Small Business Economic Indicators for 2003

A Voice for Small Business Small Business Economic Indicators for 2003 A reference guide to the latest data on small business activity, including state and industry data August 2004 Small Business Economic Indicators was prepared by Brian Headd and edited by Rebecca Krafft. The full text of this report is available on the Office of Advocacy’s website, www.sba.gov/advo. Reprints in paper or microfiche are available for purchase from the National Technical Information Service, 5285 Port Royal Road, Springfield, VA 22161. The Office of Advocacy of the U.S. Small Business Administration was created by Congress in 1976 as an independent voice for small business within the federal government. The Chief Counsel for Advocacy directs the office. Appointed by the President and confirmed by the U.S. Senate, the chief counsel advances the views, concerns, and interests of small business before Congress, the White House, federal agencies, federal courts, and state policymakers. The offices uses economic research, policy analyses, and small business outreach to identify issues of concern to small businesses. A network of regional advocates and an office in Washington, D.C., support the chief counsel’s efforts. For more information on the Office of Advocacy, visit www.sba.gov/advo, or call (202) 2056533. To receive email notices of new publications, regulatory comment letters, and other information from the Office of Advocacy, sign up for Advocacy’s Listservs at http://web.sba.gov/list. The four Listservs are Advocacy Communications Advocacy Newsletter Advocacy Press Advocacy Research Small Business Economic Indicators for 2003 A reference guide to the latest data on small business activity, including state and industry data Office of Advocacy U.S. Small Business Administration Washington, D.C. June 2003 The full text of this report is available on the Office of Advocacy’s Internet site at http://www.sba.gov/advo/. Reprints in paper or microfiche are available for purchase from the National Technical Information Service, 5285 Port Royal Road, Springfield, VA 22161. Federal Recycling Program Printed on recycled paper. EXECUTIVE SUMMARY The year 2003 began on a positive note, and important economic indicators advanced throughout the year. Output increased, the stock markets rose, proprietors’ income grew, and corporate profits were up. The cautious atmosphere of the two previous years gave way to increased entrepreneurial risk taking. The number of employer firms and self-employed persons increased by 0.3 percent and 3.7 percent, respectively. The only qualification to the year’s positive economic news was in employment. The unemployment rate remained at around 6 percent and overall private sector employment declined by 400,000. The number of new employer firms outnumbered employer terminations by a small percentage. New employer firms dropped 2.8 percent from the previous year, but estimated employer terminations fell 2.5 percent. Business bankruptcies declined 9.1 percent, indicating that fewer closed businesses needed protection from creditors. Businesses had solid returns as cost increases were held in check and productivity grew. Sole proprietor incomes and corporate profits were up 6.2 percent and 18.3 percent respectively. The compensation cost index (an indicator of labor costs) rose 4 percent, while the prime rate (an indicator of the cost of capital) fell by 11.8 percent. Productivity rose 4.5 percent. The outlook for future small business expansion was positive at the end of 2003. Banks began relaxing lending standards in late 2003 for the first time since 1998, and the demand for small business loans halted its decline. The National Federation of Independent Business’ index of small business optimism was at its highest level since January 2000. This index gauges how many businesses view the coming three months as a good time to expand. Small Business Economic Indicators for 2003 INTRODUCTION Running a small business is not for the faint of heart. In addition to working long work weeks, small business owners must overcome financing hurdles, regulatory requirements, and other challenges to successfully compete in their industries. Because the bar is set high, small business owners’ efforts, ingenuity, and inventiveness profoundly affect the economy overall, making it more productive and competitive. Small businesses play several key roles in the economy.1 For large businesses, small businesses represent the stock from which they grew, and whence their next competitor will emerge. To individuals in the labor market, small businesses are often a first job, an entry into the working world. They are often an individual’s entry into the world of business too, as employees set out on their own to start their own businesses. To the overall economy, small businesses are a method of launching new ideas and incorporating new processes which propel the economy’s evolution by bringing about more efficient uses of resources. In statistical terms, small firms represent about 99 percent of employers, employ about half of the private sector workforce, and generate between two-thirds and three-quarters of the net new jobs. While small firms contribute substantially to the growth of the economy, the number of small firms does not change dramatically over time. The steady level represents an equilibrium which results from a constant churning, as new firms are born, small firms grow into large firms, and large ones contract into small firms or disappear.2 SMALL BUSINESS IN THE YEAR 2003 By the end of 2003, the U.S. economy had surged out of the recession of 2001. At year’s end, employment growth remained muted and concern continued to grow about the rising cost of health insurance coverage. The economy avoided a return trip into recession, as real output rose 3.1 percent in 2003, following on 2.2 percent growth in 2002. Businesses benefited from the economic rebound, as proprietors’ income rose 5.6 percent and corporate profits rose 18.3 percent. These increasing business returns were the combined effect of an accelerating economy and subdued cost increases. The wage and The Office of Advocacy often defines a small firm as one with fewer than 500 employees. Precise size definitions vary by industry and are available from SBA’s Office of Size Standards (www.sba.gov/size). 