When it comes to defining a small business, most of us think really small. And we would be right. How a small business is defined makes a big difference. Using one set of standards, a small business would have no more than four employees, while under another set, 500 employees is the cutoff point.
A new report from the Congressional Research Service presents nonfarm employer data from 2019, with several data points broken out by the number of employees. The report is titled “Small Business Size Standards: A Historical Analysis of Contemporary Issues.”
The following table presents summary data on the number of U.S. firms broken down by the number of employees. Data on self-employed Americans was not included because it was not available for 2019. In 2018, there were 26.49 million Americans who were self-employed.
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| Number of employees/firm | Number of firms | Cumulative percent of total firms | Total employment | Cumulative percent of total employment | Annual Payroll | Cumulative percent of total payroll |
|---|---|---|---|---|---|---|
| 0–4 | 3,556,927 | 61.6% | 5,632,339 | 4.3% | $283.5 billion | 3.4% |
| 5–9 | 959,641 | 78.3% | 6,329,828 | 9.3.% | $257.6 billion | 7.5% |
| 10–19 | 609,355 | 88.8% | 8,211,284 | 15.7% | $347.8 billion | 12.3% |
| 20–99 | 532,972 | 98.0% | 20,893,780 | 31.8% | $960.9 billion | 25.6% |
| 100–499 | 92,159 | 99.6% | 18,235,627 | 46.0% | $1.01 trillion | 39.5% |
| 500+ | 20,256 | 100.0% | 69,695,369 | 100.0% | $4.4 trillion | 100.0% |
| Total | 5,771,290 | 128,898,227 | $7.23 trillion |
We note a few standout data points:
- More than 60% of all U.S. firms have four or fewer employees.
- Just 0.4% of all firms have more than 500 employees.
- The largest firms employ 54% of Americans.
- The largest firms pay 60.5% of all U.S. salaries.
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