Headlines often boast of companies coming to Kansas City and opening their doors to anywhere from 300 to 1,000 new employees. It’s a promise of new jobs that’s worth celebrating.
But how do Kansas City startups impact our economy? How many jobs do they create?
Before today, the answer was, “Well, we don’t really know.” Researchers can and have tracked jobs contributed by new and young firms at a national and even state level, with, at the very least, a two-year lag. And we know that these new and young firms, at the national level, are the primary source of job creation in the U.S. economy. In fact, the Kauffman Foundation reports that these new businesses account for a disproportionate amount of new job growth, creating nearly all net new jobs and almost 20 percent of gross job creation.
So we know, and have known (and at KCSourceLink we’re been beating this drum with you for the past 15 years) that entrepreneurship matters. Nationally, it’s a game changer for our economy; locally, entrepreneurship has shaped our city’s character, culture and vibrancy. But what we didn’t know, before today, was how to quantify the impact of entrepreneurship, right here in our own backyard. We didn’t know how many jobs Kansas City entrepreneurs create.
Today, thanks to We Create Jobs, a new statistical analysis and report from KCSourceLink, we have a number.
KC startups created 16,325 new jobs in 2016.
On average, KC startups create 16,376 new jobs every year.
And from 2012 to 2016, the cumulative job-creating impact of Kansas City’s first-time employers resulted in 84,011 jobs, accounting for 65 percent of all new jobs and about 7.7 percent of the total employment in the Kansas City metro area.
And these numbers are real and current. They aren’t guesses or estimates or promises.
Yes, you are right. Applause, hat tips, curtsies, high-fives and huzzahs are in order. And yes, you surmised correctly: KC startups are a job-creating powerhouse.
(Don’t drop that mic yet: we’ve got more stats on job contributions by industry and by tech startups; how wages compare to the average KC wage and more in the full We Create Jobs report. You can jump there now. Feelings won’t be hurt if you want to get straight to the data and methodology.)
“I'm very pleased with the We Create Jobs report, which builds on work originated by the Kauffman Foundation as to the economic impact of new and young firms,” said Wendy Guillies, president and CEO, Ewing Marion Kauffman Foundation. “With this report, KCSourceLink has illustrated just how important these first-time employers are to job creation.”
How did we get this number?
We Create Jobs, for the first time ever, tracks jobs created by new and young establishments in nine-county Kansas City metro area—Johnson, Leavenworth, Miami and Wyandotte counties in Kansas; and Cass, Clay, Jackson, Platte and Ray counties in Missouri.
KCSourceLink calculated the number of jobs from first-time employers by looking at employers who paid for unemployment insurance for the first time—a registration required by law. (Didn’t know that? Be sure to download our hiring checklist before you make your first hire.)
We further sorted that number to include only those employers with 20 or fewer employees in the metro area and then tracked the growth of those insurance registrations over time, subtracting jobs lost by firms that shrink or fail.
This gave us a precise and reliable count of job creation. And these aren’t just from the tech industry. We define startup entrepreneurs broadly and these jobs show that economic impact comes from restaurants, retail, manufacturing, administrative as well as tech.
Want more details about jobs and the industries that represent these first-time employers?
Download the full We Create Jobs report.
But are these “good” jobs?
This statistical analysis also lets us track the salaries paid by these first-time employers.
The data reveals that while average salaries paid by first-time employers trail the overall metro average for the first three years, they exceed the overall average after year three, and widen the gap considerably in succeeding years. And wages from first-time tech employers start well above the overall metro average.
Want more details about wages and how they split out for the tech industry?
Download the full We Create Jobs report.
Why is this jobs number important?
As the portal for entrepreneurship in Kansas City, KCSourceLink talks to entrepreneurs every day. Entrepreneurs and small business owners call us with their struggles, we connect them to vital resources, we celebrate their successes and we track our city’s entrepreneurial progress.
We’ve always known entrepreneurs create impact. We just didn’t have the hard data at the local level to demonstrate that significance and to show stakeholders the quantifiable proof that we need to invest in them and the organizations that support them.
So here it is. More proof that entrepreneurship matters. In Kansas City.
Connecting the data from Kansas City with the existing theory pertaining to entrepreneurship is a positive step in supporting civic leaders in their quest to boost economic activity. It acknowledges the importance of our entrepreneurs and justifies the work of our 250+ entrepreneurial resource network.
This number lets us have deeper and richer discussions about what we can all do to support such an important cultural—and economic—player.
“KCSourceLink’s report makes it clear that our entrepreneurs are a critical part of the economic health and vitality of Kansas City and our entire region,” said Kansas City, Missouri, Mayor Sly James. “We should be grateful to these entrepreneurs for the companies they build and the people they employ, and we—civic, community and corporate leaders alike—should do everything we can to support their success.”
How can you help?
Whether you’re an entrepreneur, an entrepreneurial service organization, a civic or community leader or someone who insists on shopping local at every opportunity, pat yourself on the back. You create jobs.
So here’s how you can help:
- Be ready to help people who are starting or growing a business. Refer them directly to KCSourceLink, and we’ll guide them to the right resource for them from our network of 250+ resources. It’s what we do and our services are free.
- Donate to an entrepreneurial support organization.
- Improve someone’s social network. Introduce them to a customer, investor or mentor.
- Attend a meetup, sponsor it or convene it.
- Celebrate an entrepreneur in your communications.
- Buy from locally owned companies.
- Invest in local startups.
- Support the educational system to develop the talent of tomorrow.
- Help create a community that’s attractive and vibrant.
- Support innovative research at universities, hospitals and research institutions.
We’ve all worked hard to build a city that welcomes and supports entrepreneurs, their businesses and the talent they attract. So let’s celebrate, then let’s keep helping entrepreneurs.