By Scott Meacham
Copyright © 2013, The Oklahoma Publishing Company
The bedrock of any vibrant, expanding economy is jobs. Jobs are the measure of success.
And we’re achieving success in Oklahoma. Our state’s 2.6 percent job growth rate was the third best in the nation. Our unemployment rate has dropped from 6.1 to 4.7 percent (June 2012) from the previous year.
There are three ways to grow jobs in a state. The first method — the one we hear the most about — is recruiting companies to move headquarters, manufacturing facilities or assembly plants to Oklahoma from other states. It’s a competitive, costly and time-consuming process.
State and local economic development professionals have to build elaborate presentations based on volumes of data, propose significant incentives and often offer infrastructure improvements. The cost per job acquired can be significant.
A second, simpler, and more fertile way to add jobs is by growing existing businesses. In Oklahoma, more than 80 percent of all new jobs come from companies that already have a footprint here.
For these companies, economic development efforts are geared toward connecting existing business with support services, incentives and access to capital like the GrowOK Fund to help established firms expand and create jobs.
The third category of job creation is growing new businesses. If a state isn’t growing new businesses, there won’t be a pipeline of companies moving into the expanding business category. At i2E we spend most of our time growing new businesses in Oklahoma.
Creating new companies is every bit as important as growing existing firms and attracting jobs from other states. For long-term job growth, I would argue that new company starts are more important than the other two methods of economic development.
However, growing new companies is much more difficult. It’s higher touch and takes a longer time to bear fruit. It requires perseverance and a willingness to invest for benefits five to 10 years down the road. There is neither instant gratification nor quick splashy headlines in starting up a business. The startup failure rate is more than 50 percent.
The flip side is that over the last 20 years, almost all net new job growth nationally has come from firms that are less than five years old. Also, the coveted home-office jobs are typically grown, not recruited from other states.
Oklahoma has proved that our state knows how to create economic expansion from established companies. We need to continue to invest to start up more of them for the future.
Scott Meacham is president and CEO of i2E Inc., a nonprofit corporation that mentors many of the state’s technology-based startup companies. i2E receives state appropriations from the Oklahoma Center for the Advancement of Science and Technology. Contact Meacham at [email protected].
DID YOU KNOW? In 2012, the average annual wage of direct new jobs in Oklahoma was $54,683, which is 32 percent higher than the state average. Source: Oklahoma Department of Commerce