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Kootenai County on firm footing

Fri., July 28, 2006

If you’re keeping track of the birthrate of new firms in the area, the busiest new-business hotspot is Kootenai County. Thanks to soaring growth, Kootenai County’s rate of new-company formation is three times faster than Washington state and more than twice as fast as Spokane County, regional economists say.

Counting only those businesses that pay wages to workers, Kootenai County has added about 725 firms to its rolls since 2002. In the same period, Spokane County — with nearly four times Kootenai County’s population — has added about 880 new businesses.

The birth and survival rate for those new firms in North Idaho was 18 percent, compared to 7 percent in Spokane County. Idaho statewide saw a 10 percent growth rate from 2002 to 2005; Washington state had a 6 percent rate, identical to the national average.

That statistic is yet another example of how hot the North Idaho economy has become, said Kathryn Tacke, a state regional economist who tracks the Panhandle.

“We’re glad to see that level of growth,” she said. “It’s a sign of people who are successful in creating what they want, their own companies. It’s also a way to track the health of your economy and the business friendliness of your climate,” she added.

Economists sometimes say it’s not always a good thing to have a boom in new firms. Often more firms are started during an economic downturn “when people can’t get jobs anywhere else, so they take on Avon routes or become consultants, so they can earn half of what they made before they lost their jobs,” said Tacke.

But that’s not the case in this business recovery, say area economists. The boom in new business growth follows significant regional job growth and spikes in housing, retail sales and population influx.

Kootenai County’s 5 percent annual job growth in recent years has made it one of the fastest-growing metros in that category across the country, Tacke pointed out.

From 2002 to 2005, Kootenai County saw a net gain of 726 new firms, from 3,938 to 4,654. Spokane County’s net gain came to 885 firms, from 12,766 to 13,651, according to numbers from Washington’s Employment Security Department.

The period 2002 onward was used since Washington changed its method of tracking firms in 2001. The numbers also reflect total net businesses — counting both new companies as well as those that closed their doors in that period.

Tacke said it’s no surprise that 35 percent of Kootenai County’s new firms were related to construction. “That’s close to what you’d see on the national level,” she said.

The data gathered by both states cover private firms; they exclude government employers and those that are so small they don’t pay wages, or have only one self-employed worker. Also excluded would be small seasonal firms, such as Christmas tree sellers or fair vendors.

So strong was Kootenai County’s growth that only one company sector — agriculture and forestry — lost firms from 2000 to 2005. That sector lost six firms, said Tacke.

Construction firms, out of all new businesses, amounted to 35 percent of the net gain. The second largest gain was with professional and business service companies (19 percent), followed by financial service firms (14 percent).

“That growth is really not surprising when we’ve had the kind of job and population growth we’d had in recent years” in North Idaho, Tacke said.

The vast majority of the new firms in both Spokane and Kootenai counties are small businesses, but that’s another sign of a thriving economy, added Tacke.

“Most of them are small firms, but small companies over time do create an awful lot of jobs.”


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