Small Business Dynamics and Job Creation Or Small Business Numbers, Pretty Pictures and Not So Pretty Pictures Brian Headd Office of Advocacy U.S. Small Business Administration
Employers 8,000,000 7,500,000 7,000,000 6,500,000 6,000,000 Number of Businesses Non-employers Employers Nonemployers 24,000,000 22,000,000 20,000,000 18,000,000 5,500,000 5,000,000 4,500,000 Est. 16,000,000 14,000,000 4,000,000 1985 1990 1995 2000 2005 2010 12,000,000 Note: Employer 2009 and 2010 figures estimates using Bureau of Labor Statistics, BED trends. Source: U.S. Small Business Administration, Office of Advocacy, from data provided by U.S. Department of Commerce, Census Bureau, Statistics of U.S. Businesses and Nonemployer Statistics.
Start Years for 6.7 Million Employer Establishments, 2005 (thousands) Source: U.S. Small Business Administration, Office of Advocacy from data provided by the U.S. Department of Commerce, Census Bureau, Business Dynamics Statistics.
Establishment Dynamics, 1992-2010q2 (thousands of establishment, seasonally adjusted) 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 1994 1996 1998 2000 2002 2004 Births Deaths Expansions Contractions 2006 2008 2010 About half of all establishments do not change employment from quarter to quarter and about 85 percent of establishment turnover is small business turnover Source: Office of Advocacy, U.S. Small Business Administration from data provided by the Bureau of Labor Statistics, Business Employment Dynamics.
Percent of establishments 100 90 80 70 60 50 40 30 20 10 0 Cumulative Survival Rates for Establishments by Birth Year 1995 2000 2005 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Years in existence Source: Office of Advocacy, U.S. Small Business Administration from data provided by the U.S. Bureau of Labor Statistics, Business Employment Dynamics.
100% 90% Establishment Survival Rates: One- and Five-Year Rates by Birth Year, 1977-2004 Five-year rate One-year rate 80% 70% 60% 50% 40% 30% 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 Source: U.S. Census Bureau, Center for Economic Studies, Business Dynamics
Share of Private-Sector Net New Jobs by Firm Size 500+, 34.8% <20, 22.4% 20-499, 42.8% 1993-2010q2 (16.1 million net new jobs) Source: U.S. Small Business Administration, Office of Advocacy, from data provided by U.S. Census Bureau, Statistics of U.S. Businesses and U.S. Bureau of Labor Statistics, Business Employment Dynamics.
Small Businesses Share of Employment, 1988-2008 Percent 60 50 40 30 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Total Manufacturing (SIC) Manufacturing (NAICS) Retail Trade (SIC) Retail Trade (NAICS) Source: U.S. Small Business Administration, Office of Advocacy, from data provided by U.S. Department of Commerce, Census Bureau, Statistics of U.S. Businesses which covers the private-sector.
Employment Change by Size of Firm (thousands, seasonally adjusted) 400 0-400 1994 1996 1998 2000 2002 2004 2006 2008 2010-800 -1,200 1-19 employees 20-499 employees 500+ employees 1,200 800 400 0-400 1992-800 -1,200 Employment Changes by Size of Establishment Change (thousands, seasonally adjusted) 1994 1996 1998 2000 2002 2004 2006 1-4 employees 5-19 employees 20+ employees 2008 2010 Source: Office of Advocacy, U.S. Small Business Administration from data provided by the U.S. Bureau of Labor Statistics, Business Employment Dynamics.
Number of employees 20 18 16 14 12 10 8 6 4 2 0 Average Employment per Establishment by Birth Year 1995 2000 2005 2010 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Years in existence Source: Office of Advocacy, U.S. Small Business Administration from data provided by the U.S. Bureau of Labor Statistics, Business Employment Dynamics.
Mean Employment Level for Firm Birth Year Cohorts, 1980-2005 (millions) 2.98 2.98 2.76 2.60 2.47 2.38 2.14 1.99 1.93 0 1 2 3 4 5 6 to 10 11 to 15 16 to 20 Years in existence Source: U.S. Small Business Administration, Office of Advocacy from data provided by the U.S. Department of Commerce, Census Bureau, Business Dynamics Statistics.
Percent Small Business Bank Lending, 1991-2010 100 75 50 25 0-25 -50 Tightening loan standards Stronger demand for loans -75 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Note: Change in percentage of respondents from the previous period. Source: Office of Advocacy, U.S. Small Business Administration from data provided by the Federal Reserve Board Senior Loan Officer Survey.
Billions of 2010 dollars 900 700 Small Business Loans Loans under $1 million, fiscal year 500 300 1996 1998 2000 2002 2004 2006 2008 2010 Source: Federal Reserve Board, Call Report data. Billions of 2010 dollars 3.0 2.5 2.0 1.5 1.0 0.5 0.0 7(a) Loans SBA Loans 504 Loans 1996 1998 2000 2002 Source: U.S. Small Business Administration. 2004 2006 2008 2010
Points to Remember Big employment expanders (gazelles) are needed We need bigger start-ups, not necessarily more Momentum for small firms is going in the right direction Contact info: Brian Headd 202-205-6953, brian.headd@sba.gov