How entrepreneurial businesses drive job creation
EEntrepreneurial businesses create huge job growth compared to traditional businesses, as shown in new research by ERShares.
When we compare the new employment growth created by S&P 500 Index stocks against the new employment growth of Entrepreneurial 30 Index companies (a proprietary index that tracks 30 entrepreneurial companies well established listed on the stock exchange), it is becoming clear that entrepreneurial businesses are a major driver of job creation.
From 2011 to 2019, year-over-year new job growth for companies in the S&P 500 increased by just under 50%, while job growth for companies in the index ER30 has increased by approximately 1000%.
It’s important to note that this is based solely on organic growth, not growth created by mergers and acquisitions, as major acquisitions are excluded from the datasets.
Employment growth, in numbers
In 2019, 393,969 new jobs were created by companies in the S&P 500 index. Of these, 171, 232 were created by entrepreneurial companies also listed in the ER30 index.
In short, 43.46% of job creation in 2019 was driven by entrepreneurial growth.
In addition, the share of jobs created by entrepreneurial firms is increasing relative to other blue chip stocks. For example, in 2011, ER30 companies employed a total of 0.64% of total jobs in the S&P 500 index. In 2019, ER30 companies employed 3.66% of total jobs.
Entrepreneurial businesses drive growth
Amazon (Nasdaq: AMZN) continues to be the largest employer in the S&P 500 Index, employing more than 1,289,000 people according to its fourth quarter earnings report (not including temporary staff and contractors).
With an annual growth of 63%, it creates the most jobs of all the companies in the S&P 500.
Bezos’ vision and the entrepreneurial culture he created at Amazon allowed her to be an industry innovator and create disruption in all areas that she pursued. Amazon’s market cap is $ 1.64 trillion.
the ETF ERShares Entrepreneurs (ENTR), which tracks entrepreneurial stocks, owns 6.2% of its portfolio on Amazon.
Meanwhile, Alphabet Inc (Nasdaq: GOOGL), the parent company of Google, has ranked second in job creation since 2011.
As of the date of its last quarter results, the organization employed around 140,000 people, creating more than 16,000 jobs in the first quarter of 2021.
Google also offers the highest average salary in the tech industry.
ENTR owns 6.8% of its portfolio in Alphabet.
Rising wages equals economic growth
In a report by CNBC published at the time of this data’s release, five of the top 10 highest-earning companies were ER30 companies.
This means that not only do entrepreneurial businesses drive growth, but they also do so with a better paid workforce, creating economic growth on many levels.
“Through innovation and dedication, entrepreneurs have repeatedly succeeded in creating wealth through their rapid growth and providing employment opportunities while increasing wages at the same time thus benefiting the economy. ”, Wrote the authors of the article.
ERShares offers two ETFs that provide exposure to entrepreneurial companies. ERShares Entrepreneurial Factor (EF) combines thematic research and AI to identify high growth entrepreneurial companies.
The aforementioned ENTR ETF mainly tracks large cap US companies, while the ETF ERShares NextGen Entrepreneurs (ERSX) mainly tracks non-US small cap stocks.
For more news, information and strategy, visit the Entrepreneur ETF Channel.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.