Census Data Does Not Reflect Saint Louis City Claims of Business, Tech Company Growth

Leaders in Saint Louis have touted the city for its efforts to attract new businesses, especially high-tech startups. Square’s decision to locate in the city has been held up as evidence that the city’s tech incubator (T-Rex) and its innovation district (Cortex) are having the desired effect. Speaking about the new Square office, Mayor Francis Slay said:

We have made a conscious decision as a community to build the infrastructure to retain, attract and grow tech companies here and support entrepreneurship. It’s one of our strongest economic drivers.

While few would dispute that many great tech companies are starting in, and coming to, Saint Louis, the data show that in terms of companies and jobs, Saint Louis is losing as many as it is gaining.

To see this, we can look at Census Data that tracks Saint Louis City business establishments from 2008 to 2013 (which excludes government employees and self-employed persons). The period starts just before the recession and ends three years into the “recovery.” Over that time, Saint Louis City’s total business establishments rose by 866, or about 10%. That may sound good, but the problem is that over the same period the city’s total paid employees decreased by more than 25,000 (as shown in the chart above). 

The increase in business establishments and decrease in employment seem counterintuitive until one notes that all the city’s net establishment gain came from the smallest businesses (from one to four employees). Total businesses with more than four employees decreased in the city over the period examined.

Contrary to the popular narrative, growth in small companies did not come primarily from tech fields. Instead, the main growth sectors were health services and education (meds and eds):

The Saint Louis economy has performed better in 2015 than in previous years, so it is possible that future data will show greater business and employment growth. However, the latest census data strongly suggest that:

1.       In recent years city has failed to retain or increase medium- and large-sized businesses of nearly every type.

2.       The business and job growth there has been is mostly attributable to health services and education, not tech startups.