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Economic News, Data and Analysis

Small Business Job Creation

Here’s a data paradox to mull over…
< 20 employees
Firms with fewer than 20 people represented 18% of employment in 1999. [data]
Firms with fewer than 20 people were responsible for 53% of total net job creation in 1999. (From 1989 to 1999 this figure has ranged from 49% to over 75%) [data]
500+ employees
As of 1999, about 50% of all jobs are in firms with more than 500 employees. [data]
Of the jobs created, only 33% were in firms with more that 500 people. [data]
Puzzle:
Given these numbers, you’d expect the total employment share in firms with less than 20 people would have been growing over time, and the share of the 500+ group to decline. Right?
Wrong! The employment numbers show that percent of total employment for the <20 person firms has decreased from 21% to 18% from 1989 to 1999; and the total employment for the 500+ group has increased from 45% to 50%.
Any explanations? Comments welcome…
Sources:
Office of Advocacy – U.S. Small Business Administration – Firm size data provided by the U.S. Census Bureau
Here’s the spreadsheet with data.

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