Report: KC startups driving quality job creation across metro

Young Kansas City businesses are substantial job creators for the area, according to a recent report from entrepreneurial resource hub KCSourceLink.

In its recent “We Create Jobs” report, KCSourceLink found that new firms that employed fewer than 20 workers created 16,325 new jobs in 2016. And for the past five years, startups created an average of 16,376 new jobs in the metro area each year.

The report is the culmination of a long-held aspiration, said Maria Meyers, CEO of KCSourceLink.

Meyers is thankful she can finally hold up a figure to demonstrate the job-creating power startups have in the area.

“I’ve been dreaming about this day since 2003,” Meyers said, referring to the year that KCSourceLink launched. “Our young companies are strong job creators. We hear a lot about young companies going out of business, but you can see from the report that even as companies go out of business, those that stay in business pick up the slack and create those jobs. That’s important.”

A startup, according to the report, is defined as a firm hiring its first employee as observed by compliance with unemployment insurance laws. The firm may or may not have had operations prior to the hiring of the first employee. The firms were further sorted for those with fewer than 20 employees upon first time filing with Kansas or Missouri secretaries of states to eliminate large companies moving into the area.

The report entailed significant data digging, Meyers said, which required that KCSourceLink meticulously analyze data from the Quarterly Census of Employment and Wages for Missouri and Kansas from each zip code in the metro area. The Kansas City nine-county region includes Johnson, Leavenworth, Miami and Wyandotte in Kansas; Cass, Clay, Jackson, Platte and Ray in Missouri.

Between 2012 and 2016, startups in those areas generated 84,011, according to the report. That accounts for 7.7 percent of all jobs in Kansas City in 2016.

In addition to their job creating power, startups tend to create high-paying jobs over time, Meyers said. After reaching their seventh year, Kansas City area startups’ average wages shoot up from about $37,000 to nearly $52,000 per year. The average wage in Kansas City is about $44,000 per year, according to the report.

“We all know that a lot of young companies start with below average wages, but you can see that wages increase over time and exceed that (average),” Meyers said. “Not only are startups job creators but they’re creating quality jobs.”

The diversity of firms represented in the report also bodes well for Kansas City, said Kate Hodel, project director at KCSourceLink. It’s not just tech firms or any one particular sector, she said, but rather a breadth of industries with young, emerging firms.

Another notable observation is the steady rate at which startups have created jobs, Hodel said.

“One of the biggest things is how consistent it has been over five years,” Hodel said. “The fact that there’s not that much variation is pretty amazing. These young, emerging firms are churning out jobs every single year at a pretty consistent pace.”

To learn more about the report, click here.