Despite last week’s headlines about alarmingly soft job growth, millions of Americans have been starting businesses at unprecedented rates. This trend started in 2020 during the COVID-19 pandemic and is still holding strong. However the shift is not accounted for in traditional labor statistics, which focus exclusively on W-2 payroll jobs. New business formation is a vital piece of the business landscape of the United States and can counteract the economic impact of a slowdown of traditional job creation.
Job growth numbers from the Bureau of Labor Statistics (BLS) miss this point, highlighted by the most recent data: The economy appears to have added only 73,000 jobs in July 2025, significantly less than expected and not enough to keep up with population growth. Adding to the concern, the BLS drastically revised May and June numbers, reporting that the economy grew 258,000 fewer jobs during those months than was previously stated.
The news was quickly translated into reduced overall employment, which raised widespread concern. But the BLS numbers give us an incomplete view of jobs in America. Business formation statistics from the U.S. Census Bureau shows 6.48% growth from Q1 to Q2 of this year. While this may not seem like a large growth number, it is monumental compared to the significant declines that were being recorded last year when traditional job growth was accelerating. Even more importantly, new business formations have become increasingly important to the economy and job growth since Covid, yet it is largely ignored in the BLS job report.
Jeff Stibel
Business formations and job growth are counterbalancing factors in the U.S. economy and any economic indicator needs to factor in both measures, especially given the surge in new businesses since Covid. Newly formed companies create jobs immediately for their founders and over time for other job seekers, pulling people out of the traditional labor market that the BLS exclusively tracks. This artificially inflates unemployment assumptions.
Historically, there has been a strong relationship between economic change and entrepreneurship. Lack of traditional job opportunities inspire people to create jobs for themselves and building a new business has never been easier. Artificial intelligence in particular has enabled individuals to launch business ideas with minimal startup capital, experience, or risk. Readily available tools can build websites, write copy, design graphics and logos, and even find customers. AI can analyze market research and offer pricing strategies and financial projections frictionlessly. This rapid change is accelerating the shift toward self-employment and micro business creation, not to mention an increase in freelancing, consulting, and “side hustles.” MarketWatch reported in April 2025 that 51% of Americans have a side hustle, with the country’s youngest workforce participants leading the charge—72% of Gen Z reporting a side hustle in the past year. With people entering the job market overwhelmingly pursuing alternative jobs and individuals retiring from the workforce leaving behind traditional jobs, shifts in employment type should not surprise or alarm us; rather, we should track and incorporate these changes into our thinking and analytics. While unconventional jobs may be untraditional, they are real jobs nonetheless, with a significant economic impact.
Jeff Stibel
Traditional labor statistics are built on outdated employment models. As the nature of work changes, we need more modern methods to accurately assess the true health of the economy. A more complete measure would integrate a diversity of data sources, including new business registrations and freelance platform activity, in addition to polling larger businesses and households. With an expanded palette, we could color a more accurate picture of modern labor dynamics.
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