October 27, 2008

Small US businesses

Ok, it's bad for my health, but I can't stop following the news. So I just watched McCain speak. Pretty good stuff, for a Republican. But eventually he throws out a number (Republicans tend to avoid hard facts), and my analytical mind goes nuts.

He said that more than 80% of Americans are employed by small businesses. It made his speech make a lot of sense. But that number sounds very high. So how many Americans are actually working for small businesses?

Short search throws up the following stat - about 50% of non-government employees work for small businesses. Hmmm. How many work for government, then? Well, state and local governments employed 15.4 million Americans in 2002 (http://factfinder.census.gov/jsp/saff/SAFFInfo.jsp?_pageId=tp16_government)
The federal government employs 1.8 million civilians (http://www.bls.gov/oco/cg/cgs041.htm) plus the 600,000 postal workers and 1.4 million soldiers. That's roughly 3.8 million. In total, we're talking something like 20 million people. This is direct employment only.

Ok, I digress. This is the money shot:
50 % of Americans work for a business that has 500 employees or more. That's NOT small. More than 60% work for a business with at least 100 employees. That's still at least medium sized.

The census number totals 116 million workers in private business. With a labor force of 153 million (https://www.cia.gov/library/publications/the-world-factbook/geos/us.html), that means 37 million people are working for the government or are unemployed. Assuming the previous estimate for the government workforce - about 20 million - there are about 17 million unemployed.

Ok, so clearly McCain was full of it. Again. Small businesses with less than 20 employees (which surely covers almost all plumbers) employ less than 20% of the non-government workforce - a little over 20 million people. That's not much more than the size of the government workforce, if you take the conservative numbers for the size of the government. If you believe the official unemployment rate, there's only 6.1% unemployment. That would mean that more than 27 million Americans work for the government - many more than work for those revered small businesses.

It's okay for Americans to identify with small businessmen. They represent a part of history and perhaps personify a crucial part of the national spirit, just as French farmers and German Mittelstand do in their countries. But you have to put away this nostalgic image when you discuss real policies. The US economy may be strengthened by small businesses and innovative upstarts. But the overwhelming majority of Americans work for large companies.


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