 and 55."
  • In fact, the trend is that startup founders are getting older and older: According to a 2015 study by the Kauffman Foundation study, 52% of startup founders were 45 to 64 in 2014, up from 38% in 1996; those 20 to 34 were a quarter of startup founders in 2014, down from about a third in 1996.

It's still not clear why the economy and demographics have so dramatically shifted, nor what to do about it.

  • Most blame money — people owe too much, and the financial system is holding back more than it used to.

Go deeper

Ina Fried, author of Login
1 hour ago - Technology

Scoop: Google is investigating the actions of another top AI ethicist

Google CEO Sundar Pichai. Photo by Mateusz Wlodarczyk/NurPhoto via Getty Images

Google is investigating recent actions by Margaret Mitchell, who helps lead the company's ethical AI team, Axios has confirmed.

Why it matters: The probe follows the forced exit of Timnit Gebru, a prominent researcher also on the AI ethics team at Google whose ouster ignited a firestorm among Google employees.

2 hours ago - Politics & Policy

Scoop: Joe Biden's COVID-19 bubble

Photo illustration: Aïda Amer/Axios. Photo: Joe Raedle/Getty Images

The incoming administration is planning extraordinary steps to protect its most prized commodity, Joe Biden, including requiring daily employee COVID tests and N95 masks at all times, according to new guidance sent to some incoming employees Tuesday.

Why it matters: The president-elect is 78 years old and therefore a high risk for the virus and its worst effects, despite having received the vaccine. While President Trump's team was nonchalant about COVID protocols — leading to several super-spreader episodes — the new rules will apply to all White House aides in "high proximity to principals."

Justice Department drops insider trading inquiry against Sen. Richard Burr

Sen. Richard Burr (R-N.C.) walking through the Senate Subway in the U.S. Capitol in December 2020. Photo: Stefani Reynolds/Getty Images

The Department of Justice told Sen. Richard Burr (R-N.C.) on Tuesday that it will not move forward with insider trading charges against him.

Why it matters: The decision, first reported by the New York Times, effectively ends the DOJ's investigation into the senator's stock sell-off that occurred after multiple lawmakers were briefed about the coronavirus' potential economic toll. Burr subsequently stepped down as chair of the Senate Intelligence Committee.