Kansas City has fallen five spots on this year’s Kauffman Index of Growth Entrepreneurship, ranking 28th among the nation’s largest metro areas.
Produced by the Ewing Marion Kauffman Foundation, the annual study is one measure of the nation’s entrepreneurial health. Generally, this year’s index shows a continuing recovery from the Great Recession, though researchers warned of a long-term decline in entrepreneurial growth.
Kansas City’s lower ranking was because of a decline in the rate of startup growth and in its share of “scaleups” – the number of young, small businesses that expand to 50 employees by their 10th year.
Instead, the list is led by cities such as Washington, D.C.; Austin, Texas; Columbus, Ohio; Nashville; and Atlanta.
Meanwhile, Missouri held steady at No. 22 on the index’s list of the 25 largest states, but Kansas dropped three spots to No. 8 on the list of the 25 smallest states.
Among the biggest states, the leaders were Virginia, Georgia and Maryland. Utah, Hawaii and North Dakota topped the list of smaller states.
The nation’s young companies are growing more swiftly and hitting the 50-employee mark faster, but fewer are evolving into medium- and large-size employers, researchers found.
The revenue’s there. So is the value creation. But job growth is lagging.
According to the index, companies that turned 5 years old in 2016 saw their head count expand by approximately 76 percent, growing from six at their inception to 10 people. Hiring lags compared to what the United States recorded in the 1980s and 1990s.
“These findings are cautiously promising. We are seeing a new model of economic development emerge – one that infuses entrepreneurship into the economy and removes barriers to starting and growing businesses,” said Victor Hwang, vice president of entrepreneurship at the Kauffman Foundation.
“Our research indicates that high-growth firms, particularly of young firms, are important to job, output and productivity growth. However, because businesses are creating fewer jobs, it’s more important than ever to empower people to control their own economic destinies.”