Any entity attempting to spur economic development should study the important new details about job creation and destruction released by the U.S. Census Bureau in recent years. The Business Dynamics Statistics have shattered conventional thinking about who creates jobs. Between 1987 and 2005, startup companies (those which did not exist the prior year) added about 3% annually to the existing job pool. Over the same time period, total job growth averaged 1.8% per year. This means all existing companies, grouped as a whole, reduced the number of jobs by 1.2% per year. Stunningly, all net job growth can be attributed to startup companies. For example, in 2005 startups added 3.5million net new jobs, but the economy as a whole added only 2.5million net jobs. As a group, existing businesses lost over 1million jobs that year.
Here's a letter I wrote on this topic to my local paper more than three years ago.