More Than 80% of US Businesses Don’t Employ People?

AutoInformed.com on Non-Employee Businesses

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The U.S. Census Bureau’s County Business Patterns (CBP) data includes only data on businesses that have employees on their payroll. But, in 2016, only 23.8% of the 32,570,855 establishments in the United States had paid employees. This means the remaining 76.2% of establishments were non-employers or establishments that don’t have any paid employees. And those data come from the 2016 Non-employer Statistics (NES).

The three states with the largest number of non-employer establishments are Texas (79.5%), Georgia (79.4%) and Florida (79.0%). North Dakota is the only state where more than 30% of the establishments have paid employees.

“Most of all business establishments in the United States are non-employer, yet these non-employer establishments average less than 4% of all sales and receipts nationally,” according to Adam Grundy, a supervisory statistician in the Census Bureau’s International Trade Management Division. “So, to get a f  ull picture of U.S. businesses in 2016, you must look at both CBP and NES data programs.”The U.S. Census Bureau just released a report that combines both sets of data for the first time.*

Non-Employers and Employers?

NES provides economic data for businesses that have no paid employees and are subject to federal income tax. Data are available for the nation, states, counties, metropolitan statistical areas and combined statistical areas. Most non-employers are self-employed individuals operating a very small unincorporated business, which may or may not be the owner’s principal source of income. NES includes the number of businesses and total receipts by industry. CBP is also an annual series that provides economic data by industry, from state, county and congressional districts all the way down to Zip codes.

Data Say

Some sectors of the economy, such as Arts, Entertainment, and Recreation (Sector 71), non-employer establishments account for 91% of total establishments. In other sectors, such as Wholesale Trade (Sector 42), only about half of the establishments are non-employers. Accommodation and Food Services (Sector 72) is the only other sector with more employer establishments (64.8%) than non-employer establishments (35.2%).

In other sectors, such as Wholesale Trade (Sector 42), only about half of the establishments are non-employers. Accommodation and Food Services (Sector 72) is the only other sector with more employer establishments (64.8%) than non-employer establishments (35.2%).

All these economic data would be missed if you were to look at only CBP or just NES on their own. You would then be missing out on a very large portion of the total U.S. economy. Using both Census Bureau data programs provides a more complete picture.

* CBP and NES cover most of the country’s economic activity. However, there are some exclusions. CBP excludes employees of private households, railroad employees, agricultural production employees and most government employees. NES excludes crop and animal production; national postal service; investments, funds, trusts, and other financial vehicles; management of companies and enterprises; private households; and public administration. For more information of the technical methodology, see the CBP methodology page and NES methodology page.

 

About Ken Zino

Ken Zino is an auto industry veteran with global experience in print and electronic media. He has auto testing, marketing, public relations and communications expertise garnered while working in Asia, Europe and the U.S.
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