Lawrence doesn’t fare well in ranking of best places for new businesses; numbers show a historic low for Kansas economy
I would think Lawrence is one of the best small cities in America to start a business. After all, even an April snow shoveling business has a chance at success, as we’ve learned recently. But in a new report on the subject, Lawrence doesn’t rank well.
The financial website WalletHub has released its 2018 list of the Best Small Cities to Start a Business. Lawrence ranked No. 653 out of 1,261 cities with populations between 25,000 and 100,000. So, middle of the pack overall, but Lawrence’s ranking was the second lowest in Kansas.
Here’s a look at the Kansas communities that are ranked:
— Dodge City: No. 132
— Salina: No. 208
— Hutchinson: No. 252
— Manhattan: No. 254
— Garden City: No. 401
— Lenexa: No. 494
— Shawnee: No. 597
— Lawrence: No. 653
— Leawood: No. 968
The good news for Lawrence is it may not be on this list next year. Population growth is pushing it above the 100,000 mark. There are several high-ranking communities on this list that have no worries about that. Dodge City is the best small community in the state to start a business, according to this list, but population growth has struggled there. It has added about 500 people since the 2010 census, or about 2 percent, which is actually better than I thought it would be. It is better than some other places that rank high on the list. Hutchinson — which according to this list is in the top 20 percent of all small cities in the country for starting a business — has seen a population decline of about 400 people since the census.
So, everybody will have to make what they will of the list. In some ways it is counter-intuitive. Communities that have lower median wages and higher unemployment (thus an available labor pool) fare better in some parts of this ranking. Towns like Lawrence, though, should fare well in categories such as education levels and access to higher education.
As you can tell, I have some doubts about the outcomes of this report. But, it is worth noting, but probably not worth worrying too much about. What would be most interesting is why Lawrence and Manhattan rank so differently. In many reports that rely on demographics and other types of community statistics, Lawrence and Manhattan show up as pretty similar.
The report does provide some breakdown of the rankings. Each community was scored in three broad areas:
— Business environment: This category used statistics related to average length of work week, average commute times, growth rate in small business numbers, startups per capita, average growth of business revenues, and industry variety. Lawrence ranked No. 968 out of 1,261. Manhattan was 892, and the best in the state was Dodge City at No. 66.
— Access to Resources: This category used statistics related to small business loans per capita, job openings versus the unemployment rate, access to quality higher education, education levels of the workforce, growth in working-age population, and total job growth figures. Lawrence ranked No. 308 out of 1,261. Manhattan was No. 26 in the country and was the highest-ranked in the state, although Leawood also had an impressive ranking of No. 81.
— Business Costs: This category used statistics related to commercial lease rates, median incomes, corporate taxes and cost of living. Lawrence ranked No. 580 out of 1,261. Manhattan was No. 532. Hutchinson was best in the state at No. 400. Notably, Leawood was near the bottom in the entire country at 1,211. Remember, high incomes don’t cause you to score well in this report. Also, remember that person who just passed you in the Mercedes is from Leawood.
While I wouldn’t spend much time worrying about any of these rankings, I did stumble across some interesting state statistics while I was trying to get more information about some of these WalletHub numbers.
In short, they show that last summer was a historic low point for the Kansas economy in at least one key regard.
The Bureau of Labor Statistics releases a quarterly report related to the number of business establishments that open and close in the state. The most recent report is for June 2017. The report shows that during the second quarter of 2017, there were 18,692 job losses caused by Kansas business establishments that closed. It shows there were 10,204 jobs created by new establishments that opened.
So, the masters of the Kansas economy definitely had their finger on the minus key. But more noteworthy is the 18,692 job losses due to closings was the highest quarterly total since the third quarter of 2002. In other words, not even during the last recession did so many Kansans lose their jobs due to business closings.
But wait, there is more. The 10,204 jobs created by new establishments was the lowest number since at least 1992, which is as far back as the database went for me. A few months were very close to that number, but none actually were that low.
The business environment at a glance didn’t seem that bad in Lawrence last summer, but for the state as a whole, it apparently was feeling a double whammy.
