The Best & Worst Cities to Work for a Small Business – 2013

CardHub-2013-Best-Worst-Cities-to-Work-for-Small-BusinessContinuing CardHub’s theme of small business-related releases in anticipation of National Small Business Week (June 17-21), this study sought to identify the cities that are the most and least friendly to employees of small companies.

There is no shortage of commentary on the best and worst cities to start a small business, after all, and with such companies employing about 47% of the private workforce in this country, paying more than 40% of the private payroll, and creating more than 60% of the new jobs added over the past 20 years, according to the U.S. Small Business Administration, it bears asking what opportunities exist for the roughly 14% of people who are currently either unemployed or underemployed, according to data from the Bureau of Labor Statistics.

More specifically, CardHub used 10 different metrics – ranging from net small business job growth and industry variety to hours worked and average wages for new hires – to evaluate the state of small business in the 30 largest metropolitan areas in the United States.  We then ranked the cities based on their overall attractiveness for job seekers.

The following can be found below:

Overall Results

 

Rank City Rank City
1 Denver 16 New York
2 Boston 17 Pittsburgh
3 Minneapolis 18 Cleveland
4 Seattle 19 Los Angeles
5 San Francisco 20 Baltimore
6 Houston 21 Atlanta
7 San Antonio 22 Washington, D.C.
8 Dallas 23 Phoenix
9 Tampa 24 Chicago
10 Kansas City 25 Las Vegas
11 Miami 26 San Diego
12 Orlando 27 Philadelphia
13 St. Louis 28 Sacramento
14 Cincinnati 29 Riverside
15 Portland 30 Detroit

Other Main Findings

  • The overall rankings display little correlation to geography, as the top 10 boasts 1 city from the Northeast, 1 from the Southeast, 2 from the Midwest, 3 from the Southwest, and 3 from the West.  The bottom 10 includes 1 from the Northeast, 1 from the Southeast, 2 from the Midwest, 1 from the Southwest, and 4 from the West.
  • Miami, Denver, and New York have the most small businesses per capita.  Las Vegas, San Antonio, and Riverside have the least.
  • Phoenix, Denver, and Riverside have the fastest growing small business communities, while Detroit, Chicago, and New York bring up the rear.  It’s especially surprising that Riverside is on the positive side of this, as its one of the worst overall places to work for a small business these days, but the area shed so many jobs during the Great Recession that it’s bound to recoup at least some of them fairly quickly.
  • New hires make the most money in Washington, D.C., San Francisco, and New York – the three cities with the highest cost of living.  They make the least in Riverside, Sacramento, St. Louis – all of which are in the bottom half for cost of living.
  • Los Angeles, Kansas City, and St. Louis have the most industry variety in their small businesses, while Baltimore, Miami, and Washington, D.C., have the least.

Commentary for Selected Metropolitan Areas

Top 5

Denver:  It’s no surprise that Denver topped the list of the Best Cities to Work for a Small Business, as 97% of employers in Colorado are classified as small businesses and such companies comprise 90% of the Denver Metro Chamber of Commerce’s membership.  The Mile High metropolitan area boasts nearly 30 businesses with fewer than 250 employees per 1,000 residents, a workforce that’s growing at the second fastest rate in the country, and the 5th highest wages for new hires.

Boston:  Boston ranks among the top 10 nationally in terms of the number of small businesses per capita, small business vitality, unemployment rate, disposable income, and hours worked.  Such factors were enough to overcome a relatively high cost of living and garner Beantown the distinction of being the second best city to work for a small business in 2013.

Minneapolis:  Companies with fewer than 50 employees comprise roughly half of the Minneapolis Chamber of Commerce’s membership, and the surrounding metropolitan area has nearly 27 companies with fewer than 250 employees per 1,000 residents.  Minneapolis also boasts the least competition for jobs among the 30 major cities CardHub evaluated, its workforce spends relatively little time on the job, and the city ranks in the top 10 nationally in terms of small business vitality, industry variety, and stress.

