According to new study recently released by the Office of Advocacy, which is part of the U.S. Small Business Administration, companies referred to as “high-impact” create a large portion of New Jersey jobs. In order to be considered one of the businesses, a firm must have at least doubled their sales during the course of a four-year period and have an employment “growth quantifier” of two or more. To determine a companies “growth quantifier” the firm’s absolute change in employment is multiplied by the percent change.
This study found that high-impact firms create almost all of the gains in both employment and in revenue in the national economy. Currently there are 376,604 businesses that are considered to be high-impact operations throughout America. Of these, 10,300 are located in New Jersey. This means that 2.22 percent of all of the businesses in the state qualify as high-impact firms.
High-impact firms exist in all industries and were found in all of the country’s geographic regions, according to the study. It then ranked regions, states, metropolitan statistical areas, and counties by the percentage of high-impact firms that they have. After complying this data, researchers found that, for the most part, these companies are not start-ups but are usually around 25 years old. Business in this category exist in all size classes.
The study also found that not only are these firms responsible for creating a large portion of job, few are downsizing. Almost all job losses experienced throughout New Jersey and the rest of the country were found to happen at large sized low-impact companies.
“High-impact firms are important to New Jersey’s economic growth and development,” said Dr. Chad Moutray, who is the Chief Economist for the Office of Advocacy. “State policy makers would be wise to consider how their policies can encourage such firms.”
The Office of Advocacy is considered the “small business watchdog” of the federal government. It is responsible for examining the roles and statuses of small companies in the economy and independently represents the views of these businesses to federal agencies, Congress and the President. The office also funds research into the issues of smaller companies. More information about this particular study can be found at www.sba.gov/advo.