Researchers frequently highlight the role geography plays in our lives, whether that is the likelihood of upward mobility, our overall health or the cost of raising a family.
A recently released study by the Economic Innovation Group emphasizes the changing geographic landscape of new business establishment growth during the nation’s three most recent economic recovery periods.
The authors used data from the U.S. Census Bureau to analyze business establishment growth in the five years following the last three major recessions (1992-96, 2002-06, and 2010-14). Their findings present alarming trends for communities across the country – including the greater Pensacola community.
Unlike the previous two recovery periods, business establishment growth during the 2010-14 recovery period was much slower nationwide, growing only 2.3 percent over five years. While the most recent recovery period has been characterized by much slower growth rates than the two preceding recovery periods, what is perhaps most striking is how geographically concentrated the recovery has been. Haas Center staff analyzed the data to see how Escambia and Santa Rosa counties compare to counties in other parts of the country.
Historical data shows us Santa Rosa County has fared better than Escambia County during periods of economic recovery, typically experiencing growth rates much higher than both the state and national level. While Santa Rosa continued to outpace both the nation and Escambia during the past recovery period, the county’s rate of growth was noticeably lower than previous recovery periods.
It is possible that population growth rates may explain some of this trend. The population growth of Santa Rosa County was 1.3 percent per year in 2010-14, compared to 3.6 and 2.6 percent per year during 1992-96 and 2002-06, respectively.
The geographic concentration of establishment growth continued to shrink during recent recovery periods. Astonishingly, 50 percent of the nation’s new establishment growth from 2010 to 2014 can be attributed to a total of 20 counties. Disproportionately, these counties only represent 17 percent of the U.S. population. Four of these counties are located in Florida (Miami-Dade, Palm Beach, Broward, and Orange counties), none of which are located in Northwest Florida.
Additionally, the number of counties experiencing a decline in establishments increased.
Approximately 59 percent of counties, representing nearly one-third of the nation’s population, saw a decline in the number of establishments between 2010 and 2014. Comparatively, only 17 percent of counties, representing 14 percent of the U.S. population, saw a decline in establishments between 1992 and 1996.
Furthermore, only 25 percent of counties saw a growth rate of establishments that matched or exceeded the national level. These counties are home to approximately 48 percent of the nation’s population.
Florida as a whole fared better than most states, with approximately 82 percent of its population residing in a county that experienced positive growth equal to or greater than the national rate.
A decline in new startups is one reason for the slow business establishment growth rate during the most recent recovery, according to EIG. A company is distinct from an establishment in that an establishment is the physical location out of which a firm operates. For example, the Drowsy Poet coffee shop would be counted as a company creation in the year it started for Escambia County. Each new store is credited as a new business establishment for the county where it is located.
For the Pensacola area over the most recent recovery period of 2010-14, there was a net loss of 203 firms, meaning there were more firm deaths than births. The previous recovery periods of 1992-96 and 2002-06 saw net increases of 678 and 1,046, respectively.
Because the Pensacola-area business establishment growth rate was positive from 2010-14, despite a net loss of firms, we can conclude that the establishment growth can largely be attributed to the expansion of existing firms.
Allison Tyler Romer serves as economic development coordinator at the Haas Center in Pensacola.