Seattle:  The birthplace of Starbucks and Nordstrom and a key West Coast hub for manufacturing, transportation and entrepreneurship, Seattle ranks as the 4th best city for small business employees in 2013.  This strong overall result comes on the strength of the Emerald City ranking  5th nationally in terms of small businesses per capita, 2nd for small business vitality, and in the top 10 for unemployment, new hire earnings, and industry variety.

San Francisco:  San Francisco has long been recognized as a bastion for entrepreneurial spirit, and the Bay Area now boasts the 6th most small businesses per capita, ranks 5th in terms of both small business vitality and net small business job growth, and offers the 2nd highest wages to new hires.  The city also recently upped the ante in welcoming start-ups, establishing an Emerging Business Loan Fund which enables qualified businesses to “apply for a loan ranging from $50,000 to $1 million to cover operational, staffing, equipment, expansion, and real estate costs,” according to the California Economic Summit website.

Bottom 5

San Diego:  San Diego – known largely for its scenery and military community – ranks in the bottom half nationally in terms of number of small businesses per capita, small business vitality, unemployment rate, hours worked, industry variety, and cost of living.  While that was enough to secure it the dubious distinction of being the 5th worst city for small business employees in 2013, San Diegans do have reason for optimism as the metropolitan area ranks 5th nationally in terms of net small business job growth over the past four years.

Philadelphia:  The City of Brotherly Love ranks in the bottom 10 nationally in terms of small business vitality, unemployment, stress, and cost of living.  It also sits in the middle of the pack for small businesses per capita, small business job growth, new hire earnings, and industry variety.  About the only thing the Philadelphia metro area has going for it is that its employees work the 4th fewest hours, on average, out of the 30 largest metropolitan areas in the United States.

Sacramento:  Not only was Sacramento one of the cities hit hardest by the Great Recession, but it has also displayed one of the most lethargic economic recoveries.  It therefore makes sense that this metropolitan area ranked in the bottom 10 nationally in terms of the number of small businesses per capita, small business vitality, unemployment, and new hire earnings.  That, combined with below-average job growth and stress rankings, explains why Sacramento is among the worst cities to work for a small business in 2013.

Riverside:  Much like Sacramento and many of California’s other major metropolitan areas, Riverside’s economy took a beating during the Great Recession and has yet to bounce back in earnest.  More specifically, out of the 30 cities that CardHub evaluated, the Riverside metropolitan area ranks last in terms of number of small businesses per capita, small business vitality, and unemployment rate as well as in the bottom third for new hire earnings and hours spent at work.

Detroit:  The Motor City was the epicenter for much of the economic strife during the Great Recession, and while bailouts breathed new life into the city’s automotive industry, Detroit’s small business community continues to be marred by low rankings in terms of small businesses per capita (22/30), small business vitality (28/30), net small business job growth (27/30), unemployment rate (29/30), new hire earnings (21/30), hours worked (24/30), and industry variety (26/30).

6 Tips for Landing a Small Business Job

  1. Tailor Your Search, But Avoid Limiting Yourself:  You obviously don’t want to cast too wide of a net, as that will simply increase the odds of missing a job you’d be perfect for as well as limit your ability to pay enough attention to each lead.  However, it’s perhaps equally bad to put yourself in a box in terms of the types of jobs you’re willing to consider, the starting pay you require, and even the city in which you’ll live.  So, try to leave your preconceptions behind and instead focus on the jobs for which your skills are appropriate (rather than what your degree is in), no matter where they may be.
  2. Move Proactively If Necessary:  The entrepreneurs who run successful small businesses (which is where you want to be) are busy folks who garner a lot of interest from local job applicants.  They tend to give these candidates more consideration, as it’s simply easier to interview them and more likely they will accept a job if offered.  So, if you’re not finding the type of job you want where you’re currently living, you should definitely at least consider moving to one of the highest ranked cities in this study. 
  3. Focus on the Future:  Job seekers have a tendency to overly emphasize immediate compensation and the sheer availability of a job, any job.  While there is obviously something to be said for being able to pay the bills in the short term, it’s also important to consider opportunities for growth within a given company, the likelihood of said company achieving long-term success, and the potential for skills development that could help you find other work in the future.
  4. Customize Your Approach:  It’s amazing how little care most job applicants put into their search.  Many simply apply en masse, thinking this will give them the greatest odds of finding a job.  In truth, however, they’re severely minimizing their chances of finding the right job.  It’s therefore important to not only customize your cover letter and resume for each position that you have serious interest in, but also to research each respective company as well as its leadership and human resources staff in order to find commonalities and gain a sense of the type of employee their looking for.
  5. Mind Your Online Footprint:  As familiar as we’ve become with the Internet and social media, people still seem to forget that online information is accessible to everyone.  Before applying for any jobs, it’s a good idea to adjust your privacy settings on all social media accounts as well as have explanations ready for any publically available information that might reflect poorly upon you.
  6. Have a Positive Attitude:  Not only is it important to stay positive in the face of rejection, but you also have to remember that employers are looking for people who fit their organizational culture and will be pleasant to work with every day.  What’s more, an eagerness to learn can be enough to get you a serious look for jobs for which you might not have a perfect background.

