Pants on Fire?

March 10, 2010 10:04 AM

In this article (registration required), Alexander Cockburn states that " 95% of all the firms in America hire fewer than ten people". He seems fond of this statistic, but it seems fishy to me. Is it true?
posted by wittgenstein to Work & Money (11 answers total)

Makes sense to me. Most companies are small companies. Our perceptions are biased because most companies that we hear about are large companies.
posted by dfriedman at 10:07 AM on March 10, 2010

Seems to me like there should be some information on this at the Bureau of Labor Statistics.
posted by three blind mice at 10:15 AM on March 10, 2010

According to the 2004 Census, those numbers are correct.
posted by meowzilla at 10:15 AM on March 10, 2010

Seems reasonable. According to this IRS document, 72% of all businesses in the US are sole propietorships. My understanding is that typically these have very few employees, if any, as there are better incorporation methods if you've got payroll, etc. Taking into account the fact that the vast majority of firms live less than five years, and 95% sounds plausible.
posted by PMdixon at 10:16 AM on March 10, 2010

It turns out that 75% of all businesses hire absolutely no one, so it isn't as impressive as it sounds at first glance.
posted by Lame_username at 10:20 AM on March 10, 2010

It turns out that 75% of all businesses hire absolutely no one, so it isn't as impressive as it sounds at first glance.

Sort of. Nonemployer firms appear to be the most numerous, but they only account for 3% of total business revenue, according to PMdixon's link. Here's some information on the distribution of nonemployer firms. Looks like mostly real estate agents and single person contractors.
posted by electroboy at 10:40 AM on March 10, 2010

Sort of a misguided quote.
I'm sure that the greatest percentage of WORKERS work for companies with >10 employees. I'm also sure that the greatest percentage of individual COMPANIES have fewe.r than ten employees.
Just thinking of the probably 15 small businesses owned by friends with 3 or fewer "employees.", especially when most of those folks have regular day jobs.
posted by TomMelee at 11:09 AM on March 10, 2010

Using the same 2004 census data from meozilla, while 95% of companies do have less than 10 employees, about 90% of employees are employed by companies with 10 or more employees.
posted by GregorWill at 11:59 AM on March 10, 2010

And actually running the 2004 census data from meozilla, it looks like about 80% of companies do have less than 10 employees, not 95%.
posted by GregorWill at 12:04 PM on March 10, 2010

Ah, yes 80% of companies that have employees have less than 10 employees, but 77% of all companies don't have any employees, so 95% of all companies have less than 10 employees .
posted by GregorWill at 12:08 PM on March 10, 2010

My understanding is that the figures are similar in other Western nations (I know they are here).

We use a similar figure in my industry, which people constantly challenge and which is related - that 80% of employment vacancies are in the "hidden" job market and are not widely advertised or even advertised at all. This is largely because the majority of business enterprises here are "small business".
posted by Lolie at 12:42 PM on March 10, 2010