Best way for Lexington to create jobs? Grow them from small businesses

small business successes best way to build strong economy, tax base

January 27, 2013 

Lexington/Fayette County is home to Kentucky's second largest city and its flagship university; has the leading agriculture income in Kentucky, is a center of medical care, government and retail for a huge region.

No surprise it has traditionally enjoyed high employment.

Before the recession, unemployment hovered around 4 percent. In 2009 and 2010 that number more than doubled, reaching as high as 9.3 percent.

So, we join with Mayor Jim Gray in celebrating a local unemployment rate of around 6 percent.

Even more, we agree with Gray that job creation and economic growth must remain his administration's top priority. While 6 percent unemployment is an improvement, it's small consolation for the thousands of willing workers who can't find jobs — 14,797 in November according to the Bureau of Labor Statistics — and those soon entering the job market.

Jobs also drive the investment government makes in our community, as Gray well knows. Local government relies on payroll taxes for about 75 percent of local tax revenues. When people work in Fayette County, city coffers swell, meaning there's more money for services ranging from park maintenance to police protection, cleaning streets to code enforcement.

During his annual state of the merged government speech, Gray highlighted employers who have accounted for significant job gains in the last couple of years, such as the global services center for international law firm Bingham-McCutcheon that will mean 250 new jobs.

Attracting good jobs in big gulps is important and satisfying. However, the majority of jobs are created in smaller batches by businesses most of us never hear of, home-grown with deep roots here.

No one, of course, is arguing against small employers but we urge the administration, CommerceLexington and others involved in economic development in the community to work hard on both nurturing small businesses and finding ways to measure their success.

A university community, almost by definition, is a business incubator. The wealth of marketable ideas that arise in this environment was evident recently at the University of Kentucky Venture Challenge, now approaching its second round of contestants, and the newly created Alltech Innovation competition.

The winning ideas — a telephone application allowing baseball fans to compete with each other in real game time, predicting plays based on stats and history; and a plan to use switchgrass grown on reclaimed strip-mined land to create butanol, replacing ethanol as a gasoline additive — illustrate the range and diversity of possibilities.

Alltech itself is a local success story, started in 1980 in Jessamine County. Although the headquarters of this international biotech firm remain there, the entire region has benefited from the company's success, through widespread philanthropy and investment, including opening the first new Bourbon distillery in Fayette County in a century.

Similarly, the UK competition takes place in the Davis Marksbury building on campus, named for the donor who founded Exstream Software here in 1998 and sold it a decade later for almost $1 billion.

Attracting jobs is critical. As these and other stories illustrate, though, growing jobs locally has the potential for even greater long-term return to the community.

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