2 Some large firms do shrink into small firms during a recession and then grow back into large firms; this is a relatively rare occurrence, however. 1 Small Business Economic Indicators for 2003 2 salary index rose 3 percent, the producer price index rose 3.2 percent, and interest rates continued to decline. Nevertheless, the employee benefits cost index rose 6.4 percent, a significant one-year increase. Small businesses played a role in the 2003 economic rebound. However, data distinguishing growth by size of firm is only available with a lag of a few years, making it difficult to pinpoint their exact contribution. In place of specific data, proxy indicators can be used to demonstrate small businesses’ resilience throughout the downturn.3 Since only 17,000 firms out of the U.S. total of 5.7 million firms have 500 or more employees, it is apparent that more than 99 percent of businesses are small. Indicators based on the number of firms reveal trends among small businesses. The change in business bankruptcies is one indicator of whether the economy is getting the best of the small business or whether the best small businesses keep contributing to the economy. Business bankruptcies declined 9.1 percent in 2003. The change in the number of businesses is another sign of an expanding or declining small business sector. The number of employer firms rose 0.3 percent and the number of self-employed (nonincorporated) rose 3.7 percent in 2003. So the proxy data indicates small business strength in 2003. The quarterly indicators listed in Tables I and II show the steadily expanding economic foundation. Output, as measured by real GDP, rose every quarter in 2002 and 2003. Self-employment and NFIB’s small business optimism index rose every quarter in 2003. Business bankruptcies fell throughout most of 2003. And even the laggard of the recovery, employment, showed strong signs at the end of 2003. In the fourth quarter of 2003, nonfarm employment rose for the first time in three years, and the unemployment rate declined from its short-term peak reached mid-year. Note that when the economy gained momentum after the previous downturn in the early 1990s, firms with fewer than 500 employees increased their net employment in the first year after the recession, while large firms continued to shrink. And from March 2000 to March 2001, small firms added 1.15 million net new jobs while large firms lost 0.15 million net new jobs. 3 Small Business Economic Indicators for 2003 3 Table I: Output and Employment, 2001 – 2003 Year 2003 Quarter 4 3 2 1 4 3 2 1 4 3 2 1 Real GDP (Billions of 2000 Dollars) 10,600.1 10,493.1 10,288.3 10,210.4 10,160.8 10,128.4 10,045.1 9,997.9 9,883.6 9,834.6 9,866.3 9,882.2 Nonfarm Employment (Thousands) 130,002.0 129,819.7 129,877.7 130,047.3 130,247.7 130,286.7 130,388.7 130,448.3 130,911.0 131,789.0 132,186.7 132,462.3 Unemployment Rate 5.9 6.1 6.1 5.8 5.9 5.7 5.8 5.7 5.6 4.8 4.4 4.2 2002 2001 Note: Employment is seasonally adjusted. Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Commerce: Bureau of Economic Analysis and U.S. Department of Labor: Bureau of Labor Statistics. Table II: Small Business Indicators, 2001 – 2003 SelfEmployment (Thousands) 10,485 10,312 10,185 10,009 10,256 10,114 9,858 9,477 9,954 10,243 10,250 9,988 NFIB Optimism Index (1986=100) 104.0 100.6 100.0 99.2 100.4 99.5 102.2 100.8 96.3 98.5 98.4 96.5 Year 2003 Quarter 4 3 2 1 4 3 2 1 4 3 2 1 Business Bankruptcies 8,294 8,446 9,331 8,814 9,500 9,433 9,695 9,775 10,013 9,537 10,330 10,005 2002 2001 Note: Self-employment figures are based on seasonally adjusted monthly average of primary self-employed non-incorporated. Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Labor: Bureau of Labor Statistics; Administrative Office of the U.S. Courts; and National Federation of Independent Business. Small Business Economic Indicators for 2003 4 The Number of Businesses and Turnover Business participation increased in 2003. Employer firms rose to an estimated 5.7 million, a 0.3 percent increase from the previous year. The unincorporated self-employed, a proxy for non-employer firms, rose by 3.7 percent to 10.7 million.4 The number of nonfarm sole proprietors rose 1.9 percent to 18.7 million. This figure does not necessarily indicate the number of businesses, since businesses can file more than one tax return. But the direction of these numbers is a useful indicator. A comparison of the downturn in 2001 to an earlier one in 1991 reveals that employer firm counts declined in 1991, the year of the downturn, but have not declined since. The count of unincorporated selfemployed declined in 1992, the year following the downturn. During the recent downturn, the number of unincorporated self-employed declined in both 2001 and 2002. There are several reasons that may account for the delayed recovery of self-employed in the recent downturn. The labor market was tight going into the downturn of 2001, the unemployment rate didn’t peak until two years after the downturn of 2001 (versus a year after the downturn of 1991), and the unemployment rate peaking at a relatively low 6.3 percent (seasonally adjusted). Since self-employment can be an alternative to wage-earning work, it has a tendency to climb when a shortage of jobs exists and declines when jobs are plentiful. Although the number of employers increased, employer firm births declined 2.8 percent