Relatively expensive housing, coupled with the high cost of living and doing business in the Bay Area, has made the nine-county region less hospitable to new companies than other big urban centers in California, according to a study released Thursday that urges improvements in what it describes as this area's burdensome regulatory climate.
"You have to ease the regulations that people face when they want to launch a new venture," said Jon Haveman, chief economist with the Bay Area Council's Economic Institute, which produced the report. "If somebody is trying to start a small business and spend a small fortune on a new home, they will probably start that business elsewhere."
The Bay Area lags major rivals such as Los Angeles and San Diego in jobs created by startup companies, the study determined.
The strengths of the region are reflected in household income and other factors, the report stated. The region has increasingly specialized in high-value industries such as professional, scientific and technical services, along with information services and products.
"This not only supports new company formation locally, but also helps attract innovative young companies from elsewhere in the country and around the world to locate here," the report stated.
"Even though there are high costs in the Bay Area, this region still has a reputation for new business formations," added Scott Anderson, chief economist with San Francisco-based Bank of the West. "You have the visibility of the tech industry. A lot of venture capitalists. Silicon Valley is the heart of the U.S. technology sector."
The report also determined that the migration of businesses into -- or the defection from -- the Bay Area has relatively little impact on the region's job market.
On average, only 2.3 percent of new jobs created in the Bay Area in a given year is the result of companies that came from other parts of California, other states or other countries. Similarly, only 3.7 percent of the jobs that vanish in a year are the result of firms defecting from the Bay Area.
Instead, 55 percent of the new jobs created in the Bay Area every year result from companies that were already located in the Bay Area. And 66 percent of the job losses in a typical year come from companies that were already operating in the nine-county region.
"Instead of spending money on going to other states or countries, local leaders should spend that money to make the environment more hospitable to companies that are already here, to create a better atmosphere for the formation of startups and the survival and retention of new companies."
"You have to ease the regulations that people face when they want to launch a new venture," said Jon Haveman, chief economist with the Bay Area Council's Economic Institute, which produced the report. "If somebody is trying to start a small business and spend a small fortune on a new home, they will probably start that business elsewhere."
The Bay Area lags major rivals such as Los Angeles and San Diego in jobs created by startup companies, the study determined.
The strengths of the region are reflected in household income and other factors, the report stated. The region has increasingly specialized in high-value industries such as professional, scientific and technical services, along with information services and products.
"This not only supports new company formation locally, but also helps attract innovative young companies from elsewhere in the country and around the world to locate here," the report stated.
"Even though there are high costs in the Bay Area, this region still has a reputation for new business formations," added Scott Anderson, chief economist with San Francisco-based Bank of the West. "You have the visibility of the tech industry. A lot of venture capitalists. Silicon Valley is the heart of the U.S. technology sector."
The report also determined that the migration of businesses into -- or the defection from -- the Bay Area has relatively little impact on the region's job market.
On average, only 2.3 percent of new jobs created in the Bay Area in a given year is the result of companies that came from other parts of California, other states or other countries. Similarly, only 3.7 percent of the jobs that vanish in a year are the result of firms defecting from the Bay Area.
Instead, 55 percent of the new jobs created in the Bay Area every year result from companies that were already located in the Bay Area. And 66 percent of the job losses in a typical year come from companies that were already operating in the nine-county region.
"Instead of spending money on going to other states or countries, local leaders should spend that money to make the environment more hospitable to companies that are already here, to create a better atmosphere for the formation of startups and the survival and retention of new companies."
