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STUDY POINTS TO SOURCES FOR JOB CREATION
COMMENTARY
"Local Unemployment Rate Rises" (12/01/04) seems to have become an unfortunately persistent theme. Too many people chasing too few jobs. That is a symptom of a region with an economy that is not creating enough jobs to fully employ its population. But, why are there too few jobs and what is being done in the region to deal with the root cause? The 1999 Battelle Memorial Institute study of economic development here in the Great Valley pointed out that it was the lack of entrepreneurial activity that kept the region from participating in past national economic growth and—if allowed to continue—likely would keep us from a brighter economic future. By now it is a well known fact that the majority of new jobs come from new, small and entrepreneurial firms. Fortunately there are data to help us better understand entrepreneurial activity in the region. Indicators of the region’s entrepreneurial activity can be found in economic data not often cited in reports and in the media. Four categories of data in particular, reveal some interesting facts that could have implications for policies and programs in the region designed to spur entrepreneurship as a means to job growth, such as the Northeast PA Technology Institute and the Great Valley Innovation Center. 1. Between 1990 and 2000 the percentage of self-employed persons (not in incorporated businesses) in the three-county region rose from 6.3 percent to 7.1 percent. This group represents a fertile breeding ground for enterprises that could create more jobs. 2. The number of incorporated establishments with no employees in the region grew by nearly 19 percent between 1997 and 2001. Their receipts grew at a slower pace—only 8.3 percent—but grow they did. Within this category, we note the rather robust growth in the number of firms in the "information providing" category. The number of information establishments grew by 43 percent with receipts growing more than 210 percent! 3. The region did not fare as well between 1996 and 2001 in terms of sustaining small business establishments employing between 1 and 19 persons. The percentage of such establishments of the total dropped from 86.2 percent to 85.6 percent. This drop, though small, is significant because it shows that the number of small businesses was shrinking while the number of all other size establishments was stable. 4. Over the recent few years in the U.S., great energy has been brought to business creation by minorities and women. Our region lags behind both Pennsylvania and the nation as a whole in terms of the percentage of businesses owned by women and minorities. These data suggest the following: 1. A pool of entrepreneurial talent exists right here, right now in the form of people working out of their homes and in one-person businesses. Programs, services and incentives may be needed to move economic activity out of the garage and into the newly established incubators. 2. We need to find new and better ways of helping existing small business establishments succeed and grow and 3. Productive investments may be able to be found in programs to nurture and tap into the entrepreneurial energy of women and minorities. The Battelle Study spawned a number of regional programs designed to enhance entrepreneurial activity. Hopefully, these programs will bear fruit that will be reflected in the data presented above—especially by persistently lower unemployment rates. Dr. John Sumansky is Chief Planning Officer at College Misericordia in Dallas Township. © Copyright 2004, The Wilkes-Barre Times Leader. All Rights Reserved.
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