Philly Behind Major Metro Regions in Startup Creation, Among Other Things

A new entrepreneurship survey from the U.S. Census Bureau shows the region and entire country have ways to go.

A new survey of the country’s entrepreneurs puts the Philadelphia metro region behind on a number of key economic growth indicators. Philadelphia trails the nation’s other major regions for the number of new businesses in the area and for its number of minority- and female-owned businesses.

The findings come from the U.S. Census Bureau’s inaugural Annual Survey of Entrepreneurs, conducted to provide a “timely, more frequent socio-economic portrait of the nation’s employer businesses by gender, ethnicity, race, and veteran status,” the Census Bureau said in statement. The new survey also includes the number of years a surveyed firm has been in business, information that’s left out of the agency’s well-known Survey of Business Owners released every five years.

“This is the first time the Census Bureau is making statistics available on every year that show a portrait of America’s business owners, providing vital information to understanding the state of our economy,” said Census Bureau director John H. Thompson. The survey is based on 290,000 respondents and data collected in 2014.

And according to a paper accompanying the survey by Census Bureau researchers Lucia Foster and Patrice Norman, the Bureau chose to survey entrepreneurs because entrepreneurship is a “driver of economic growth” and “one of the most dynamic parts of the U.S. economy.”

Moreover, “understanding business startups is critical for developing a deeper understanding of job flows and productivity dynamics,” the authors wrote.

One of the survey’s main findings is that nationally, new businesses — those younger than two years old — made up about 9 percent of companies in 2014. Nearly 1 in 10 businesses nationwide are new.

The Philadelphia metropolitan area came close to this national figure, with less than 8 percent of its businesses being younger than two years old, but that trailed other major regions like Miami, which led the country with 11 percent of its businesses being new.

The paper noted that the process of entering and exiting of new businesses boosts economic growth. “[…] startups account for 20 percent of U.S. gross (total) job creation while high growth businesses (which are disproportionately young) account for almost 50 percent of gross job creation,” the authors said. “And not only do startups impact job creation, they also play a large role in innovation and productivity dynamics in the U.S.,” the paper said.

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The study also broke down the country’s businesses by race and ethnicity, gender and veteran status.

“Understanding differences in demographics of business startups is critical since startups (and self-employment) can be an important mechanism for ensuring the mobility of economically disadvantaged groups,” the authors wrote in the paper.

More than one third or 36 percent of the 50 most populous metropolitan areas had about 20 percent of minority-owned businesses. But Philadelphia didn’t make the cut.

Minority-owned businesses represented about 16 percent of the majority minority city’s businesses. San Jose and Miami sat atop the list of the country’s most populous regions with the most minority owned businesses, 39 and 38 percent, respectively.

By state, Hawaii and California were leaders in the percentage of all employer businesses that were minority-owned, with 54 percent and 32 percent, respectively. New Jersey was among the group of 10 states that had 20 percent or more minority-owned businesses, with 22 percent.

Nationally, minority-owned businesses made up about 17 percent of total businesses.

While the U.S. Census Bureau’s latest Survey of Business Owners shows that the number of women-owned businesses is growing, the Annual Survey of Entrepreneurs shows that women in some regions may face more challenges. Philadelphia was ninth among the top 10 major metropolitan areas in female-owned businesses, with 17 percent. Atlanta had the highest percentage of women-owned businesses at 24 percent. And nationally, women owned about 19 percent of businesses.

Veterans in the Philadelphia metro area owned about 7 percent of businesses, on par with national representation. The survey found that more veteran businesses were operating for less than two years than those that were in business for more than 16 years.

The Census Bureau hopes to prompt communities and federal and local leaders to make data-driven decisions with these timely statistics on the demographics of the country’s business owners.

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