to an estimated 572,900. Employer firm births climbed in the five years following the 1991 downturn. Employer terminations declined 2.3 percent to an estimated 554,800 in 2003. While many observers have expressed concern at the stagnant rate of new firm creation, in fact, the number of employer firms declined from 1996 to 2000, a period of tremendous expansion for the economy. Worries about the impact of the declining number of new employers on the macroeconomy may be unfounded. Business Bankruptcies The number of business bankruptcies has declined since 2001 and fell to 35,037 in 2003. (Business bankruptcies are to be distinguished from personal bankruptcies, which rose over this period.) Business bankruptcies have been declining for the past two decades, an unexplained trend. They averaged 66,800 a year in the 1980s, 55,400 in the 1990s and 37,300 so far in the 2000s. For the past fifteen years, business bankruptcies have only increased in recessionary years (by 6,700 in 1991 and 4,600 in 2001) except for slight increases of 2,068 from 1995 to 1997. Small Business Economic Indicators for 2003 5 Financing The outlook for small business financing was good/solid by the end of 2003. Interest rates were low, and banks had relaxed lending standards by year’s end. The equity markets rose steadily throughout 2003, with the S&P index rising 17 percent and the Nasdaq rising 29 percent. Many new businesses rely on the equity markets, as they contain savings needed for seed capital. The equity markets are also the lifeline for a small number of ventures seeking large infusions of capital to help them grow into large businesses. The growth of the S&P and Nasdaq indexes broke the pattern of declines in place since 2000. Their improvements essentially balanced out the losses of 2002, providing relief from the losses and hope for the future. Employment Trends There has been some controversy over the differing trends seen in the nation’s two main sources of employment data: the Current Population Survey and Current Employment Statistics (Table III.) Although each measures employment in slightly different ways, their overall trends are expected to be similar.5 In 2003, their annual changes diverged by 1.66 million. Some analysts tend to focus on one survey or the other, but a Joint Economic Committee study offers this prudent advice: “Analysts should consider both the household and payroll surveys in trying to understand the employment situation.”6 Table III: Employment Measures from the Principal Government Surveys, 2000-2003 Year 2003 2002 2001 2000 Payroll Survey 129.93 130.34 131.83 131.79 (Millions of jobs) Year-over-year change -0.41 -1.48 0.94 - Household Survey 137.74 136.49 136.93 136.89 Year-over-year change 1.25 -0.45 0.04 - Source: U.S. Department of Labor: Bureau of Labor Statistics. Both measures of employment had one-year change improvements. Although the payroll survey showed decreases in employment every quarter from 2001 to 2003’s third quarter, 2003’s fourth quarter was 4 Non-employers are best measured by the U.S. Census Bureau, but this data is available with a lag of two to three years. See www.sba.gov/advo/stats/data.html or www.census.gov/epcd/nonemployer/. 5 Both surveys are conducted by the Bureau of Labor Statistics, but one measures employment by household and one by payroll. It is useful to note that over the long term, disparities in the measures are mitigated and they increased by a similar amount from 1995 to 2003 (14.7 million for the household survey and 15.6 million for the payroll survey). 6 “A Tale of Two Employment Surveys,” Joint Economic Committee, October 2003, http://jec.senate.gov/_files/TwoSurveysUpdated.pdf. Small Business Economic Indicators for 2003 6 positive, indicating that employment declines may be ending. Another sign that the labor market woes could be coming to an end was the drop in the unemployment rate from the third to fourth quarter in 2003. Although the labor market was showing improvement in 2003, job losses from the downturn remain. Total nonfarm private employment dropped to 108.4 million, a decrease of 400,000 from 2002. All of these declines and more were from manufacturing, with this sector losing 734,000 jobs and the other sectors as a whole gained jobs. Manufacturing has been declining in employment since 1999, losing 3 million jobs over this period, but increasing in output over this period. The 2003 employment decline led to a rising unemployment rate, from 5.8 percent to 6.0 percent. The unemployment rate may have peaked. The National Federation of Independent Business’ survey of small business showed its highest percentage of businesses feeling the next three months are a good time to expand since January 2000. Even with the labor market struggling so far in this century, a labor shortage could develop swiftly. The December 2003 unemployment rate was the same as it had been in December 2001 rate, 5.7 percent. At that time, the National Federation of Independent Business’s Small Business Economic Trends reported that the availability of qualified labor was the single most important problem for small business. Insurance—A Continuing Small Business Challenge in 2003 Rising health care costs plagued small businesses in 2002, and the trend continued in 2003. Small businesses started 2003 citing the cost and availability of insurance (mainly health) as their largest problem. By the end of the year, the highest percentage of businesses ever responding to the survey listed this category as their largest problem.7 A survey by the Kaiser Family Foundation and Health Research and Educational Trust found that insurance rates for small firms rose 15.5 percent in 2003.8 In response, more small firms are no longer offering health benefits or are charging employees a higher share of the cost. The percentage of small firms providing health insurance coverage to their employees fell from 71 percent in 1999 to 65 percent in 2003. National Federation of Independent Business, Small Business Economic Trends, January 2004, www.nfib.com/object/4147629.html. 8 Employer Health Benefits, 2003 Annual Survey, Kaiser Family Foundation and Health Research and Educational Trust, 2003, www.kff.org/insurance/ehbs2003-abstract.cfm. (The survey defined small businesses as having between 3 and 199 workers.) 