by Patrick Delehanty
The Office of Advocacy (Advocacy) advances the views and concerns of small businesses before Congress, the White House, and federal agencies. One of our most important responsibilities is understanding the state of the American small business economy. To accomplish this goal, Advocacy produces research that gives policymakers and stakeholders more insight into small business contributions and the challenges they face. To analyze and research small business economic impacts, Advocacy relies upon data collected by the federal statistical agencies.
The U.S. government’s main statistical agency, the U.S. Census Bureau (Census), produces data on households, workers, and businesses across the economy. Advocacy partners with the Census to produce data on small businesses. This data includes:
- The number of small businesses in each industry and geographic area
- Small business employment, payroll, and receipts
- Demographic data on small businesses and small business owners including age, race, ethnicity, sex, and veteran status.
Census prepares most of this data using a business registry database they maintain from tax records and other administrative data the government collects from businesses. The Census also surveys small businesses about their characteristics, conditions, and performance. Advocacy also uses data from other federal sources in our research and analysis including the Bureau of Labor Statistics, Bureau of Economic Analysis, Federal Reserve, Federal Deposit Insurance Corporation, Small Business Administration, and General Services Administration.
Advocacy uses this data to produce our research products and bring attention to important small business issues for policymakers and stakeholders to consider. Our research team also uses this data to work with federal agencies to assess the effects of federal regulations on small businesses during the regulatory development process by analyzing affected small businesses at the industry level.
Importantly, the Census’s Statistics of US Businesses (SUSB) and Nonemployer Statistics (NES) provide us with statistics on the number of small businesses in an industry or area as well as how many workers are employed by small businesses and what their payroll and revenues are. While Advocacy does not collect its data or have access to individual business information, our economists use the aggregated, publicly available economic data in the SUSB and NES tables to assess the size and structure of the small business sector.
Similarly, when stakeholders are interested in the business owner demographics of small businesses, our economists use the Census’s Annual Business Survey (ABS), a survey of employer businesses, and Nonemployer Statistics by Demographics (NES-D), a dataset of nonemployers based on administrative records, to provide counts of women-owned, minority-owned, and veteran-owned businesses.
Small business data are collected by Census in two separate categories that are added together for a total small business count: data series of small employers (small businesses with employees) and nonemployers (small businesses without employees). For multiple reasons, the Census Bureau produces data on nonemployers separately from employers. There are a lot of nonemployers in the U.S. and it can be hard and costly to collect information on them. Additionally, demographic statistics of nonemployers are produced through administrative records instead of surveys allowing the Census to provide more frequent and timely data, higher quality data, reduce respondent burden, and create more detailed estimates by demographic, geography, and industry.
While nonemployers are more plentiful than employers, a substantial majority of economic activity comes from employer businesses. Data on employers are broken down into employment size and receipt size categories to assess different firm sizes. Employer data can also be used to compare small employers with large employers. SBA sets a small business size standard, either by employment or revenue size, for each industry, but Advocacy uses a general small business definition of fewer than 500 employees in its research to make cross-industry analysis easier. Most employers are small, and all nonemployers are considered to be small businesses. These small employers and nonemployers together amount to the nation’s over 34 million small businesses.
In most cases, new economic data on small businesses are released annually. However, the Census’s process of collecting and releasing accurate detailed data covering millions of businesses takes time, usually with a lag of 1 – 3 years from the reference year. Most of the data collection process via survey or administrative records starts after the reference year it describes ends. Data is gathered from administrative sources or surveys are conducted, and then the data must be processed to ensure quality and protect the privacy of those described. Most of the time the latest annual small business data released provides a good approximation of current conditions, even though the current period may lag the period the data describes. Under some circumstances, more recent data from high-frequency sources is used to supplement the lagged data. For example, the Census’s Business Trends and Outlook Survey (BTOS) provides current economic data on a biweekly basis on small business conditions and performance.
Advocacy uses federal data across several sources to provide stakeholders with the most accurate and comprehensive small business economic data available. Census and other federal agencies take great care to ensure that their data are high quality and reliable. In turn, Advocacy takes great care to ensure the small business statistics we produce from federal sources are accurate and informative. Despite the lag in time between data collection and publication, the representative and comprehensive small business data and statistics we report are of great value to policymakers and stakeholders. To learn more about the main economic datasets we use to research small businesses, visit our Small Business Data Resources page.