There’s Good News and Bad News for Seattle Rankings

This month, Kiplingers Personal Finance magazine ranked Seattle at number two in its list of the Best Cities for the Next Decade, citing aerospace, life sciences and green technology as the flagship industries of our local economy. The article quoted University of Washington president Mark Emmert: “We only have two products here: smart people and great ideas.”

But other statistics tell a different story. The 2009 Kauffman Index of Entrepreneurial Activity found that Seattle had the lowest rate of entrepreneurial activity among the 15 largest metropolitan areas in 2009. The state of Washington ranks among the ten lowest in the nation, along with Alabama, Nebraska and Mississippi.

So how did the region that gave rise to household names like Microsoft and Amazon land so low on the Kauffman Index? For starters, its important to note the studys definition of entrepreneurial activity. The Kauffman report measures entrepreneurial activity by the percentage of adult, non-business-owner population that starts a business each month. This would probably leave out the serial entrepreneurs that are responsible for so much of the startup activity in our state.

Also, the study includes those who own incorporated or unincorporated businesses, and those who are employers or non-employers, and requires only that the entrepreneur spend fifteen or more hours per week working on their new business. These criteria cast a pretty wide net, and could include anything from regular blogging to selling flowers at the farmers market. This could explain why Oklahoma and Montana lead the nation in entrepreneurship.

Still, its sobering to realize that the word entrepreneurship doesnt necessarily mean the same thing to the rest of the country as it does to Seattleites. Thousands of new companies are starting all over the U.S., and they dont all have names like Tippr and Pixsy and Zooppa. The really good news in this report is that entrepreneurial activity is on an upswing nationwide, and that the U.S. economy may be climbing out of recession.