Alexa: Will you bring jobs to my city?
This, in a nutshell, seems to be the main strategy of far too many policymakers trying to create jobs in their states and cities this year, rather than investing in the proven record of job creation from their communities’ entrepreneurs and small businesses.
All around the country, officials are pulling out all the stops to try to attract large technology and manufacturing companies to their region. They’ve spent countless valuable hours pitching Amazon to host their HQ2, going so far as to ship giant cactus tributes (Tucson), enshrine Amazon street art (Birmingham), offer free sandwiches to future employees (Pittsburgh), or offer $7 billion in tax incentives (New Jersey). Yet at the end of this process, only one will win the big business Powerball, and the rest will have squandered their time, money, and resources.
This mindset is reflected in the results of Thumbtack’s yearly survey of small business owners in the United States to hear what they need from policymakers to succeed. The 2017 study reached 13,284 small business professionals in all 50 states and identified barriers to growing their business in a competitive marketplace. These pros are some of hundreds of thousands who have contracted work through Thumbtack, part of an $700 billion local services market in this country that is often ignored by policymakers.
In city after city we hear that while officials always pay lip service to small business, repeating time and again that they are the “backbone of our economy,” much of their efforts are focused on courting the big businesses with their army of lobbyists and hefty checkbooks.
When it comes to resources and strategy, policymakers at all levels are increasingly and disproportionately focused on what they can give away to lure large businesses to their city or state from another. And representatives from the biggest companies are pitting cities and states against each other in a race to give away tax incentives and regulatory waivers in exchange for shuffling jobs temporarily to their region.
But what do small businesses, the increasingly ignored “backbone” of our economy, need? Our survey found that while the answers are a little different in each place, the themes are consistent: make local rules easier to understand and comply with, put information online so business owners can focus on growth rather than trips to city hall, and give small businesses the same respect and support that large companies receive.
One frustrated small business owner summed up this sentiment, saying, “It’s like navigating a maze [in my state] to handle taxes. It’s expensive for small businesses. We’ll give all the incentives in the world for corporations to come in, hire a bunch of people, and then lay them off. But try to start your own business? Forget it, they’re not interested.”
These states and cities are giving away billions of dollars a year in incentives to big companies when a fraction of that could ensure small business owners can survive and thrive in their community.
So it shouldn’t be a surprise that the cities catering most to small businesses are smart enough to avoid the pitfalls of placing their hopes and dreams in the corporate lottery.
A top city for small business friendliness this year — and consistently over the past six years — is San Antonio, which recently bowed out of the bidding war to get Amazon. As Mayor Ron Nirenberg put it, “blindly giving away the farm isn’t our style.” What cities like San Antonio that scored well on our survey are doing instead is enacting policies that make it easier for professionals to run and grow their business.
The most friendly city for small business this year was Boise, and it became so by creating small business-friendly zoning regulations. Oklahoma City scored well for the ease of navigating local licensing rules, Knoxville for investing in training and networking for small businesses. These changes might not be as glamorous or media friendly as shipping a 21-foot-tall cactus to Seattle, but they are actually having an impact on people’s lives.
Instead of creating glossy PowerPoint decks to impress elite corporate leaders, teams of MBA students and local leaders could huddle in city war rooms for weeks on end strategizing on how to help small businesses by streamlining the local business registration process or by reforming the tax code to help small businesses survive their initial lean years.
And instead of writing a blank check to multinational conglomerates that may or may not live up to the job promises they claim, these cities could invest a fraction of the cost in boosting and encouraging new business formation. That’s what these small business owners told us time and again. In job creation, as in life, the answers don’t always come easy. Hoping Alexa will give you the answer you need is not a strategy. Listen instead to the local professionals who are already working and creating value all across our country.
Marco Zappacosta is the founder and CEO of Thumbtack, an app and website that finds customers local professionals for any project.