The Small Business Administration (SBA) administers several programs to support small businesses, including loan guaranty programs to enhance small business access to capital; contracting programs to increase small business opportunities in federal contracting; direct loan programs for businesses, homeowners, and renters to assist their recovery from natural disasters; and small business management and technical assistance training programs to assist business formation and expansion. Congressional interest in the SBA's programs has increased in recent years, primarily because they are viewed as a means to stimulate economic activity and create jobs. This report opens with an assessment of the economic research on net job creation (employment gains related to business startups and expansions minus employment losses related to business deaths and contractions) to identify the types of businesses that appear to create the most jobs. That research suggests that business startups play an important role in job creation, but have a more limited effect on net job creation over time because about one-third of all startups close by their second year of existence and fewer than half of all startups are still in business after five years. However, the influence of small business startups on net job creation varies by firm size. Startups with fewer than 20 employees tend to have a negligible effect on net job creation over time whereas startups with 20-499 employees tend to have a positive employment effect, as do surviving younger businesses of all sizes (in operation for one year to five years). This information's possible implications for Congress and the SBA are then examined. For example, since its formation one of the SBA's primary goals has been to promote business competition within the various industrial classifications as a means to deter monopoly and oligarchy formation within those industries. As part of that effort, the SBA provides assistance to all qualifying businesses that meet its size standards. About 97% of all business concerns currently meet the SBA's eligibility criteria. Given congressional interest in job creation, this report examines the potential consequences of targeting SBA assistance to a narrower group, small businesses that are the most likely to create and retain the most jobs. In addition, the Government Accountability Office (GAO) has argued that the SBA's program performance measures provide limited information about the impact of its programs on participating small businesses because those measures focus primarily on output, such as the number of loans approved and funded, rather than outcomes, such as how well the small businesses do after receiving SBA assistance. Given congressional interest in job creation, this report examines the potential consequences of adding net job creation as a SBA program performance measure. This report also examines the arguments for providing federal assistance to small businesses, noting that policymakers often view job creation as a justification for such assistance whereas economists argue that over the long term federal assistance to small businesses is likely to reallocate jobs within the economy, not increase them. Nonetheless, most economists support federal assistance to small businesses for other purposes, such as a means to correct a perceived market failure related to the disadvantages small businesses experience when attempting to access capital and credit. The following sections provide an assessment of employment dynamics in the United States, starting with the latest economic data available from the U.S. Bureau of the Census concerning the number and employment of small and large enterprises, establishments, and firms (small is defined here as having fewer than 500 employees and large as having 500 or more employees). This is followed by an assessment of job gains and losses (sometimes referred to as "churning") by small and large establishments (including opening/startup establishments) using data available from the U.S. Department of Labor's Bureau of Labor Statistics (BLS). Assessments of employment dynamics usually examine the employment decisions of establishments, firms, and/or enterprises. An establishment "is a single physical location where one predominant activity occurs." A firm "is an establishment or a combination of establishments" and is often "defined by its unique Employer Identification number (EIN) issued by the Internal Revenue Service (IRS)." An enterprise "is a firm or a combination of firms that engages in economic activities which are classified into multiple industries. An enterprise may report under one or a number of EINs." Each of these units of analysis provide information that is useful for understanding employment dynamics. As the BLS explains: The perception is that multiunit businesses act as a whole rather than as a collection of individual establishments. On the one hand, it could be that larger multiunit businesses make more unified decisions to control hiring, close a plant or store, or lay off workers during economic downturns. This argument supports the use of a higher level of aggregation than the establishment level. On the other hand, businesses might make such decisions on the basis of each establishment's profitability, product line, and longer term prospects for contributions to the overall business. Why restrict hiring at a fully profitable and growing location when other locations are suffering from insufficient demand? In this case, the firm may act more like a set of individual establishments rather than a unified set of establishments. Generally speaking, "the net employment change remains the same for all levels of aggregation, but the magnitude of gross job flows varies with the unit of analysis chosen." There is "a higher level of churning when job flows are estimated at a lower level of aggregation (the establishment)" and a lower level of churning "at a higher level of aggregation (the enterprise or firm) [because] expansions in some units offset contractions in other units, leaving job flows at a lesser magnitude." In 2016 (the most recent available data), there were nearly 7.76 million employer establishments, over 24.81 million non-employer (self-employed) establishments, and over 5.95 million employer firms. As shown in Table 1 , small employer enterprises (fewer than 500 employees) provided almost half (47.3%) of all jobs in 2016. As shown in Table 2 , from 2010 to 2018, opening/startup establishments (establishments with positive employment in March of the current year following zero employment in March of the previous year) have accounted for just under 30% of all employment gains (new jobs) in the United States each year since 2011. By definition, opening/startup establishments do not affect employment losses, which result from establishments contracting or closing. As shown in Table 3 , from 2010 to 2018, small establishments (establishments with average employment of fewer than 500 employees from March of the current year to March of the previous year) have accounted for about two-thirds of net employment gains in the United States each year since 2011. As shown in Table 4 , from 2010 to 2018, large establishments (establishments with an average employment of 500 employees or more from March of the current year to March of the previous year) have accounted for just under 30% of all employment gains (new jobs) in the United States each year since 2011. Until recently, the prevailing view among economists was that although small businesses, defined as firms with fewer than 500 employees, and large businesses "provide roughly equivalent shares of jobs, the major part of job generation and destruction takes place in the small firm sector, and small firms provide the greater share of net new jobs." For example, in 2010, a SBA study found that over the previous 15 years small businesses accounted for about 65% of private-sector net job creation. Also, as shown in Table 3 , small businesses have continued to account for about two-thirds of net new jobs since 2010. However, as the availability of data concerning the life cycle of firms and establishments has improved, and the number of studies examining the relationship between job creation and business size has increased, the prevailing view that small businesses, as a whole, are responsible for the majority of net job creation has been challenged. For example, some researchers have found considerable variation in the role of small businesses in net job creation across different time periods. In some time intervals, small businesses accounted for virtually all job growth and in others they accounted for about the same proportion of new jobs as their share of existing jobs. Some researchers have also argued that the role of small businesses in net job creation is overstated because most new jobs are created by new businesses and most new businesses (startups) are small because the resources needed to launch larger businesses are relatively difficult to obtain. They argue that many startups (defined as businesses in operation for less than a year), and the jobs they create, disappear within a few years. For example, several studies have found that about 20% of all startups close in their first year, one-third close within two years, and fewer than half of all startups are still in business after five years. Another study, an analysis of job creation in the United States from 1994 to 2006, found that startups with fewer than 20 employees had "a strong positive initial effect" on employment growth in the year the business was formed, but that positive employment effect decreased over time and was negligible after six years. However, that study also found that startups with 20-499 employees had a positive employment effect that increases after its first year in operation, reaches a maximum after five years, and then moderates. The positive employment effect from these firms continued to remain positive over the entire time period studied (1994-2006). The authors asserted that these larger small businesses were "able to increase their level of productivity sooner after entry" than startups with fewer than 20 employees "due to their size and preconditions," such as better access to capital, and, as a result, were in a better position to "challenge existing firms and increase the competitiveness of surviving existing firms." The study's authors argued that their findings suggest that the age of a business is a more important factor in understanding business employment dynamics than the size of a business: Our findings emphasize the critical role played by startups in U.S. employment growth dynamics. We document a rich "up or out" dynamic of young firms in the U.S. That is, conditional on survival, young firms grow more rapidly than their more mature counterparts. However, young firms have a much higher likelihood of exit so that the job destruction from exit is also disproportionately high among young firms.