NEW YORK, Sept. 3 -- The average number of people employed by the youngest businesses fell sharply during the pandemic, accelerating a decades-long slide in the United States -- the rise of these smaller ventures is one of the first signs of how pandemic-inspired businesses have reshaped the economy, reported The Wall Street Journal (WSJ) on Tuesday.

Businesses launched between March 2020 and March 2021 had, on average, 4.6 employees, compared with 5.3 employees a year earlier, according to Census Bureau data. That figure was 5.8 at the turn of the century and had been declining gradually until COVID-19 spurred a sharper drop.

"The number of people taking initial steps to start a new business surged during the pandemic and remains elevated, as COVID-19 created new opportunities and left people with more time and different priorities," said the report.

There are different reasons these new businesses are smaller. At some new companies, pandemic-related headwinds have slowed hiring. At others, entrepreneurs have chosen to keep their operations small out of a desire for a better work-life balance, it noted.

But the lower head counts also reflect more fundamental changes. The rise of remote work, the expansion of the gig economy and the proliferation of software tools all make it easier for entrepreneurs to operate with a leaner staff, according to WSJ.

Keeping head count down can make it easier for young businesses to adapt to the ups and downs of the economic cycle, said Robert Fairlie, an economist at the University of California, Los Angeles.

"At some stages of growth for a small business, it can be pretty valuable. They have that flexibility," Fairlie said. "At some stages of growth, it will hurt them."

  - Xinhua