Think Startups are Fueling the Recovery? Not So Much

New businesses hire fewer employees than in the past, report shows.

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Sometimes, the new graduate is the founder, a concept that entrepreneur Scott Gerber works to encourage. "Job numbers are terrible [and] youth employment especially is in the toilet," says Gerber, founder of a new organization called The Young Entrepreneur Council. "There needs to be some other way of creating an income."

Yet while self-employment has a new appeal in the wake of a layoff-filled recession, entrepreneurs often work alone, which doesn't create jobs. A previous Kauffman report showed that while more people became self-employed in 2010 than during each year over the last 15 years, many of those entrepreneurs did not hire employees.

Today, a new business starts with an average of 4.9 jobs, the foundation reports, far lower than the average of 7.5 employees startups had at launch in the 1990s.