Josephine County Employment by Firm Size and AgeFebruary 17, 2017 Have you ever heard statements such as “small businesses create the most jobs”? You might agree, but how would you know if this is a fact? One source for this information comes from the U.S. Census Bureau’s Local Employment Dynamics program. Data from the Local Employment Dynamics program is very detailed, as it is administrative data rather than survey-based information. Data by specific industry as well as other criteria such as employment by race and ethnicity are also available.
Information regarding firm size and age is a fairly new addition to this warehouse of job data. This allows questions such as pay difference among different age and size firms to be answered, along with employment change and growth rates among firms with those different attributes.
Part of the challenge in affirming or refuting claims such as small businesses create the most jobs is the definition used in describing what a “small” business is. Even within the U.S. Small Business Administration, the definition of a small business varies widely depending on the industry the business is in.
In Josephine County in 2015, there were about 6,600 private-sector jobs in the largest size category (500+), which represented 31 percent of payroll employment. The next category, 250 to 499 employees, had about 1,500 workers, or 7 percent of the total. Firms with 50 to 249 employees comprised about 19 percent of total private employment. Firms with zero to 19 employees had almost 6,600 workers and represented 31 percent of total private employment in Josephine County. The next larger category was firms that have between 20 and 49 workers. Those firms had 2,424 workers or 12 percent of the total in 2015.
Now let’s look at job change from the bottom of the employment recession in 2011 through 2015 to contrast net job change in different size firms in Josephine County. Over that time firms in the largest size class added the most jobs, up by 969, a 17 percent increase. Employment at firms in the next size class, 250 to 499 employees, roughly doubled from 2011 to 2015, adding 750 jobs. On the other end of the firm size spectrum, firms with zero to 19 workers added 635 jobs, an 11 percent increase. Employment at firms with 20 to 49 workers declined by 135, or a loss of 5 percent. Firms with between 50 and 249 workers saw a slight 2 percent gain, with about 60 jobs gained from 2011 to 2015. This data dispels the often-repeated slogan that small businesses create the most jobs, at least for Josephine County coming out of the Great Recession through 2015.
Wages by Size of Firm
Wages by size of firm are also published from the U.S. Census Bureau’s Local Employment Dynamics program. Data are available going back to about 1991, allowing a longer look at wage and employment trends.
From 2011 to 2015, average wages rose faster at firms with 250 to 499 employees (22.8%) than other firm size categories. Wages rose about 11 percent for the largest firms. Average monthly pay rose by 17 percent at firms with zero to 19 workers. Wages declined slightly at firms with 20 to 29 workers.
In 2015, employees at the largest firms had average monthly earnings of $3,258. Those with 50 to 249 employees had the next highest average pay at $3,091. Workers at the smallest firm size category also had the smallest average monthly pay.
Employment by Age of Firm in Josephine County
Despite the notoriety and excitement surrounding start-ups, new firms and innovative new industries and businesses, by far most private-sector employees (78%) in Josephine County work at firms 11 years old and older. Just 10 percent of all employees in the private sector work at firms between six and 10 years old. Less than 5 percent of all employees work at firms in other groups that are less than five years old.
One trend that this recovery from the past recession is noted for is the low numbers of new businesses compared with other recoveries. We can see this trend locally by looking at total employees in the newest firms – those zero to one year old. These fledgling firms had 1,063 workers in 2011. By 2015, employees at the youngest firms totaled 702, a decline of 34 percent. On the other end of the firm-age spectrum, employment at firms age 11+ rose by about 2,865, a 21.1 percent rise. Employment at firms six to 10 years old also declined between 2011 and 2015, down by about 400. Firms between two and five years old added about 200 employees over that time.
Older firms tend to have higher wages. Some things get better with age, apparently including average monthly pay at oldest firms. The average monthly wage in firms 11 years old or older was $3,000 in 2015. Firms age four to five years had an average wage of $2,787.
Wages were slightly lower among firms that are less than four years old. Wage growth was fastest in the firms ages four to five years from 2011 to 2015, increasing 57 percent. Wages rose about 33 percent at firms ages two to three years. Average monthly wages increased by 10 percent for the oldest firms. Wages declined slightly at firms ages six to 10 years, falling by 2.5 percent from 2011 to 2015.
There are many more data sets available and now even easier to access using the “LED Explorer” application on the U.S. Census Bureau’s Local Employment Dynamics website (https://lehd.ces.census.gov/).