Inner City Small Business Study by SBA

Here is a study from the SBA you should know about.

Inner city businesses are similar to businesses located in the rest of the metropolitan statistical area (MSA), exhibiting similar startup and bankruptcy rates. Small businesses are the greatest source of net new employment in inner cities – comprising more than 99 percent of establishments and 80 percent of total employment.

America’s inner cities are home to over 814,000 private employer establishments employing just less than 9 million people (8 percent of U.S. private employment), a figure that grew 1 percent between 1995 and 2002. This figure lagged behind the job growth rate for the rest of the MSA, which was 1.9 percent over the same time period.

• Inner city residents hold only 22 percent of inner city jobs, while commuters hold 78 percent. This fact helps to explain why higher-wage inner city jobs do not correspond to higher median household income levels for many inner city residents. Wage growth between the inner city and the MSA has been competitive.

• About 5 percent of establishments with greater than $2.5 million in revenues are located in the inner city.

• Ten inner cities experienced faster small business job growth than their surrounding MSA’s from 1995 to 2002. These cities were: Jersey City, NJ; Tulsa, OK; Tampa, FL; Oakland, CA; St. Petersburg, FL; San Jose, CA; Mobile, AL; Portland, OR; Santa Ana, CA; and Augusta, GA. In addition, 51 inner cities gained small business jobs overall.

• Micro establishments in inner cities with under 20 employees showed an overall net job decrease of 75,000 jobs between 1995 and 2002. It is important to note that the SOICE project uses a static and not dynamic analysis of establishments; these micro establishments could have “graduated” beyond the 20 employee threshold.

• Service jobs dominated small business job growth in both inner cities and their surrounding regions.

• The most populous cities experienced more widespread employment growth than smaller cities. Job growth varied significantly by region, with larger growth in the West and the South outpacing smaller gains in the Northeast and Midwest.

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