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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Forget gaining £350m a week, Brexit would cost the UK £300m a week

Figures from the government's own Office for Budget Responsibility reveal the negative economic impact Brexit would have. 

Even now, there are some who persist in claiming that Boris Johnson's use of the £350m a week figure was accurate. The UK's gross, as opposed to net EU contribution, is precisely this large, they say. Yet this ignores that Britain's annual rebate (which reduced its overall 2016 contribution to £252m a week) is not "returned" by Brussels but, rather, never leaves Britain to begin with. 

Then there is the £4.1bn that the government received from the EU in public funding, and the £1.5bn allocated directly to British organisations. Fine, the Leavers say, the latter could be better managed by the UK after Brexit (with more for the NHS and less for agriculture).

But this entire discussion ignores that EU withdrawal is set to leave the UK with less, rather than more, to spend. As Carl Emmerson, the deputy director of the Institute for Fiscal Studies, notes in a letter in today's Times: "The bigger picture is that the forecast health of the public finances was downgraded by £15bn per year - or almost £300m per week - as a direct result of the Brexit vote. Not only will we not regain control of £350m weekly as a result of Brexit, we are likely to make a net fiscal loss from it. Those are the numbers and forecasts which the government has adopted. It is perhaps surprising that members of the government are suggesting rather different figures."

The Office for Budget Responsibility forecasts, to which Emmerson refers, are shown below (the £15bn figure appearing in the 2020/21 column).

Some on the right contend that a blitz of tax cuts and deregulation following Brexit would unleash  higher growth. But aside from the deleterious economic and social consequences that could result, there is, as I noted yesterday, no majority in parliament or in the country for this course. 

George Eaton is political editor of the New Statesman.