7 Small Business Economic Indicators for 2003 7 Conclusion U.S. economic performance in 2003 assuaged fears that the economy would slip into an echo recession following the downturn of 2001. Output increased 3.1 percent in real terms in 2003, following on a 2.2 percent increase in 2002. To achieve these output gains, cautious businesses squeezed existing resources for productivity gains instead of increasing hiring. The unemployment rate climbed from 5.8 percent in 2002 to 6.0 percent in 2003. With proprietors’ income up, corporate profits up, interest rates low, financing available and productivity gains maxed out, hiring increases are likely in the year to come. The stage is set for an uptick in employment: the number of employer firms has increased every year since 1991. Considering that hiring the first employee is the most difficult, there are a great many businesses that are potential job creators. Even with a solid economy and available workers, small businesses are struggling to cope with rising health insurance costs. Despite a 5.7 percent unemployment rate at the end of 2003, a labor shortage could still potentially arise quickly. Small Business Economic Indicators for 2003 8 INTRODUCTION TO THE DATA This report presents the status of small firms in 2003 and makes current data on small firms more accessible to the public, decision-makers and researchers. It lists the number of businesses, new employer firms, business terminations, bankruptcies, and lending terms and standards for 2003 and years prior. Because very little current economic data has been collected that distinguishes between small and large firms, estimates and proxies are often used. For instance, the total number of U.S. businesses is used as an indicator of the number of small businesses since more than 99 percent of all U.S. firms are small! (In fact, 99.7 percent of America’s 5.7 million employer firms in 2001 had fewer than 500 employees.) Consequently, data that are based on the number of firms indicate small business status. Data on the financial side are not disaggregated by firm size, and small firms represent only about half of the financial totals, making financial indicators difficult to interpret. Most of the data is at the national level, but stateby-state data is given wherever it is available. A note about Table 11, nonfarm private employment by industry: previous editions of this report have listed detailed industry employment changes along with the industry’s share of small business employment. Unfortunately, discrepancies between the Bureau of Labor Statistics’ and U.S. Census Bureau’s application of the new industry classification, NAICS, prevent this table from being generated this year. Small Business Economic Indicators for 2003 9 DATA TABLES This report’s 14 tables provide a wealth of data to show the status of small firms in 2003. Below is a description of each table. Whenever possible, information is shown at the state or industry level, as well as the national macroeconomic level. Table 1 Macroeconomic Indicators, 1990–2003 (Selected Years) ..................................................... 12 This table uses economy-wide figures to indicate how the overall economy performed in 2003. Table 2 Indicators Related to Small Business, 1990–2003 (Selected Years).................................... 13 Table 2 highlights the economywide indicators that show small businesses status in 2003. Table 3 U.S. Business Measures, 1980–2003 ...................................................................................... 14 Although current variables are important, Table 3 captures the long-term trends of indicators related to small firms. This table is particularly important in showing how variables react to business cycles and how the economy is evolving over time. Table 4 Number of Employer Firms by State, 1990–2003 (Selected Years).................................... 15 Changes in the number of employer firms can be indicative of economic conditions. Table 5 Number of Self-Employed by State, 1990–2003 (Selected Years)....................................... 16 The self-employed are the stock from which employer firms emerge, and self-employment provides individuals the ultimate in labor force empowerment. Table 6 Employer Firm Formation and Termination Rates by State, 2003 .................................... 17 Business turnover rates, formation, and termination show the speed with which the economy cycles through new and old ideas. Table 7 Employer Firm Births by State, 1990–2003 (Selected Years) ............................................. 18 Business formation figures and employer firm births show the changing level of the spirit of creation in the U.S. economy. Table 8 Employer Firm Terminations by State, 1990–2003 (Selected Years)................................. 19 Business closure figures and employer firm terminations show the loss of existing ventures, which also frees up of resources for new ventures. Table 9 Business Bankruptcies by State, 1990–2003 (Selected Years)............................................. 20 Business bankruptcy is where business struggles meet financial obligations. Risks need to be balanced with rewards for creditors, and changes in business bankruptcies may indicate this balance. Table 10 Financial Information by State, 2002 and 2003 .................................................................... 