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Don’t forget the small and neighborhood-based businesses

James Jennings, PhD | 6/19/2014, 6 a.m.

As Boston faces many economic challenges, questions about its priorities and future direction emerge. With the changed political landscape there is considerable excitement about strengthening and expanding economic opportunities in the city, and it is hoped they will be for the benefit of all Boston’s citizens. After his election in November, Mayor Marty Walsh appointed a transition team for economic development to focus on small business. This topic should continue to receive attention. The impact of our smaller, neighborhood businesses and micro-enterprises plays a critical role in Boston’s future economic well-being. Small businesses and micro-enterprises based in our neighborhoods represent a substantial economic base and are important sources of employment.

Recent information reported about businesses in Boston suggests that we should be placing much emphasis on smaller, neighborhood-based businesses. According to data compiled from the InfoUSA business database, the Bureau of Labor Statistics, and U.S. Census’ County Business Patterns, there were 37,805 business establishments in this city as of 2013. The majority of these businesses were in services (58 percent), followed by retail trade (15 percent), and finance, insurance and real estate, or FIRE (12 percent). Approximately 2 percent of these establishments were in Manufacturing. These businesses employed 315,298 workers in services; 95,532 workers in FIRE; 73,594 in retail trade; and 23,215 in Manufacturing. It should be noted — and emphatically — that more than two thirds (66 percent), or 25,071, of these businesses were very “small” and employed between 1 to 4 employees.

In the Mattapan neighborhood 69 percent of all businesses (459) employed between 1 and 4 employees. The total employment base for Mattapan was reported at 3,664 employees, mostly in services (61 percent), followed by retail trade (22 percent), and then FIRE (8 percent). Using ZIP codes 02119 and 02120 as proxy for the Roxbury neighborhood, 60 percent of all businesses (1,247) employed between 1 and 4 workers. The total employment base for Roxbury was 22,600 workers, and 46 percent were in services.

The aggregate income in just these two neighborhoods indicates that there is enormous capacity to strengthen and expand the base of smaller businesses in these areas of Boston.

According to the American Community Survey 2008 – 2012, the aggregate income of all residents in Mattapan is $564.4 million, and for Roxbury, $948.9 million.

Clearly, smaller businesses are a major component of Boston’s future economic development, and a key factor in ensuring that neighborhoods are linked to the city’s overall economic progress.

The smaller, and neighborhood-based businesses not only generate local wealth, but they also keep it in circulation longer at the local level. And, just as important, this sector is part of a neighborhood’s social infrastructure. Many owners of our local, smaller businesses see themselves as part of a community. This is the sector which employs local residents and youth, and thereby contributes to family stability. They have partnered with nonprofits and community-based organizations in many ways and on a range of issues. This is a sector that cannot just get up and leave due to a cheaper workforce in another part of the world. And they don’t want to — businesses based in our neighborhoods understand that their economic well-being is directly linked to their stable and vibrant neighborhoods.

It should be a policy prerogative to develop strategies for reducing displacement that occurs with major economic development in low-income and working-class areas of the city. Many small businesses are hurt, or may have to close, when long-time clientele are displaced from their homes. The vibrant small business sector should be a component in community organizing and included in government responses against potential residential displacement and neighborhood-disruption as a result of ‘big box’ or ‘trickle-down’ economic development.

Boston is fortunate to have a significant small, and neighborhood-level business sector as the numbers, above, suggest. As we consider the range of economic challenges facing Boston, therefore, let’s make sure we don’t lose sight of this fact. We should work toward strengthening our neighborhood-based businesses.

James Jennings, PhD Tufts University