It has become commonplace to say, “Maine is the oldest state in the nation. If we are to improve our economic lot, we need to keep and attract more young people.”

It has become equally commonplace to say that the way to keep and attract more young people is to create more jobs – and the “we” toward whom our policy prescription is directed is narrowed to employers. “They” need to create more jobs.

This appeal, in turn, generally morphs into the skills gap commentary – “We try to hire more people, young and not-so-young, but we just can’t find them; people just don’t have the skills (whatever that means) we need.”

Thus, the directive to “keep and attract more young people” is redirected from employers to educators. It becomes, “Restructure the content, location, timing and cost of your educational programs to better meet the needs of the 21st century economy.”

And there you have it.

The buck has been passed from “us” to “employers” to “educators.” And the results of this buck passing are mixed. The change that has occurred in our public schools – both K-12 and post-secondary – has been enormous and wrenching, but still mostly focused on demographics, the effort to cope with drastically declining enrollment numbers.

At the same time, efforts to link educational institutions with employers have increased and had some degree of success.

Project Login, the collaboration between Berwick Academy and a number of neighboring machine tool companies and the variety of outreach initiatives the University of New England has undertaken in the health professions come to mind.

Diving deeper into the data surrounding the demographic structure of our employers, I suggest, presents another focus. More than needing young people, we need young businesses.

Consider, for example, business services. This collection of “knowledge work” ranging from architecture and advertising to travel arrangements and waste collection has, over the past three years, had an average annual net job gain of 0.8 percent.

That is, the number of new hires over layoffs and departures in the firms in this broad range of activities has averaged just under 1 percent per year over the three years of recent “economic recovery.” This all-sector average, however, hides a wide variation within, ranging from a 4 percent annual increase for office administrative services to a 2.5 percent annual decrease for waste treatment and disposal services.

To explore the “young business” hypothesis, I calculated the share of net job creation occurring in businesses less than six years old, as a share of total initial employment in each of the 20 business services categories. For all 20 categories, young businesses accounted for about 14 percent of net job creation, ranging from highs of 41 percent in “other support services” and 34 percent in “specialized design services” to lows of 3 percent in “travel arrangements” and “office administrative services.”

Next I separated the above- and below-average sectors. The seven with above-average shares of young businesses had an average net job creation rate of 26 percent. For the 20 sectors with below-average shares of young firms, the average net job creation was 5 percent.

Clearly the presence of more young businesses seems to have a positive effect on job creation.

So what, from a practical standpoint, does all this mean? To whom does this analysis lead us to pass the buck now?

There are, I believe, three points here. The first is that business services is a polyglot sector composed of a vast array of strange bedfellows.

The second follows from the first – that the all-sector average of a polyglot sector doesn’t mean much. Rates of growth of traditional, well-defined sectors such as legal services and accounting occur for reasons quite separate from the reasons driving specialized design services, waste remediation services and technical consulting services.

The third and by far the most important point is that the prevalence of young firms is highest in the hardest to define sectors.

This in itself is a major reason young firms are so important. What exactly is “other business services”? Or “business support services”? Or “specialized design services”? What skills do they require? What markets are they seeking to serve?

Who knows? Certainly not the coders in Bureau of Labor Statistics offices trying to put the responses these businesses provide on payroll and tax forms into some meaningful pigeonhole.

The main reason we need young businesses is because they are blazing the path on our technological and cultural frontiers to find the goods and services our future economy needs.

It’s not the fact that they are young that make these businesses important. It is the fact that they are pioneers, that they have broken free of the constraints of past habits and are exploring our future.

It’s not their age but their pioneer spirit that we need.

Charles Lawton is Chief Economist for Planning Decisions Inc. He can be reached at:

[email protected]

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