21 The financial bottom line is the final indicator of business accomplishment. Proprietors’ income shows the returns for the smallest of firms, and wages are indicator of the biggest cost for small firms. Table 11 Non-farm Private Employment by Industry, 2002 and 2003 .............................................. 22 Small Business Economic Indicators for 2003 10 Although current industry employment by firm size is not available, employment changes for industries that have a high proportion of small firm employment is a useful guide to small firm employment status. Table 12 Bank Lending Information by Size of Firm, 1991–2003 ..................................................... 23 Financing is the lifeline for many small firms. This table illustrates the availability and demand for credit for small firms. Table 13 Opening and Closing Establishments, 1992–2003 ................................................................ 24 The turnover of business locations and their employment often gives insight to the status of the small business sector. Table 14 Establishment Turnover by Industry, 2002 and 2003 ......................................................... 25 To analyze the status of an industry, it is useful to see what portion of the total change was from new locations, closing locations, and continuing locations. Small Business Economic Indicators for 2003 11 Table 1 Macroeconomic Indicators, 1990 - 2003, Selected Years Percent Change 2002-2003 4.8 3.1 5.0 2.8 5.2 5.2 3.0 5.6 36.4 18.3 3.7 (0.8) 4.5 (0.4) 3.4 4.0 3.0 6.4 (6.8) (11.8) (13.0) 1.8 155.1 (3.8) 7.3 137.5 2.3 3.2 1.7 1990 Gross Domestic Product (GDP) (billions of dollars) (1) Current dollars Constant dollars (billions of 2000 dollars) Personal consumption expenditures Sales (billions of dollars) (2) Manufacturing Wholesale trade Retail trade Income (billions of dollars) Compensation of employees (3) Nonfarm proprietors' income Farm proprietors' income Corporate profits (4) Output and productivity (business sector indexes, 1992=100) Output Hours of all persons worked Productivity (output per hour) Employment and compensation Nonfarm private employment (millions) (3) Unemployment rate (percent) Total compensation cost index (Dec.) (June 1989=100) Wage and salary index (Dec) (June 1989=100) Employee benefits cost index (Dec.) (June 1989=100) Bank loans, interest rates, and yields Bank commercial & industrial loans (billions of dollars) Prime rate (percent) U.S. Treasury 10-year bond yields (percent) 5,803.1 7,112.5 3,839.9 242.7 149.5 153.7 3,351.0 349.9 31.1 408.6 98.6 102.6 96.1 91.1 5.6 107.0 106.1 109.4 641.2 10.01 8.55 1995 7,397.7 8,031.7 4,975.8 290.0 176.2 189.0 4,177.0 469.5 22.7 696.7 111.5 109.5 101.7 97.9 5.6 126.7 123.1 135.9 723.8 8.83 6.57 2000 2001 2002 2003 9,817.0 10,100.8 10,480.8 10,987.9 9,817.0 9,866.6 10,083.0 10,398.0 6,739.4 7,045.4 7,385.3 7,757.4 350.7 228.6 255.8 5,782.7 705.7 22.7 817.9 140.5 121.4 115.7 111.0 4.0 150.9 147.7 158.6 1,088.4 9.23 6.03 926.7 1,209.2 2,025.2 1,788.8 236.4 172.2 138.0 100.0 330.9 225.1 263.1 5,940.4 745.6 25.0 770.4 140.6 118.9 118.3 110.7 4.7 157.2 153.3 166.7 1,028.4 6.91 5.02 800.1 187.3 1,991.2 1,863.9 127.3 177.1 140.7 102.4 324.3 228.5 269.2 6,019.1 783.4 14.3 904.2 143.8 116.0 124.0 108.8 5.8 162.3 157.5 174.6 963.5 4.67 4.61 782.5 237.1 1,853.2 2,011.0 (157.8) 179.9 138.9 103.9 333.3 240.4 283.3 6,198.1 827.4 19.5 1,069.9 149.1 115.1 129.6 108.4 6.0 168.8 162.3 185.8 898.2 4.12 4.01 796.9 604.9 1,782.3 2,157.0 (374.7) 184.0 143.3 105.7 Investments by nonfarm nonfinancial corporate business (billions of dollars) Capital expenditures 387.8 628.2 Change in financial assets 131.5 426.4 Federal budget (billions of dollars, fiscal year) Receipts Outlays Surplus or deficit ( ) Price indices (inflation measures) Consumer price index (urban) (1982-84 = 100) Producer price index (finished goods) (1982 = 100) GDP implicit price deflator (2000 = 100) 1,032.0 1,253.2 (221.2) 130.7 119.2 81.6 1,351.8 1,515.8 (164.0) 152.4 127.9 92.1 (1) Small Business Share of Private, Nonfarm Gross Domestic Product by Joel Popkin and Company (Office of Advocacy funded study) estimates small businesses (fewer than 500 employees) created 52 percent of the total nonfarm private output in 1999. (2) U.S. Census Bureau, Statistics of U.S. Business, showed that in 1997, small firms (fewer than 500 employees) accounted for 24.8 percent of manufacturing, 52.6 percent of retail, 46.8 percent of wholesale sales. (3) Statistics of U.S. Businesses, Bureau of the Census, showed that in 2001, small firms accounted for 44.3 percent of annual payroll, and 49.9 percent of total nonfarm private employment. (4) With inventory valuation adjustment and capital consumption adjustments. Source: U.S. Small Business Administration, Office of Advocacy, from U.S. Department of Commerce: Bureau of Economic Analysis. Small Business Economic Indicators 12 Table 2 Indicators Related to Small Business, 1990 - 2003, Selected Years 1990 Number of businesses (1) Employer firms (nonfarm) (2) Self-employment (unincorporated) Business tax returns (nonfarm) Sole proprietor tax returns (nonfarm) Business turnover Employer firm births (2) Employer firm terminations (2) Bankruptcies Income (billions) Wage and salary income Proprietors' income (3) Federal corporate taxes State and local corporate taxes 1995 2000 2001 2002 2003 Percent Change 2002-2003 5,073,795 5,369,068 5,652,544 5,657,774 5,678,500 e. 5,696,600 e. 10,097,000 10,482,000 9,907,000 10,109,000 9,926,000 10,295,000 20,219,400 22,555,200 25,106,900 25,631,200 26,347,100 e. 26,915,900 e. 14,783,000 16,424,000 17,570,500 17,904,900 18,336,500 18,684,200 0.3 3.7 2.2 1.9 584,892 531,400 64,853 594,369 497,246 51,959 574,300 542,831 35,472 585,140 553,291 40,099 589,700 e. 569,000 e. 38,540 572,900 e. 554,800 e. 35,037 (2.8) (2.5) (9.1) 2,754.0 380.6 93.5 22.5 3,419.3 492.1 157.0 29.1 4,829.2 728.4 207.3 32.5 4,942.9 770.6 151.1 