The Not-So-Secret Force Behind KC Job Creation

The Not-So-Secret Force Behind KC Job Creation


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“Small businesses add nothing to the economy and workforce.” — Said no one ever

And now, thanks to the work of KCSourceLink, we have the data to prove that that is, indeed, #fakenews.

The latest report in KCSourceLink’s “We Create” series, the findings from “We Create Jobs” shares real numbers that show what everyone has always known: Small businesses and entrepreneurs make the Kansas City economy run.

“We have always wanted to quantify the impact of entrepreneurs,” said Kate Hodel, who coordinated the report. “We knew in
our hearts that it was great, but to be able to put a number on it was what we wanted. We’d been looking and looking for a way to measure this.”

The data was collected from the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages. KCSourceLink researchers calculated the number of jobs from first-time employers using the number of employers who paid for unemployment insurance for the first time. They counted only companies with 20 or fewer employees, which helped screen out bigger companies that relocated to the metro.

What the report shows is that startups (defined as first-time employers with fewer than 20 employees) are creating a significant number of jobs in the metropolitan area—upwards of 16,000 each year. In 2016, the cumulative impact of those first-time employers was 84,000 jobs, accounting for 65 percent of all new jobs and nearly 8 percent of total employment in the metro.

That number was the biggest surprise for Hodel and KCSourceLink.

“We expected it to be significant, but not 16,000, and we were surprised at how consistent it was over time,” she said. “You always hear about how many startups fail, and this shows that even with the failures, there are others there to pick up the slack.”

Another interesting discovery from the study is the variety of industries that are represented by entrepreneurial companies. While technology companies are obviously growing in number, Hodel said it’s interesting to note that retail, manufacturing and health care are also a large part of the overall mix.

“The support for entrepreneurs comes from many areas,” she said.

KCSourceLink is breaking new ground with this report, Hodel said. It’s always been difficult, if not impossible, to find local data like this about startups and small entrepreneurial ventures.

“Usually, the stats are on a national, state and some county level,” she said. “But drilling down to the metro area, to ZIP codes, we haven’t found anything else like it.”

Hodel is encouraged by the report and sees it validating our entrepreneurial community and the overall region’s growing support for entrepreneurs.

Hodel was pleased to see that when it comes to salaries, entrepreneurs are keeping pace with, and sometimes exceeding, their corporate counterparts.

“I love the chart that shows that employees of entrepreneurs start below in salary, but quickly catch up and exceed others,” Hodel said. “Successful entrepreneurs understand that it’s about their people.”

Looking ahead, what might the numbers say about the metropolitan area’s future? We are in a good place, but the question now becomes how to sustain and grow entrepreneurship and everything that goes with it—jobs, salaries and support services. The key to that, Hodel said, is recruiting and keeping talent.

“That’s the biggest challenge for everybody,” she said. “We need to focus, focus, focus on how education is working—not just for the entrepreneurial companies, either—but how education is preparing young people for the world that is changing rapidly.

“Entrepreneurs are important to the local economy’s health. We need to continue to support both the entrepreneurs and the organizations that support them.”

Written by

Kate Leibsle is a freelance writer in the Kansas City area.

Categories: KC Futures

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