Lawrence transit system ranked No. 36 in the country; construction firm purchases North Lawrence property
There used to be a time whenever you mentioned Lawrence’s public transit system – The T – you would inevitably hear a joke about how its more appropriate name was the empTy. But those jokes have lost their luster, and there’s a new study out that shows why. The T isn’t empty, but rather is the 36th most used public transit system in the country, at least by one measure.
The journalists at FiveThirtyEight.com have looked at the ridership numbers that transit systems report to federal regulators each month. Then they took that data and compared it to each city’s population. The result was number of trips per resident. Of the 290 cities ranked by that criterion, Lawrence was No. 36 with 33.2 trips per resident.
So, not exactly empty. If you want to look at empty, gaze to the south. Our friends in Wichita ranked No. 245 in the country with 4.5 trips per resident. Nearby Topeka was a little better at No. 170 with 8.2 trips, and the Kansas City metro only was No. 139 with 10.9 trips per resident.
In fact, you could argue that Lawrence has the second most used transit system in the entire region. Who has the top spot? Iowa City checks in at No. 11 in the country with 66 trips per resident. Iowa City, like Lawrence, is a university town. The study by FiveThirtyEight did show that compared to other university towns, Lawrence still has some room to grow. Four of the top 11 cities were university communities, with Athens, Ga. No. 4, Champaign, Ill. No. 7, and State College, Pa. No. 8. All those cities more than doubled Lawrence’s usage rates, so it seems the city’s system still can grow.
Certainly, KU students play a large role in Lawrence’s ridership numbers. Although the city and the university technically operate separate bus systems, they are coordinated, which means riders from each system can transfer between the two systems. When it comes to counting ridership, the federal regulators combine the KU and Lawrence systems and count the riders under Lawrence. Without the KU riders, Lawrence’s standing on this list would look much different.
While Lawrence still has some catching up to do with some university communities, it is clearly ahead of some others. Columbia, Mo. ranked No. 108 with 13.9 trips per resident. (Note: I don’t think it is accurate or appropriate to say that the reason for Columbia’s low ranking is because they have to take the buses off of the cement blocks each morning.) In fact, Lawrence was the top ranked city of all the Big 12 communities that were ranked. (Ames, Stillwater, Norman, and Manhattan weren’t large enough to be ranked.)
I’m sure these numbers won’t dissuade some from continuing with the empTy jokes. Indeed the ranking system isn’t perfect. It measures per capita volume more so than efficiency, but it is interesting to think that Lawrence has one of the more heavily relied-upon systems in the entire Midwest. It also is interesting to think about four years from now. Lawrence voters likely will be asked to save the system again. It was in November 2008 that voters approved a pair of sales taxes to fund the transit system, which at the time was hurting for funding. The ballot language, however, made it clear those taxes only would last 10 years. The transit vote won easily with 70 percent of the vote back then, so perhaps fans of the transit system don’t have anything to worry or about. Or, on the other hand, take a bus on Wall Street and you’ll find many a poor soul who has relied on past performance to project future returns.
In other news and notes around town:
• Maybe a mobile home is more your style than a bus. If so, you already have noticed that Webster’s Mobile Home Sales in North Lawrence has gone out of business. We reported on that quite a while ago. But there is now news about a new business that will take over the company’s longtime real estate at 801 N. Second St. A group led by Manhattan-based Hi-Tech Interiors has purchased the property, and will use the existing building for its Lawrence office staff. But a company official told me the construction firm also is considering building a warehouse and a construction yard on the site. The firm has had offices in Lawrence at 616 Arizona St., but has been looking for additional space as work levels in the Lawrence and Kansas City areas have been increasing. The Lawrence office serves the Kansas City market, which has been the company’s best growth market. The firm specializes in steel framing, drywall and exterior finishes. It is a subcontractor for a lot of large projects, including the Theatre Lawrence project and the downtown hotel project that is underway.
Call it a rankings rut, and this one is pretty deep for the city of Lawrence.
A new national study has ranked Lawrence as the second-worst-performing small metropolitan area in the nation, based on a variety of economic measures. The Milken Institute ranked Lawrence 178 out of 179 metro areas in its most recent Best Performing Cities index. A web site for The Atlantic this week had an article analyzing the results.
