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Three-fourths of the Nation’s Businesses Don’t Have Paid Employees

Employment

Three-fourths of the Nation’s Businesses Don’t Have Paid Employees

Employment

Nonemployer Statistics and County Business Patterns Data Tell the Full Story

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You could look at the total number of establishments in the United States using just the U.S. Census Bureau’s County Business Patterns (CBP) data. But if you did, you would only be getting a partial view of the economic landscape.

That’s because CBP only provides data on businesses that have employees on their payroll. But, in 2016, only 23.8 percent of the 32,570,855 establishments in the United States had paid employees.

That means the remaining 76.2 percent of establishments were nonemployers or establishments that don’t have any paid employees. And those data come from the 2016 Nonemployer Statistics (NES).

The majority of all business establishments in the United States are nonemployers, yet these nonemployer establishments average less than 4 percent of all sales and receipts nationally.

So, to get a full picture of U.S. businesses in 2016, you have to 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.

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In 2016, only 23.8 percent of the 32,570,855 establishments in the United States had paid employees.

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Who Are Nonemployers and Employers?

NES is an annual series that 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 nonemployers 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.

This series includes the number of establishments, employment during the week of March 12, first quarter payroll and annual payroll.

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What The Data Tell Us

By looking deeper into both sets of data, you’ll see that in some sectors of the economy, such as Arts, Entertainment, and Recreation (Sector 71), nonemployer establishments account for 91.0 percent of total establishments.

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

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

All these valuable nuggets of 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 paints a more complete picture.


Note: The headline was updated Sept. 20, 2018, with correct information. Please disregard any previous versions.

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Adam Grundy is a supervisory statistician in the Census Bureau’s International Trade Management Division.


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Footnote: 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.

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This story was posted in: Employment


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