As large businesses continue to shrink, smaller ones become even more important to the American economy. Federal 2012 census statistics counted 4267 establishments in Ulster County with fewer than 20 employees each. In 2000, the same count of small establishments had shown 3950. That’s an average of about two and a quarter such small new enterprises a month. Not bad, though not great, either.
The bulk of the growth in Ulster County establishments came in firms with fewer than five employees, which increased by 299. In percentage terms, these establishments had accounted in the year 2000 for 61.11 per cent of the total number of establishments. By 2012, the latest year for which comparable figures are available, the proportion of very small establishments had increased a couple of percentage points to 63.12.
The pattern was similar in the thriving New York City labor market, where the percentage of very small establishments jumped from 63.9 per cent in 2000 to 66.7 per cent in 2013. According to a report released this month by the Center for an Urban Future, the New York metropolitan area had a higher percentage of businesses with less than 20 employees than all but one of the nation’s 363 metro regions. “Much of this [growth in the number of businesses] is the result of a spectacular spike in entrepreneurial ventures, ranging from digital startups and artisanal food manufacturers to new retail and service firms, like restaurants, wine stores and healthcare clinics,” read the report. “Indeed, nearly twice as many new businesses were incorporated in the city in 2011 than in 1991.”
Turning establishments with fewer than five employees into larger businesses is no easy task. The vast majority of small businesses “never expand in a meaningful way.” But for some of these enterprises, the potential is there. Why not set a modest, achievable goal? “If just one third of the city’s 165,000 microbusinesses added one new employee,” the report calculated, “it would mean 55,000 additional jobs citywide.”
For Ulster County, with 2962 such microbusinesses, achieving such a goal would mean 987 additional jobs. In a private labor force with 47,000 jobs, that may not seem impressive. But it’s not a goal to sneeze at. The last year that total private employment increased by more than that many jobs was 1999.
The economic climate of 2014 is very different from the time when localities competed for employers looking to building manufacturing plants that offered hundreds of jobs. The talk these days is more about nurturing networks of startup ecosystems at the grass-roots level, helping would-be entrepreneurs build the right connections, find talent and attract investors — just the thing that a real community with a clear focus can do.
Like the national economy, the Ulster County economy seems on an upturn, albeit a fragile one. It’s been years since a major announcement of new jobs (especially one where the jobs panned out). This seems to me an ideal time to understand what’s going on, to refocus our expectations, and to begin to build a new economy one job at a time.
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