31.7 4,974.6 797.7 148.0 25.9 5,095.6 846.9 131.8 NA 2.4 6.2 (10.9) NA e. = estimate. All estimates by Office of Advocacy except business tax returns, by Internal Revenue Service. (1) Self-employment presented here represents individuals whose primary occupation is self-employment and they may or may not have employees. Note that some businesses file more than one tax return. (2) Birth and terminations for 2002 and 2003 are estimated from 2001 data from the Bureau of the Census, yearly percent changes in similar data provided by the Department of Labor, Employment and Training Administration and rounded. Births and terminations are from prior year's March through current year's March. Employer firm estimates are the previous year figure plus the difference between birth and termination estimates. (3) With inventory valuation and capital consumption adjustments Sources: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Commerce: Bureau of the Census and Bureau of Economic Analysis; U.S. Department of Labor: Bureau of Labor Statistics; Employment and Training Administration; Internal Revenue Service; and Administrative Office of the U.S. Courts. Small Business Economic Indicators 13 Table 3 U.S. Business Measures, 1980 - 2003 Real GDP (billions 2000$) 10,398 10,083 9,867 9,817 9,470 9,067 8,704 8,329 8,032 7,836 7,533 7,337 7,101 7,113 6,981 6,743 6,475 6,264 6,054 5,814 5,424 5,189 5,292 5,162 Employer Firms 5,696,600 e. 5,678,500 e. 5,657,774 5,652,544 5,607,743 5,579,177 5,541,918 5,478,047 5,369,068 5,276,964 5,193,642 5,095,356 5,051,025 5,073,795 5,021,315 4,954,645 NA NA NA NA NA NA NA NA Establishments Self Emp. Self Emp. (a) (000) Rate (%) NA NA 7,095,302 7,070,048 7,008,444 6,941,822 6,894,869 6,738,476 6,612,721 6,509,065 6,401,233 6,319,300 6,200,859 6,175,559 6,106,922 6,016,367 5,937,061 5,806,973 5,701,485 5,517,715 5,306,787 4,633,960 4,586,510 4,543,167 10,295 9,926 10,109 10,215 10,087 10,303 10,513 10,489 10,482 10,648 10,279 9,960 10,274 10,097 10,008 9,917 9,624 9,328 9,269 9,338 9,140 8,898 8,735 8,642 7.0 6.9 7.0 7.2 7.2 7.5 7.7 7.8 7.9 8.1 8.0 7.8 8.1 8.0 8.1 8.2 8.0 7.9 8.0 8.2 8.2 8.1 8.0 8.1 Bus. Tax Returns 26,915,900 26,347,100 25,631,200 25,106,900 24,750,100 24,285,900 23,857,100 23,115,300 22,555,200 22,191,000 20,874,796 20,476,775 20,498,855 20,219,400 19,560,700 18,619,400 18,351,400 17,524,600 16,959,900 16,077,000 15,245,000 14,546,000 13,858,000 13,021,600 Nonfarm sole props. 18,684,200 18,336,500 17,904,900 17,570,500 17,377,100 17,183,700 17,176,000 16,955,000 16,424,000 16,154,000 15,848,000 15,495,000 15,181,000 14,783,000 14,298,000 13,679,000 13,091,000 12,394,000 11,929,000 11,262,000 10,704,000 10,106,000 9,585,000 8,932,000 Employer Births 572,900 e. 589,700 e. 585,140 574,300 579,609 589,982 590,644 597,792 594,369 570,587 564,504 544,596 541,141 584,892 NA NA NA NA NA NA NA NA NA NA Employer Business Terminations Bankruptcies 554,800 e. 569,000 e. 553,291 542,831 544,487 540,601 530,003 512,402 497,246 503,563 492,651 521,606 546,518 531,400 NA NA NA NA NA NA NA NA NA NA 35,037 38,540 40,099 35,472 37,884 44,367 54,027 53,549 51,959 52,374 62,304 70,643 71,549 64,853 62,449 62,845 81,463 79,926 70,644 64,211 62,412 69,242 48,086 43,252 Year 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 NA = not available. e. = estimate. All estimates by Office of Advocacy. (a) Units with paid employees in the fourth quarter through 1983. 1984 on includes units active in any quarter of the year. Sources: U.S. Small Business Administration, Office of Advocacy, from data provided by sources below: Real Gross Domestic Product (GDP) from the U.S. Department of Commerce: Bureau of Economic Analysis. Employer firms, births and terminations from the U.S. Census Bureau with estimates for 2002 and 2003 (see Table 2 for details). Establishments from the U.S. Department of Commerce: Bureau of the Census. Self-employment (unincorporated, primary occupation) from the U.S. Department of Labor: Bureau of Labor Statistics. The self employment rate is based on the civilian labor force. Nonfarm business tax returns and nonfarm sole proprietors from the Internal Revenue Service. Bankruptcies from the Administrative Office of the U.S. Courts (business bankruptcy filings). Small Business Economic Indicators 14 Table 4 Number of Employer Firms by State, 1990 - 2003 (Selected Years) State United States Yearly Change (%) Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Puerto Rico 1990 5,073,795 -80,289 13,176 79,109 49,066 767,697 89,419 95,132 18,368 20,865 311,377 142,831 26,588 26,209 248,675 109,077 61,956 58,573 71,381 80,449 33,676 112,823 151,995 178,726 100,061 45,781 126,548 23,867 39,785 28,423 32,921 204,807 33,767 491,566 134,990 17,766 207,701 64,901 77,338 233,679 27,806 70,624 18,888 93,666 318,352 32,687 18,986 128,895 134,944 35,098 103,039 15,059 -1995 5,369,068 -83,038 15,214 91,244 56,649 764,169 109,695 93,135 21,554 24,161 343,017 160,715 26,775 33,326 265,927 119,805 66,350 63,374 76,970 87,371 34,431 122,202 153,829 203,374 112,477 49,089 123,007 27,499 42,332 34,951 34,584 209,145 38,640 488,360 149,462 18,467 223,751 70,722 92,717 236,746 30,430 77,822 20,905 104,633 360,735 42,358 19,681 147,710 162,525 37,900 115,278 17,219 -2000 5,652,544 0.8 88,222 16,190 103,893 59,431 939,979 134,085 96,344 24,782 26,157 385,113 189,156 28,112 39,089 278,754 124,654 68,970 67,461 88,460 96,441 38,711 130,628 167,740 213,865 128,943 53,509 128,319 32,593 44,699 44,741 39,643 265,758 41,535 471,808 172,661 18,637 232,755 74,554 99,521 259,492 32,666 88,668 22,556 110,510 388,439 51,940 20,976 160,988 194,977 38,665 121,850 18,566 50,645 2001 5,657,774 0.1 86,007 16,398 106,680 59,757 985,846 138,411 96,916 25,199 26,312 392,756 192,736 28,569 40,459 279,627 125,119 68,704 67,197 88,138 95,829 38,907 132,049 170,026 212,608 130,348 53,303 129,404 32,891 45,019 46,339 