Small businesses are the lifeblood of the U.S. economy: they create two-thirds of net new jobs and drive U.S. innovation and competitiveness. A new report shows that they account for 44 percent of U.S. economic activity. This is a significant contribution. Small businesses with fewer than 500 employees account for 48% of American jobs and 43.5% of GDP, and they are facing an existential threat in the wake of the coronavirus crisis.
Prior to the pandemic there were 30.2 million small businesses in the U.S. accounting for 99.9% of all businesses—leaving roughly 30,000 businesses labeled as large.
Service industries (Professional, Scientific, Technical, etc.—excluding Public Administration) account for 8.58 million of the 30.2 million small businesses or 28.4% of all small businesses.
Small businesses created 1.9 million new jobs in 2015 out of a total of 2.7 million accounting for approximately 70% of all new jobs.
The Current Small Business Landscape
Large numbers of small businesses have shut down and laid off huge numbers of workers.
In a sample, 45% of small businesses were temporarily closed due to Covid-19. Total employment by these businesses declined by 40% since the end of January. The economic carnage was particularly acute at the epicenter of the American pandemic: the mid-Atlantic region that surrounds New York City. In that area, more than 55% of small businesses had closed and employment had fallen by 44%. The Pacific region, with statewide closures in California and an early outbreak in Washington, has seen equally dramatic employment reductions.
Woman-Owned Businesses Are Growing 2X Faster On Average Than All Businesses Nationwide
Women-owned businesses continue to fuel the economy and now represent 42% of all businesses — nearly 13 million — employing 9.4 million workers and generating revenue of $1.9 trillion. According to the annual State of Women-Owned Businesses Report, commissioned by American Express (NYSE: AXP), in 2019, these U.S. women with diverse ethnic and geographic backgrounds started an average of 1,817 new businesses per day in the U.S. between 2018 and 2019, down only slightly from the record-setting 2018 number of 1,821.
Minority Markets Have $3.9 Trillion Buying Power
The combined buying power of blacks, Asian-Americans and Native Americans is estimated to be $2.4 trillion, while the nation’s Hispanics command $1.5 trillion in spending power.
