Small Businesses and Commuters Drive Downtown

Two recent studies reveal important trends about the growth of the downtown areas of American cities. According to a new study by the Office of Advocacy of the U.S. Small Business Administration (SBA), small businesses are the drivers of inner city economies and job growth. At the same time, the first-ever estimates from the U.S. Census Bureau on the Daytime Population of cities and counties indicate that the population of downtown areas varies dramatically between daytime and nighttime hours.

State of the Inner City Economies: Small Businesses in the Inner City reports that small businesses comprise more than 99 percent of business establishments in inner cities and generate 80 percent of the total employment in those areas. Inner city businesses employ about 8 percent of the private workforce or about 9 million Americans. Job growth in the inner city and outside it, is concentrated in service industries. In addition, the study notes that these inner city businesses exhibit similar startup and bankruptcy rates to businesses in other parts of the Metropolitan Statistical Area (MSA).

“This report demonstrates that local entrepreneurs are not only the backbone of inner city economies but their strongest source of new jobs,” Steve Adams, Region I Advocate for the Office of Advocacy and former Director of the Center for Urban Entrepreneurship at the Pioneer Institute said in a prepared statement announcing the results. “Policy makers should take note of these findings showing that supporting new and established entrepreneurs in inner cities should take priority in their urban development strategies.”

The study is part of a larger project undertaken by the Initiative for a Competitive Inner City (ICIC), which is partially funded by the Office of Advocacy. Other funding agencies include the U.S. Economic Development Administration, the John D. and Catherine T. MacArthur Foundation, and the Greater Kansas City Community Foundation. The full report can be found on the Office of Advocacy web site at www.sba.gov/advo.

For anyone spending part of their day stuck in traffic on the way into or out of a downtown area, the concept of daytime population explosion just makes sense. It is also logical that, according to data from the Census Bureau, those places experiencing the largest percent increases are those having the smallest resident populations. Cities with larger populations see a smaller percentage of increase but that percentage often represents a larger number of people coming into an area that also has a significant number of residents. Among some of the highlights discovered by the daytime population study are:

  • New York City has the largest estimated daytime population at more than 8.5 million people. This is an increase of more than 500,000 people over the nighttime population however it only represents a 7 percent increase over the nighttime population.

  • Lake Buena Vista, Florida has the largest percentage increase at 192,238 percent the Associated Press reports when its population of 62 grows to more than 30,000 during the day.

  • Washington D.C. has the second highest numeric increase with 410,000 commuters boosting daytime population by 72 percent.

“Information on the expansion or contraction experienced by different communities between nighttime and daytime is important for many planning purposes, including those dealing with transportation and disaster relief operations,” Census Bureau Director Louis Kincannon said in a prepared statement. “By providing information on the number of people not living in the area, but nevertheless greatly affected by the event, the data can provide a clearer picture of the effects of disasters such as Hurricanes Katrina and Rita.”

The data used in the daytime population estimates was collected during the 2000 Census. Additional detailed tables are available on the U.S. Census Bureau web site at www.census.gov.

Based on these two reports, it is easy to see that the economies and experiences of American downtown and inner city areas is larger and more diverse than previously recognized.

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