Headlines often boast of companies coming to Kansas City and opening their doors to anywhere from 300 to 1,000 new employees. Entrepreneurs, in comparison, are a job-creating powerhouse, working outside of the spotlight to bring an average of 16,376 new jobs to Kansas City, every single year.
First-time employers who employed fewer than 20 employees created 16,325 new jobs in 2016. These new and young firms contributed an average of 16,376 new jobs to the Kansas City metro area each year for the past five years.
We Create Jobs is a new report from KCSourceLink that quantifies the impact of new and young firms to Kansas City’s economy. 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.
JOBS: TREND AND IMPACT
New and young firms are the primary source of job creation in the U.S. economy, according to the Kauffman Foundation. In fact, the Kauffman Foundation reports that these new businesses account for a disproportionate amount of new job growth, creating nearly all net new job creation and almost 20 percent of gross job creation.
In 2016, KC startups—defined in We Create Jobs as first-time employers in the nine-county KC metro area with fewer than 20 employees—created 16,325 jobs. From 2012 to 2016, the cumulative job-creating impact 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.
Wages are where the investment in an entrepreneurial economy becomes a driver of economic growth. New firms pay less than the Kansas City metro average at birth, but surpass the average at year three.
We Create Jobs, a spinoff of KCSourceLink’s annual state of entrepreneurship report We Create KC, quantifies the impact of new and young firms to Kansas City’s economy. Using data from the Quarterly Census of Employment and Wages (QCEW) for Missouri and Kansas, KCSourceLink calculated the number of jobs from first-time employers by looking at employers who paid for unemployment insurance for the first time. KCSourceLink further sorted that number to include only those employers with 20 or fewer employees in the Kansas City nine-county metro area.
HIGHLIGHTS FROM THE FULL REPORT
In addition to jobs created by first-time employers, the report also provides year-to-year comparison data regarding job creation by new and young firms and by the tech sector as well as wage growth and the industrial density of startups.
Further highlights from the report include:
First-time employers who employed fewer than 20 employees created 16,325 new jobs in the Kansas City area in 2016. These firms created an average of 16,376 new jobs in the Kansas City metro area each year for the past five years.
Taking into account the employees hired by the same firms in each succeeding year, and accounting for job losses as well, first-time employers from 2012 to 2016 created 84,011 jobs in 2016. Consistent with nationally reported trends, this accounted for 65 percent of all new jobs and about 7.7 percent of the total employment in the Kansas City metro area.
Additional research from the Kauffman Foundation highlights the role of tech-sector businesses in job creation. The QCEW data also allows for calculating the number of jobs created by tech-sector businesses. In Kansas City, tech sector new firms created an average of 1,057 jobs each year for the past five years.
Kansas City metro area new entrepreneurial firms pay significantly less than the metro average at birth, but trend toward and surpass the average after about three years.