Small Business Growth Revisited; Week In Review

Last week my post concluded with commentary on small business growth - which I consider a major element of economic growth and middle class strength.

Living in developing countries most of my life, the role of small business is obvious in improving the lot of the middle class. What is happening today in the USA can be explained in a single graphic from Gallup:

It was pointed out to me that this graph did not align with the Bureau of Labor Statistics (BLS) private sector establishment births and deaths data which shows that this graph was not current - and that current data was showing a recovery. Could it have been that Gallup misrepresented the small business situation by cutting off the data early?

  • The Gallup graph is based on US Census Business Dynamics Statistics which includes mom and pop (self employed) to Wal-Mart (WMT, the largest USA employer). The BLS establishment survey is based on PAYROLLS - which means that if you use the BLS data, one is not viewing the specific strata of the economy my post was highlighting (e.g. self employed).
  • The most recent data from the US Census Business Dynamics Statistics cuts off at the end of 2012, and the Gallup graph looks like it included the most recent data (but who knows as this graph did not say specifically).

Yet, it was bothering me that some data was not aligning with the Gallup graphic. The US Census Business Dynamics Statistics was available in enough detail that one could draw their own conclusion without using the Gallup representation of the situation. I do not care about breaking down births and deaths of business. What I want to see is the total amount of businesses active correlated to population growth.

Even with the crater created by the Great Recession - the total number of businesses has correlated well over time with population growth. Yet, this data is ALL business, not small business and particularly Mom and Pop (self employed business) which my post last week was discussing. The data in the US Census Business Dynamics Statistics is detailed enough to break out the smallest business segment.

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