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 14,863 new jobs to Kansas City, every single year.
First-time employers who employed fewer than 20 employees created 15,003 new jobs in 2018. These new and young firms contributed an average of 14,863 new jobs to the Kansas City metro area each year from 2014 to 2018.
We Create Jobs is a 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.
We Create Jobs was last updated in the December 2019. What's new?
- Job contributions by Kansas City startups through 2018
- Survival rate of KC startups vs. national firms (p. 6)
- Comparison of startup wages to the living wage (p. 9)
As well as our updates on our usual startup metrics:
- Job creation by KC startups and tech startups from 2014-2018
- Number of KC startups by industry
- Number of KC tech startups by segment
- Average startup density by industry in Kansas City
- KC startup wages vs. KC tech startup wages vs. KC average wage vs. living wage
And the good news? Numbers are trending up, showing the continued important of Kansas City's startups to job creation and economic vitality.
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 2018, KC startups—defined in We Create Jobs as first-time employers in the nine-county KC metro area with fewer than 20 employees—created 15,003 jobs. From 2014 to 2018, the cumulative job-creating impact resulted in 75,359 jobs, accounting for 58% of all new jobs and about 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 two.
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 15,003 new jobs in the Kansas City area in 2018. These firms created an average of 14,863 jobs each year from 2014–18.
- Accounting for the employees whom these same firms hire in each succeeding year and accounting for job losses as well, first-time employers from 2014–18 created 75,359 jobs in 2018. This accounted for 58% of all new jobs in the Kansas City metro and about 6.6% of the total employment.
- Tech sector new job wages in the metro area start at twice the average wage for all new jobs, making that sector a key focus for job growth. In Kansas City, new tech sector firms created 925 jobs in 2018 and averaged 900 new jobs from 2014–18.
- Using the hiring of a first employee as a proxy for startup, data reveals the number of startup firms in the KC area jumped to 6,301 in 2018 from 5,317 in 2014.
- Kansas City metro area new entrepreneurial firms pay less than the metro average at birth but trend toward and surpass the average in two years.