Entrepreneurs are the key to our economic recovery

New research underscores the role of young firms in overall job growth

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May 06, 2020, 09:06 ET

BENTONVILLE, Ark., May 6, 2020 /PRNewswire/ -- Today Heartland Forward published a new report, "Young Firms and Regional Economic Growth," that demonstrates entrepreneurship has a significant positive impact on a city's overall employment growth. The research finds that cities with a higher share of employment at "young firms," defined as businesses less than five years old, saw notably faster job growth between 2010 and 2017—and that Heartland cities have less entrepreneurial vitality than the rest of the country. The report presents recommendations to support and strengthen young firms, which are highly vulnerable as a result of COVID-19 and will be a necessary part of a strong economic recovery.

"When entrepreneurs thrive, the cities they call home also thrive," said Ross DeVol, co-author of the study and President and CEO of Walton-backed think tank Heartland Forward. "As community leaders and lawmakers chart a path to recovery, they must put a renewed focus on support for entrepreneurship. A concerted effort will give cities the economic boost they need—not just in the immediate aftermath of COVID-19, but for generations following that."

The report ranks U.S. cities based on the strength of their entrepreneurial ecosystems and finds that the Heartland region lags behind the rest of the country. Only five Heartland metros ranked in the top 50 nationally for knowledge-intensive young firms: Nashville-Davidson-Murfreesboro-Franklin, Tenn; Austin-Round Rock, Texas; Midland, Texas; College Station-Bryan, Texas; and Ann Arbor, Mich. Four of the top five metros overall are in California.

The top five Heartland micropolitan areas (defined as communities with a population between 10,000 and 50,000) are Oxford, Miss; Tullahoma-Manchester, Tenn; Pecos, Texas; Picayune, Miss; and Williston, N.D.

"The long-held notion that cities should lure large firms to create new jobs is frankly unsustainable and inefficient," said Richard Florida, Heartland Forward senior fellow and lead author of the report. "Our research shows that the true job creators are entrepreneurs. Now more than ever, cities should focus on fostering environments that allow these new businesses to flourish."

The report provides a series of recommendations for strengthening entrepreneurial ecosystems. These actionable solutions for local leaders include establishing and funding entrepreneurial support organizations, encouraging universities to increase their focus on entrepreneurship programs and commercializing innovation, and enhancing community amenities to attract entrepreneurs.

About Heartland Forward:

Heartland Forward's mission is to improve economic performance in the center of the United States by advocating for fact-based solutions to foster job creation, knowledge-based and inclusive growth, and improved health outcomes. We conduct independent, data-driven research to facilitate action-oriented discussion and impactful policy recommendations.

SOURCE Heartland Forward