Much evidence shows small firms are performing strongly and optimistic here. But that's only part of the story.
Two new reports show good trends for small business in Washington, despite the epithet hurled at such places by the Trumpists.
The latest Paychex/IHS Markit Small Business Employment Watch showed us No. 1 for job growth in November and the past three months. In the 12-month average, Washington was second behind Tennessee. Seattle ranked No. 1 for job growth in small firms over the past year.
Meanwhile, Washington ranked No. 2 in a small-business sentiment survey from the online consumer service site Thumbtack. Nearly 69 percent of small-firm respondents here expressed confidence, vs. 65 percent nationally. Seattle came in No. 3 among metros. The survey was based on 2,718 respondents.
Three reasons explain why these surveys show us doing well: The overall economy is strong; we have many large companies, which are the mother ships for small vendors; and our diverse and talented economy spawns startups. If you want to take this as evidence that the $15 minimum wage doesn’t hurt business, fine. At the least, it shows that “low tax, light regulation” doesn’t ensure a strong economy, as I wrote Sunday.
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For a more in-depth and nuanced look, check the latest work by the Kauffman Foundation. The Kauffman Index is considered a highly credible, rigorous measure of small business and entrepreneurial health. Agree or not with its methodology or results, they must be wrestled with.
The index for 2016 shows Washington ranking only No. 15 in “growth entrepreneurship.” This measures the five-year rate of startup growth based on employment; “share of scaleups,” firms growing to employ 50 or more; and “high-growth company density,” a revenue measure. Washington did well in the first category, so-so in the second and third. We did improve three slots from the 2015 rankings and were very high in “business exits,” startups successfully going public or being sold. Virginia was No. 1, helped by the suburbs of the Other Washington.
Among metropolitan areas, Seattle-Tacoma-Bellevue ranked No. 20 out of 40. Portland ranked No. 21. Washington, D.C. was No. 1.
If you accept the Kauffman findings, then small business here is in the middle-high of the pack in performance. That would indicate that much of the growth engine in Seattle, especially, is from larger companies. Those are both home-grown and outposts from Silicon Valley and San Francisco.
All of us can count the number of treasured small companies here that have closed since the recession. So it’s too early to declare victory.
Today’s Econ Haiku:
They call it ‘freedom’
Killing net neutrality
George Orwell logs off