A new report finds that New York City urgently needs a scale-up strategy aimed at helping its startups and small businesses expand into medium-sized and large enterprises.
The study concludes that, at a time when the city has experienced a remarkable boom of entrepreneurship and a significant increase in startup businesses, scaling up those companies may offer the best opportunity to expand the number of middle class jobs in New York City.
The report, Scale Up New York: Creating Middle Class Jobs by Scaling Up New York City’s Small Businesses, is the latest study in the Center for an Urban Future’s Middle Class Jobs Project, a research initiative supported by Fisher Brothers and Winston C. Fisher.
It finds that while New York City has some great small business assistance programs, most focus on aspiring entrepreneurs and companies just starting out – and too few programs are aimed at helping existing businesses grow to the next level.
At the same time, the report finds that countless small businesses in New York City face several critical obstacles at the precise moment they decide to expand.
The city is home to 207,619 businesses with 20 or fewer workers, up from 195,429 in 2010. Since 2008, the number of businesses employing fewer than 10 workers have increased by nearly 12 percent citywide and nearly 22 percent in Brooklyn.
However, the report finds that too few of the city’s small businesses manage to achieve sustained growth. Despite the surge in the number of new small businesses, growth among businesses with more than 100 employees has been largely flat since 2008 and the number of businesses with more than 1,000 employees decreased 1 percent during the same period.
“New York City’s economy is made stronger by its small businesses,” said Charles Euchner, the author of the report and the Center for an Urban Future’s Fisher Fellow. “We must invest in these companies and small business owners, which are eager to expand, to grow the economy and create more middle class jobs that the city desperately needs.”
According to the report, as small businesses grow, they create more mid-level positions and increase benefits for their workers, including paid sick leave, time off and subsidized healthcare.
Businesses employing fewer than 20 people offer an average annual pay of $49,091. Companies employing 20 to 99 workers offer average salaries of $59,930 annually, and businesses employing 100 to 499 workers offer an average salary of $68,024. The bigger the company, the higher the average wage.
“New York City has incredible potential to turn more of its startups and small businesses into larger companies,” said Winston C. Fisher, partner at Fisher Brothers and sponsor of the Center for an Urban Future’s Middle Class Jobs Project. “Doing so may be the city’s best opportunity to boost the number of middle class jobs.”