Do IPOs create jobs?

1.9 million jobs lost to the slump in IPOs over the last decade, according to a new report

Has the collapse in the number of IPOs since the dot.com boom hurt employment? That's the question asked by a new report from the Kauffman foundation.

The argument is that IPOs pump huge amounts of money into start-ups, which can then be reinvested into employment growth. Their chart of the revenue per employee of Google, Amazon and eBay is instructive:

All three experienced sharp drops in revenue per employee immediately following their IPOs, as they went on hiring binges. If that's a standard pattern, then the fall in the number of IPOs a year (from hundreds in 1996-2000 to to just 8 at the nadir of the crash in 2008) will hit the labour market nationwide.

But it doesn't appear to be a standard pattern at all, as the key chart in the report shows:

While employment in the dot.com boom rocketed up post-IPO, once the crash hit, companies appear to have begun to take the cash injection and pocket it. Google – and Salesforce.com, the other big IPO of 2004 – are such exceptions that their year noticeably deviates from the trend.

As a result, the headline conclusion of the report is that around 1.9m jobs were forfeit over the past decade by the slump in IPOs. A lot, without doubt, but when you consider that post-IPO companies hired 1.6m people last year alone, the context becomes clear. And as the continuing saga of the Facebook IPO (currently stabilising around $29, 25 per cent lower than the IPO price) shows, there are upsides of steering clear of the whole thing.

Facebook in the heady days when it was above $30 a share. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Tom Watson rouses Labour's conference as he comes out fighting

The party's deputy leader exhilarated delegates with his paean to the Blair and Brown years. 

Tom Watson is down but not out. After Jeremy Corbyn's second landslide victory, and weeks of threats against his position, Labour's deputy leader could have played it safe. Instead, he came out fighting. 

With Corbyn seated directly behind him, he declared: "I don't know why we've been focusing on what was wrong with the Blair and Brown governments for the last six years. But trashing our record is not the way to enhance our brand. We won't win elections like that! And we need to win elections!" As Watson won a standing ovation from the hall and the platform, the Labour leader remained motionless. When a heckler interjected, Watson riposted: "Jeremy, I don't think she got the unity memo." Labour delegates, many of whom hail from the pre-Corbyn era, lapped it up.

Though he warned against another challenge to the leader ("we can't afford to keep doing this"), he offered a starkly different account of the party's past and its future. He reaffirmed Labour's commitment to Nato ("a socialist construct"), with Corbyn left isolated as the platform applauded. The only reference to the leader came when Watson recalled his recent PMQs victory over grammar schools. There were dissenting voices (Watson was heckled as he praised Sadiq Khan for winning an election: "Just like Jeremy Corbyn!"). But one would never have guessed that this was the party which had just re-elected Corbyn. 

There was much more to Watson's speech than this: a fine comic riff on "Saturday's result" (Ed Balls on Strictly), a spirited attack on Theresa May's "ducking and diving; humming and hahing" and a cerebral account of the automation revolution. But it was his paean to Labour history that roused the conference as no other speaker has. 

The party's deputy channelled the spirit of both Hugh Gaitskell ("fight, and fight, and fight again to save the party we love") and his mentor Gordon Brown (emulating his trademark rollcall of New Labour achivements). With his voice cracking, Watson recalled when "from the sunny uplands of increasing prosperity social democratic government started to feel normal to the people of Britain". For Labour, a party that has never been further from power in recent decades, that truly was another age. But for a brief moment, Watson's tubthumper allowed Corbyn's vanquished opponents to relive it. 

George Eaton is political editor of the New Statesman.