Three years after the introduction of legislation designed
to spur employment by coaxing more companies into going public, tens of
thousands of related jobs have been created—but it’s a challenge to say just
how many owe their existence to the bill. About 82,000 jobs have been added by
the 454 U.S. companies that completed initial public offerings under the
Jumpstart Our Business Startups Act, an increase of roughly 30% from their
pre-IPO head counts, according to public filings analyzed by The Wall Street
Journal. U.S. private-sector employers broadly have added 7.4 million jobs
since April 2012, a 6.6% increase.
But the act’s contribution to job creation could be
overstated, because many likely would have gone public anyway, as the IPO
market picked up steam alongside gains in the stock market and the broader
economy. Additionally, some of the jobs may have been created outside the U.S.,
though, if so, it isn’t clear how many.
Residential solar-power company SolarCity Corp. added over 6,700 jobs from
October 2012, just before its December 2012 IPO, through the end of 2014. The
company, which employs engineers, salespeople and construction workers, has
increased its head count by nearly 300% since its IPO. The largest jobs gains came from companies in the
restaurant, information-technology and energy industries. More than 40% of the
positions were created by just 10 JOBS Act companies, according to the Journal
analysis, which also used data provided by S&P Capital IQ and IPO Vital
Signs. The employment gains associated with the JOBS Act legislation—as
measured by comparing company-reported figures just before the firms’ IPOs and
their most recent financial reports—are a drop in the ocean of the 141 million
people employed in the U.S.
The JOBS Act removed some IPO hurdles for so-called
emerging-growth companies with less than $1 billion in annual sales. Companies
that qualify for this designation can initially file for IPOs confidentially
and have expanded discussions with investors before the Securities and Exchange
Commission approves their offering documents. They also aren’t subject to all
of the accounting and disclosure standards that apply to larger companies.
Steven St. Peter, chief executive of Aratana Therapeutics Inc., said that the
expanded ability to talk to investors pre-IPO was key to helping the developer
of veterinary drugs go public. Last year, 293 companies completed U.S.
listings, up from 145 in 2012 and the most in any year since the end of the
dot-com boom in 2000, according to Dealogic. Still, the pace considerably lags behind
activity in the 1990s. More than 300 companies went public each year from 1995
to 2000, when investors were pouring money into young Internet companies.
Most JOBS Act supporters didn’t make promises about the
hiring that would result from the act, but many cited a 2009 study published by
accounting and advisory firm Grant Thornton LLP that found that the slump in
IPOs from their mid-1990s levels may have cost the U.S. as many as 22 million
jobs over the following decade.
Bankers who help companies execute IPOs were among the act’s
supporters. David Weild, the chairman of investment bank Weild & Co.,
estimates the JOBS Act boosted the number of IPOs by about 25%, based on the
number of firms that have completed small IPOs under the act.
Economists say it is still too early to tell whether the law
will lead to large-scale U.S. employment gains. While some mature companies
with thousands of employees went public under the JOBS Act, a big chunk are
young firms with room to grow. About 160 U.S. firms that went public under the JOBS Act
didn’t report any job growth, according to the Journal analysis. Some
eliminated jobs after their IPOs, and some investment partnerships or so-called
pass-through companies don’t have any employees.
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