Importance of Small Businesses to the U.S. Economy

Written on May 13, 2007 by Amanda M. Gladden

While researching statistics on the number of small businesses that fail yearly here in the Unites States, I came across these interesting figures and thought I’d share them. Based on the stats below, small business is en extremely important part of our economy here in the U.S.A.

Small firms

Represent 99.7 percent of all employer firms.

Employ half of all private sector employees.

Pay more than 45 percent of total U.S. private payroll.

Have generated 60 to 80 percent of net new jobs annually over the last decade.

Create more than 50 percent of nonfarm private gross domestic product (GDP).

Supplied more than 23 percent of the total value of federal prime contracts in FY 2005.

Produce 13 to 14 times more patents per employee than large patenting firms. These patents are twice as likely as large firm patents to be among the one percent most cited.

Are employers of 41 percent of high tech workers (such as scientists, engineers, and computer workers).

Are 53 percent home-based and 3 percent franchises.

Made up 97 percent of all identified exporters and produced 28.6 percent of the known export value in FY 2004.

Sources:

U.S. Bureau of the Census; Advocacy-funded research by Joel Popkin and Company (Research Summary #211); Federal Procurement Data System; Advocacy-funded research by CHI Research, Inc.(Research Summary #225); Bureau of Labor Statistics, Current Population Survey; U.S. Department of Commerce, International Trade Administration.