Methodology
CardHub used the following metrics to evaluate each major metropolitan area’s small business friendliness:

  • Number of Businesses with Under 250 Employees Per Capita – (Weight = 1):  The opportunity that job seekers have to find employment with a small business in a particular metropolitan area obviously depends, at least in part, on the sheer number of such business entities in operation there.  The U.S. Small Business Administration defines a “small business” differently depending on the industry, and while the upper limit for certain industries is a private company with 500 employees, CardHub chose to use a smaller number that is more in line with what the average person considers a small business to be. 
  • Industry Variety – (Weight = 0.5):  This metric was used to evaluate the balance of each metropolitan area’s small business community in order to gauge the opportunities available to job seekers irrespective of career focus.  After all, a given city might boast tech jobs aplenty, yet have little to offer folks interested in other fields.
  • Net Small Business Job Growth – (Weight = 0.5):  This metric was used to indicate whether a given metropolitan area’s small business workforce is expanding or contracting.  While a city with a large number of small business jobs might seem attractive on the surface, new opportunities could be few and far between if that number is consistently dwindling.
  • Small Business Vitality – (Weight = 1):  This index tracks small business job growth relative to workforce and population trends.
  • Average Number of Hours Worked – (Weight = 0.5):  It’s no secret that small business employees tend to pull long hours, but it’s also important to strike a healthy work-life balance.  So, for this metric, lower numbers of hours worked were viewed favorably.
  • Average Monthly Earnings for New Hires – (Weight = 1):  While there is indeed something to be said for the sheer availability of jobs in this economy, job seekers want to make sure what they make will pay the bills.  This metric was used to rank metropolitan areas based on how much the average new hire earns per month.
  • Unemployment Rate – (Weight = 1):  This metric was used to gauge the competition for available jobs in each metropolitan area.
  • Average Disposable Income – (Weight = 1):  This metric takes local taxes into account to show how much money area workers have to spend after government takes its cut.
  • Cost of Living – (Weight = 1):  This metric adjusts for regional price and wage differences, enabling direct comparison of how much spending power the average citizen has in each major metropolitan area.
  • Stress Index Ranking – (Weight = 0.5):  Working for a small business can be very stressful given the often long hours, uncertain future, and pressure of a down economy.  This is only magnified in areas known for their stressful lifestyles, so low scores in this index were viewed favorably for this study.

Using the most recent data available (see below for sources), we rank-ordered the 30 largest Metropolitan Statistical Areas (MSAs) in the United States, as determined by Census Bureau data, for each of the above metrics and then weighted each metric according to the breakdown above to develop the final rankings.

Sources:  Data used to create these rankings is courtesy of the U.S. Census Bureau, the U.S. Bureau of Labor Statistics, the American Psychological Association, the Council for Community & Economic Research, and the American City Business Journals.

Previous Ask the Experts: Why Do Health Care Costs Vary So Widely?   Ask the Experts: How to Maximize the Impact of Your Charitable Donations Next
POST YOUR COMMENT

Our content is intended for general educational purposes and should not be relied upon as the sole basis for managing your finances. Furthermore, the materials on this website do not constitute legal advice and should not be relied upon as such. If you have any legal questions, please consult an attorney. Please let us know if you have any questions or suggestions.