Why Startups Are Helping The Economy More Than You Think

Editor’s note: Nick Sedlet and Elli Sharef are co-founders of HireArt (YC W’12), a platform connecting job-seekers with employers.

Do tech startups create or destroy jobs? There is an obvious answer: They do both.

In the wake of the recent jobs report, it has become suddenly fashionable to accuse startups of hindering employment growth. There has been a lot of hand-wringing about this in the last two weeks. The Atlantic says that startups aren’t responsible for job growth; the New York Times writes about the “startup job myth”; while Forbes blames the dismal job numbers on lean startups.

Part of the argument is that tech companies have created relatively few jobs compared to industrial conglomerates of the 20th century. Apple employs 40,000 people today, whereas General Motors employed 400,000 in 1955 (see Dan Finnigan’s great slideshare).

But these arguments ignore the jobs that technology companies create indirectly. Over 400,000 new jobs have been created by Apple’s App store. Facebook has given rise to entirely new job functions, like social media marketers and community managers, for which there are tens of thousands of jobs listed online.

At small startups, too, it’s important to note that a large chunk of the work is done by free agents – developers, designers, accountants, and lawyers – who don’t work for the company full-time. New online marketplaces like Etsy, Dribbble, and PeoplePerHour help make the free agent phenomenon possible, by connecting workers and employers with minimal hassle.

The reality is that this new economy is creating opportunities for which demand is extremely high, but for which the workforce is not well prepared.

McKinsey Global Institute estimates that the U.S. may face a shortfall of almost 2 million technical and analytical workers over the next 10 years (a woe all of us who try to hire web developers are well aware of). At HireArt, our clients find it extremely hard to hire for positions like SEO manager, social media manager or technical copywriter.

Painfully, technological change always leaves some workers behind. But the rapid pace at which it’s proceeding is creating widespread concern. Certain skills now seem hopelessly obsolete. What is a former assembly line worker or equity trader supposed to do?

Actually, we think training people for career transitions is easier than some assume. Peter Cappelli of Wharton argues that “there are plenty of people out there who could step into jobs with just a bit of training.”  At HireArt, we see candidates who’ve learned on their own by taking courses online and searching the web. Patricia, a former Barnes & Noble associate, taught herself Excel online and applied for an analytics job through HireArt. Startups like General Assembly, Udacity and Udemy are creating training programs that are accessible to anyone and directly address the needs of the labor market. One of our big goals at HireArt is to help candidates showcase the skills that they’ve learned in non-traditional ways and that don’t often come through on a resume.

Ultimately, we need better training tools that allow candidates to pinpoint high demand skills and then quickly acquire them. We also need a more transparent jobs marketplace that makes it easy for workers to market these skills to employers. Rather than decrying technology’s effect on the labor market, let’s celebrate the interesting, meaningful work that it’s creating, and do everything we can to help our workers adapt to the changes it brings.