The United States Census Bureau and Bureau of Labor Statistics have updated data on employer firm job creation for 2008, non-employer data for 2009, and business dynamics data for the fourth quarter of 2010.
The U.S. Census Bureau’s Statistics of U.S. Businesses showed that employer firms have the lion’s share of receipts and payroll, while non-employer firms are far more numerous. Specifically, about three quarters of all U.S. business firms have no payroll and do not employ any workers. Most non-employer firms consist of self-employed persons operating unincorporated businesses, and may or may not be the owner's principal source of income.
In 2008, out of 27,281,452 total U.S. firms, 21,351,320 were non-employer firms, and only 5,930,132 were employer firms – a slight decline compared to 2007, when there were 6,049,655 employer firms and 21,708,021 non-employer firms (27,757,676 total firms). In 2008, out of nearly 6 million employer firms, the most numerous were firms with 1 to 4 employees (or with no employees as of March 12, 2008), which totaled 3,617,764 firms. By comparison, there were only 981 firms with 10,000 employees or more in 2008. However, overall firms with 1-4 employees employed slightly more than 6 million people, while firms with 10,000 employees or more employed the most people, over 33 million – a slight increase compared to 2007.
The U.S. Census Bureau also released the 2009 Non-Employer Statistics data. According to the data, the number of non-employer businesses (those without paid employees) declined by more than 260,000 between 2008 and 2009 across the United States. Real estate agents, beauticians and construction contractors are some examples of non-employer businesses. The 2009 non-employer statistics data cover 21.1 million firms, which include 18.7 million sole proprietorships, 1.4 million corporations and 1 million partnerships.
In 2009, there were 21.1 million non-employer firms, a decrease of about 1.2 percent from 2008. This continued a decline first noted in 2008 — following the beginning of the recession at the end of 2007 — when the total number fell by more than 350,000 from a peak of 21.7 million firms in 2007.
“Non-employer firms generate a small percentage of total U.S. business receipts, but they constitute the majority of U.S. businesses,” said William G. Bostic Jr., associate director for economic programs at the U.S. Census Bureau. “The decline we have seen since 2008 reflects the change in economic conditions during that time.”
Although the number of non-employer businesses declined in most states from 2008 to 2009, these businesses grew in three states and the District of Columbia during this period, the released data reveal. Texas added the most firms (8,260), followed by Georgia (3,336), Louisiana (1,871) and the District of Columbia (462).
U.S. Census Bureau’s Business Dynamics Statistics report, “Historically Large Decline in Job Creation from Startup and Existing Firms in the 2008–2009 Recession”, found that economy-wide job-creation rates and the job-creation rate from business startups (new firms) were lower in 2009 than in any year since at least 1980. According to the report, the historically low rates in 2009 reflected many factors, the first of which is the very large decline in overall economic activity. In prior recessions, the report notes, there have been relatively modest declines in job creation and job creation from startups as the economy experienced a downturn. In 1999-2002, there was a large decline in net employment growth rates, but only a modest decline in job creation from startups, and an actual increase in overall gross job creation, partly as a result of the increase in job creation from new establishment openings of existing firms. The overall decline, therefore, resulted from an increase in job destruction. In contrast, in 2006-2009, there were very large declines in job creation and job creation from startups. Overall, job creation fell by about 4 percentage points and job creation from startups by about 1 percentage point. As a percent of the 2006 rates, when job creation rate peaked, this represents a 25 percent decline in overall job creation and a 34 percent decline in job creation from startups.
Bureau of Labor Statistics’ Business Employment Dynamics report found that from September 2010 to December 2010, the number of gross job gains from opening and expanding private sector establishments increased to 7 million. At the same time, the number of gross job losses from closing and contracting private sector establishments was essentially unchanged from the previous quarter at 6.4 million. In the fourth quarter of 2010, large firms with 250 or more employees experienced the largest quarter of gross job gains (1.7 million) since December 2007. Therefore, the net change was positive and totaled 563,000 jobs in the private sector during the fourth quarter 2010.
Specifically, in the fourth quarter of 2010, contracting establishments lost 5.2 million jobs, resuming a downward trend in this series that began in the second quarter of 2009. Job gains at expanding establishments rose to 5.6 million after falling in the third quarter. Closing establishments lost 1.2 million jobs, about the same as in the previous quarter. Opening establishments gained 1.3 million jobs, an increase from the previous quarter, when opening establishments created 1.2 million jobs.
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