There Are Two Distinct Americas for Small Businesses

Date: June 10, 2016

A monumental shift in job growth is underway throughout the country, spelling bad news for rural and suburban businesses, according to a new report.

Rural and suburban small business owners are feeling the sting of a lopsided recovery that’s concentrated in urban areas.

That’s one of the findings from a new study by the Economic Innovation Group that tracked the growth of small businesses from 2010 to 2014, with some discouraging results.

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Just 20 counties accounted for half of the new businesses opened throughout the country during those four years, according to the report. Metropolitan areas dominate the list, with Los Angeles County leading the way with 14,540 new businesses started in that time frame. Miami-Dade County posted 6,790 new businesses and Kings County, New York—home to Brooklyn—rounded out the top three counties for growth with 6,510 new businesses started. The outlook for owners outside of the city looks much different.

Nearly three in five counties had more businesses close between 2010 and 2014 than those that opened, and only one quarter of counties across the country matched or exceeded the national job growth rate, the report found. In other words, a small number of areas have been churning out new jobs, but in most places, growth is still stagnant.

The consolidation of economic growth has ramped up significantly since the 1990s, the report found. During the economic recovery that lasted from 1992 to 1996, 125 counties experienced business growth, accounting for 32 percent of the population. That number plummeted to 20 counties that made up 17 percent of the population from 2010 to 2014.

During that same time period, job growth for counties with populations less than 100,000 fell from an average of nine percent to one-percent job decay.

Change in investor preferences and the rise of millennials in the workforce are contributing factors in the shift from rural to urban job growth, experts say.

“There are a lot of small towns struggling because if the guy who owns the grocery store retires and his family doesn’t want to take it over, that town then doesn’t have a grocery store,” John Paul Engel, a University of Iowa entrepreneurship lecturer told GOOD magazine.

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