Small Businesses in the Pennsylvania Economy

The Small Business Administration has published their latest profiles of small businesses in the US and each of the 50 states. Some of the data is a bid old (data on employment by small business is from 2005, and some of the other data is from 2007) so it does not cover the recent downturn in the economy.

However, the numbers are still very telling, particularly when looking at the Pennsylvania profile versus the US total. A look at the number of business (and total employment) show that the growth is in the number of small employers and nonemployers (i.e. self-employment and independent contractors). It also shows that Pennsylvania lagged behind the US.

Looking at the number of employees by firm size is even more telling. Small employers (those with less than 500 employees) now employ over half of all workers, both in Pennsylvania and nationally. Furthermore, all of the job growth occurred in small businesses; large employers lost workers from 2002-05, both in PA and the US. This finding adds greatly to the discussion of “creative destruction” in the economy.