Useful Stats: Job Churning at Businesses with Fewer than Ten Employees by State, 2005

The U.S. Census Bureau has released a new data series tracking employment changes at the establishment level. This data allows users to track the expansion and contraction of employment within existing businesses and creation and destruction of jobs through the birth and death of firms. In addition, the Census Bureau has broken down the data by firm size, age, sector and state.

Using the data available through these new Business Dynamics Statistics, SSTI has assembled a table presenting the job churning rate of very small businesses by state for 2005. For the purposes of this table, very small businesses include establishments with fewer than ten employees. Across the country, businesses of this size account for about 60 percent of all firms and just over 10 percent of all employment. These firms are younger than other businesses on average and tend to be more volatile in their employment numbers.

Examining this data by state gives a clearer picture of the relative influence of these firms in different state economies and their relative growth within a particular year. Florida, Wyoming and Vermont stand out as states with an unusually high percentage of firms with fewer than ten employees. The District of Columbia had the lowest percentage of these firms with 49.5 percent. Wyoming and Montana have a much higher percentage of employment tied to very small firms, with both having almost double the national rate.

Both job creation and destruction were higher among very small businesses than among businesses overall. In 2005, U.S. businesses with fewer than ten employees created 3.5 million new jobs, equal to about a quarter (26.7 percent) of employment at these firms.  The job-creation rate at all U.S. firms was only 15.9 percent. Across the states the job creation rate at smaller firms ranged between 37 percent in Nevada and 22.4 percent in Vermont. In all states however, the job-creation rate for smaller firms surpassed that of the overall population of businesses. The trend was similar for job destruction, reflective of the greater volatility of smaller businesses.

View the summary table at: http://www.ssti.org/Digest/Tables/121008t.htm. The full table is available for download in an Excel spreadsheet at: http://www.ssti.org/Digest/Tables/121008.xls.

SSTI will prepare additional explorations of this new data set in future issues of the Digest.