This latest report adds onto the negative news released earlier this month by the U.S. Bureau of Economic Analysis about Lawrence’s gross domestic product. It ranked 339th out of 366 metro areas, and was shrinking.
The Milken report uses some of the same types of economic numbers to create its index. But it places a particular emphasis on an area in which Lawrence is supposed to be positioned to excel: high-tech, knowledge-based jobs.
Simply put, the report found we aren’t excelling in that area. In fact, Lawrence didn’t excel in any area.
Over the course of the past year, Lawrence’s ranking in the report fell 79 spots, from No. 99 in the 2011 report to No. 178 in the most recent index. Only three other cities — Ithaca, N.Y., Great Falls, Mont., and Hot Springs, Ark. — had sharper declines than Lawrence’s.
The report takes a look at nine different categories, and Lawrence didn’t crack the top 100 in any of them. Here’s a look:
• Five-year job growth: No. 107
• One-year job growth: No. 172
• Five-year wage growth: No. 101
• One-year wage growth: No. 158
• One-year job growth percentage: No. 156
• Five-year high-tech GDP growth: No. 170
• One-year high-tech GDP growth: No. 151
• High-tech GDP as part of overall GDP: No. 164
• Concentration of high-tech companies: No. 148
I know how you all like comparisons, so I have gathered the rankings for several regional communities. I would ask for a drumroll, but the drama already has been sucked from this. Since Lawrence is second to last — last place was Carson City, Nev. — I’m guessing you’ve already deduced that every city in the region ranked ahead of us.
On a positive note, Manhattan, which has been on a roll in these type of rankings, wasn’t included in this index, likely because its population wasn’t quite large enough to qualify. But fear not, here is something for you to gnash your teeth over: Columbia, Mo., ranked No. 10 on the small cities list. Here’s a look at others:
• Iowa City, Iowa: No. 16
• St. Joseph, Mo.: No. 29
• Waco, Texas: No. 31
• Joplin, Mo.: No. 44
• Ames, Iowa: No. 61
• Topeka: No. 144
Several of the cities Lawrence often compares itself to, or at least watches, were included in the list of 200 large cities. Here’s how some of those cities fared in the rankings:
• Fort Collins, Colo.: No. 12
• Boulder, Colo.: No. 15
• Lubbock, Texas: No. 20
• Oklahoma City: No. 32
• Madison, Wis.: No. 71
• Lincoln, Neb.: No. 81
• Kansas City: No. 104
• Tulsa, Okla.: No. 118
• Springfield, Mo.: No. 144
• Wichita: No. 146
Take these rankings for whatever you think they’re worth. These indexes all have their own biases about what they think are the most important economic indicators. This one seems to be heavily focused on wages and high-tech business indicators. For what it is worth, those are two areas I hear local leaders emphasize a lot as well.
Another factor to remember is that this index — like all of them — is based on data that sometimes has some age to it. Most of the job growth numbers date back to 2011, and some of the wage numbers date back to 2010. It was no secret that Lawrence struggled during those periods. It also is worth remembering that Lawrence basically has entirely revamped its economic development team since that point.
Plus, some recent indicators have been more positive. Retail sales tax collections in 2012 had their best growth since the mid-1990s, there’s been a significant decline in Massachusetts Street vacancies, Hallmark Cards is in the process of shifting about 200 workers to its Lawrence plant, and even home sales and building permits have showed signs of a rebound.
Yes, I’m trying to put a little cheer in your Kool-Aid. But only for a moment. I’ll leave you with a finding from the report that ought to leave Lawrence leaders scratching their heads. The authors of the report noted that there were two types of communities most likely to do well in this year’s index: communities benefiting from the country’s new natural gas and oil exploration; and communities with “high concentrations of public-sector employees, especially in prominent universities.”
That second one sure sounds like us. But maybe our definition of prominent is a bit different from others. The top ranked small city, for the second year in a row, was Logan, Utah, home to Utah State University. Prominent? I don’t know. But I’m pretty sure our basketball team can beat theirs.