39,542 277,425 41,616 473,471 175,461 18,544 232,266 75,177 99,943 265,451 33,011 89,300 22,759 109,376 390,390 54,461 21,247 162,459 199,233 37,805 122,051 19,141 51,164 2002 5,678,500 e. 0.4 85,895 16,511 107,894 60,668 1,022,192 140,704 96,677 25,097 26,503 413,476 194,062 28,800 40,633 278,839 124,673 68,466 67,757 87,589 93,989 39,180 133,536 173,896 211,567 131,646 53,409 129,777 33,339 45,342 47,340 39,211 274,966 42,066 474,425 178,560 18,639 230,705 75,250 100,726 268,723 32,295 89,634 22,803 108,928 394,303 56,346 20,755 165,185 200,909 37,364 122,249 19,339 50,228 2003 5,696,600 e. 0.3 85,768 16,825 109,692 60,416 1,063,230 143,821 95,969 25,280 26,633 426,245 196,921 29,217 41,539 281,869 125,129 68,737 68,095 81,407 94,437 39,691 134,447 175,827 210,803 133,419 53,641 131,464 33,991 45,595 48,929 39,508 268,203 41,731 478,270 179,580 18,817 229,648 75,486 102,862 271,459 32,594 90,998 23,161 110,427 398,928 58,507 20,922 167,527 206,699 37,144 123,800 19,616 NA (0.1) 1.9 1.7 (0.4) 4.0 2.2 (0.7) 0.7 0.5 3.1 1.5 1.4 2.2 1.1 0.4 0.4 0.5 (7.1) 0.5 1.3 0.7 1.1 (0.4) 1.3 0.4 1.3 2.0 0.6 3.4 0.8 (2.5) (0.8) 0.8 0.6 1.0 (0.5) 0.3 2.1 1.0 0.9 1.5 1.6 1.4 1.2 3.8 0.8 1.4 2.9 (0.6) 1.3 1.4 NA 43 10 11 45 1 7 48 32 37 4 14 15 6 25 41 40 36 51 38 20 33 24 44 19 39 21 9 35 3 31 50 49 29 34 27 46 42 8 26 28 13 12 18 23 2 30 17 5 47 22 16 -Ann. percent change Rank e. = estimate. All estimates by Office of Advocacy. Notes: State data is from the Department of Labor and U.S. data 1990 - 2001 is from the U.S. Census Bureau. State totals do not add to the U.S. figure as firms can be in more than one state. U.S. 2002 and 2003 estimates are based on data from the U.S. Department of Commerce: Bureau of the Census and U.S. Department of Labor: Employment and Training Administration. Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Commerce: Bureau of the Census and U.S. Department of Labor: Employment and Training Administration. Small Business Economic Indicators 15 Table 5 Self-Employment by State, 1990 - 2003 (Selected Years) (Thousands) State United States Yearly Change (%) Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming 1990 10,097 -140 31 148 127 1,453 158 113 18 17 475 231 44 59 382 193 191 138 163 171 76 131 222 270 243 95 209 59 111 45 49 243 87 569 275 51 337 175 170 405 33 121 59 196 712 74 43 230 265 48 212 27 1995 10,482 -140 35 153 111 1,520 166 125 21 12 468 240 54 80 382 226 190 136 147 147 81 143 238 298 275 81 247 69 124 52 64 225 90 543 263 54 376 161 174 423 24 111 62 219 836 72 40 235 249 49 220 32 2000 9,907 (1.7) 143 28 156 87 1,502 182 125 22 14 432 248 48 66 335 199 143 110 135 135 80 153 210 299 216 105 194 64 98 46 62 200 73 533 293 42 344 155 192 379 24 120 50 216 814 76 35 200 225 46 222 31 2001 10,109 2.0 125 28 177 104 1,535 175 124 20 14 454 236 46 72 345 193 147 103 141 132 72 158 226 308 253 96 217 62 104 52 53 215 67 535 276 42 364 170 164 418 25 120 55 223 850 77 33 173 232 46 220 31 2002 9,926 (1.8) 118 29 157 101 1,517 171 126 18 12 452 261 50 67 352 194 136 119 135 134 66 166 217 295 246 107 207 62 98 54 57 201 73 547 256 41 328 150 155 389 26 108 52 246 827 69 38 187 226 46 212 27 2003 10,295 3.7 139 31 161 101 1,566 201 116 21 14 503 320 43 69 342 206 134 127 121 155 70 170 226 288 223 96 214 62 96 56 56 211 78 589 253 44 315 157 151 384 32 120 48 238 891 84 37 210 241 49 209 27 17.5 9.8 2.9 (0.0) 3.2 17.7 (7.5) 16.2 23.3 11.2 22.7 (14.5) 2.7 (2.8) 6.2 (2.0) 6.5 (10.6) 16.2 6.2 2.2 4.1 (2.4) (9.6) (10.2) 3.4 (0.0) (1.8) 3.3 (1.7) 5.0 7.1 7.6 (1.1) 6.3 (4.0) 4.8 (2.8) (1.4) 23.6 10.7 (7.1) (3.2) 7.8 21.8 (2.7) 12.4 7.0 8.5 (1.7) 2.7 6 12 28 32 27 5 47 8 2 10 3 51 29 43 21 39 18 50 7 20 31 24 40 48 49 25 33 38 26 37 22 16 15 34 19 45 23 42 35 1 11 46 44 14 4 41 9 17 13 36 30 Ann. percent change Rank Notes: Primarily self-employed and unincorporated. Some years figures are directly from the Bureau of Labor Statistics (BLS) and other years the figures are from the Current Population Survey microdata and adjusted to match the BLS U.S. figure. Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the Current Population Survey, a joint project of the U.S. Department of Commerce: Bureau of the Census and U.S. Department of Labor: Employment and Training Administration. Small Business Economic Indicators 16 Table 6 Employer Firm Formation and Termination Rates by State, 2003 Firms at the Beginning of 2003 5,678,500 e. 85,895 16,511 107,894 60,668 1,022,192 140,704 96,677 25,097 26,503 413,476 194,062 28,800 40,633 278,839 124,673 68,466 67,757 87,589 93,989 39,180 133,536 173,896 211,567 131,646 53,409 129,777 33,339 45,342 47,340 39,211 274,966 42,066 474,425 178,560 18,639 230,705 75,250 100,726 268,723 32,295 89,634 22,803 108,928 394,303 56,346 20,755 165,185 200,909 37,364 122,249 19,339 Rate of Firm Formations Percent Rank 10.1 10.5 14.8 12.3 12.0 11.1 15.9 8.8 13.7 15.3 16.9 12.5 12.7 14.8 10.4 10.8 8.1 11.3 9.3 9.9 10.3 15.5 10.9 10.4 11.1 11.3 12.3 13.6 9.5 20.6 11.9 10.6 13.1 12.8 12.6 7.8 9.6 11.7 13.7 11.6 10.7 12.0 5.9 16.2 13.4 18.9 10.2 13.4 18.0 11.0 10.1 12.5 38 9 22 25 32 6 48 12 8 4 21 18 10 40 35 49 30 47 44 41 7 34 39 31 29 23 13 46 1 26 37 16 17 19 50 45 27 11 28 36 24 51 5 15 2 42 14 3 33 43 20 Rate of Firm Terminations Percent Rank 9.8 12.7 15.2 14.4 11.4 13.7 9.4 11.4 12.5 14.6 13.7 13.3 13.9 16.6 14.7 12.1 10.8 12.4 12.3 12.9 12.0 16.2 12.6 11.7 13.6 13.6 15.6 14.0 11.1 18.9 11.7 13.4 13.7 12.9 13.0 11.0 10.2 11.2 14.1 12.2 12.7 11.9 8.3 15.0 14.1 18.4 12.5 12.4 17.6 14.9 10.3 15.1 28 7 13 43 18 50 42 31 12 20 24 17 4 11 37 47 34 35 26 38 5 30 41 21 22 6 16 45 1 40 23 19 27 25 46 49 44 14 36 29 39 51 9 15 2 32 33 3 10 48 8 State U.S. Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming e. = estimate. All estimates by Office of Advocacy. Notes: See Table 2 notes. On occasion, some state terminations result in successor firms which are not listed as new firms, thus making terminations higher than formations for most states. Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Commerce: Bureau of the Census and U.S. Department of Labor: Employment and Training Administration. Small Business Economic Indicators 17 Table 7 Employer Firm Births by State, 1990 - 2003 (Selected Years) State U.S. Total Yearly Change (%) Opening Rate (%) Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming 1990 584,892 ----9,260 2,688 9,832 6,484 139,146 11,962 9,399 2,083 3,226 48,391 22,309 3,585 3,853 27,952 10,993 5,526 6,716 7,730 8,321 3,978 18,923 14,697 16,804 11,525 5,620 13,336 2,295 4,143 4,934 4,278 24,610 4,721 54,781 19,652 1,392 20,286 8,069 15,504 26,125 2,900 9,913 2,026 17,297 49,419 4,662 2,183 19,856 29,322 4,231 10,307 1,879 1995 594,369 ----9,140 2,521 12,044 7,042 127,074 19,703 9,395 2,783 3,250 54,006 24,478 3,874 5,053 30,393 14,355 6,103 7,600 9,078 9,817 4,476 18,458 16,040 23,972 12,178 6,185 14,935 3,377 3,895 7,151 4,988 27,106 4,837 54,620 21,650 1,631 27,046 8,790 13,770 23,820 3,290 10,447 1,858 15,823 52,871 7,742 2,139 19,433 30,243 4,425 12,342 2,230 2000 574,300 (0.9) 10.2 10,067 2,333 15,175 4,680 167,047 25,462 9,910 3,682 4,472 59,912 28,925 3,745 5,829 28,875 14,112 5,668 6,483 8,637 10,468 5,135 20,539 18,640 23,760 13,906 6,439 13,996 4,418 4,441 8,587 4,677 27,885 e. 5,836 61,507 23,310 1,493 22,290 8,979 14,729 35,104 3,675 11,114 2,138 15,793 54,330 9,875 2,511 22,219 40,357 4,177 12,436 2,314 2001 585,140 1.9 10.4 10,060 2,438 14,541 3,990 128,885 24,730 9,074 3,352 4,090 60,370 23,211 3,811 5,534 28,426 13,903 5,659 7,026 8,713 9,816 4,667 20,072 18,166 23,060 12,700 6,164 14,360 3,608 4,419 8,864 4,398 36,747 5,753 62,730 22,436 1,419 22,951 9,940 13,246 33,497 3,547 11,372 1,953 16,488 53,271 10,745 2,226 21,371 39,641 3,691 12,025 2,558 2002 589,700 e. 0.8 10.4 9,534 2,270 14,291 5,381 130,840 25,290 8,726 3,223 4,157 72,720 28,756 3,555 5,039 27,342 13,530 5,660 6,703 8,526 9,810 4,428 20,576 21,262 22,799 13,683 6,256 16,337 3,569 4,372 8,826 4,562 29,916 5,281 59,571 22,950 1,356 22,379 8,702 13,160 31,939 3,397 10,266 1,389 15,982 54,009 10,431 2,331 21,438 37,562 3,944 12,172 2,275 2003 572,900 e. (2.8) 10.1 9,014 2,441 13,322 7,253 113,500 22,400 8,501 3,439 4,052 69,711 24,217 3,658 5,998 28,933 13,452 5,534 7,625 8,155 9,298 4,033 20,687 18,984 22,022 14,652 6,020 15,947 4,548 4,311 9,749 4,653 29,236 5,508 60,569 22,465 1,456 22,227 8,802 13,842 31,214 3,465 10,759 1,338 17,700 52,677 10,656 2,122 22,069 36,136 4,126 12,400 2,419 (5.5) 7.5 (6.8) 34.8 (13.3) (11.4) (2.6) 6.7 (2.5) (4.1) (15.8) 2.9 19.0 5.8 (0.6) (2.2) 13.8 (4.4) (5.2) (8.9) 0.5 (10.7) (3.4) 7.1 (3.8) (2.4) 27.4 (1.4) 10.5 2.0 (2.3) 4.3 1.7 (2.1) 7.4 (0.7) 1.1 5.2 (2.3) 2.0 4.8 (3.7) 10.7 (2.5) 2.2 (9.0) 2.9 (3.8) 4.6 1.9 6.3 44 7 45 1 50 49 36 10 35 41 51 18 3 12 26 30 4 42 43 46 25 48 37 9 39 33 2 28 6 21 32 16 23 29 8 27 24 13 31 20 14 38 5 34 19 47 17 40 15 22 11 Ann. percent change Rank e. = estimate. All estimates by Office of Advocacy. Notes: See Table 2 notes. On occasion, some state terminations result in successor firms which are not listed as new firms. Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Commerce: Bureau of the Census and U.S. Department of Labor: Employment and Training Administration. Small Business Economic Indicators 18 Table 8 Employer Firm Terminations by State, 1990 - 2003 (Selected Years) State U.S. Total Yearly Change (%) Closing Rate (%) Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming 1990 531,400 ----10,927 3,382 14,235 7,252 135,767 12,864 11,994 1,422 3,715 54,009 24,448 3,385 3,337 29,173 10,632 6,971 8,788 11,276 10,883 4,737 17,945 17,539 28,676 13,614 7,200 16,674 3,453 6,144 4,888 6,018 25,538 4,943 63,627 21,643 2,265 23,863 9,397 11,921 27,929 3,863 10,736 2,370 18,902 53,831 5,774 2,687 21,438 23,087 4,408 11,591 2,900 1995 497,246 ----10,968 2,530 15,431 4,872 152,945 17,933 11,619 3,193 3,302 52,467 23,161 3,953 4,861 30,260 14,129 7,702 8,387 9,307 11,347 4,676 16,256 15,417 20,340 12,458 7,077 17,588 4,066 4,645 6,483 5,044 25,667 5,240 56,813 23,389 2,045 28,091 8,623 13,022 27,254 5,985 10,391 2,360 15,896 56,027 7,654 2,577 18,493 30,847 5,119 13,054 2,735 2000 542,831 (0.3) 9.7 9,302 2,671 11,984 5,581 134,541 7,561 11,528 3,052 4,996 55,186 26,754 3,521 6,249 31,361 15,738 7,485 6,981 7,508 13,708 4,906 19,563 18,164 30,240 4,829 7,555 17,580 2,435 5,234 7,761 7,341 23,950 6,451 57,423 23,467 2,191 24,276 8,848 16,102 34,893 4,170 11,721 1,809 17,563 57,300 10,135 2,653 20,569 41,793 5,542 15,151 2,908 2001 553,291 1.9 9.8 14,781 2,575 16,371 4,746 149,831 6,954 11,348 3,122 4,013 54,573 24,352 4,080 5,851 31,976 15,839 7,770 8,055 9,883 13,319 5,401 20,667 18,268 26,535 6,770 7,557 18,188 3,881 5,394 8,252 5,264 27,890 5,495 65,616 23,217 2,112 25,460 9,498 15,512 33,426 4,152 12,893 2,156 17,637 59,342 13,565 2,578 21,449 41,122 5,741 14,135 2,969 2002 569,000 e. 2.8 10.1 12,062 2,541 17,642 4,491 156,858 10,332 11,383 3,891 3,973 52,241 31,479 3,994 7,040 32,093 16,156 7,480 6,876 11,614 14,416 5,042 20,927 20,532 26,975 12,851 7,160 21,653 4,445 5,234 8,667 5,418 31,571 7,949 63,631 22,184 1,893 24,269 8,923 14,793 35,859 4,981 11,491 2,098 16,514 58,114 11,272 3,501 20,305 40,782 5,595 13,651 2,895 2003 554,800 e. (2.5) 9.8 10,927 2,507 15,488 6,918 140,435 13,243 11,044 3,148 3,874 56,665 25,898 4,010 6,742 41,112 15,137 7,378 8,392 10,801 12,171 4,715 21,697 21,870 24,748 17,928 7,267 20,190 4,679 5,050 8,939 4,598 36,827 5,770 61,199 23,234 2,049 23,544 8,434 14,194 32,917 4,103 10,711 1,899 16,315 55,461 10,368 2,584 20,539 35,345 5,550 12,629 2,921 (9.4) (1.3) (12.2) 54.0 (10.5) 28.2 (3.0) (19.1) (2.5) 8.5 (17.7) 0.4 (4.2) 28.1 (6.3) (1.4) 22.0 (7.0) (15.6) (6.5) 3.7 6.5 (8.3) 39.5 1.5 (6.8) 5.3 (3.5) 3.1 (15.1) 16.6 (27.4) (3.8) 4.7 8.2 (3.0) (5.5) (4.0) (8.2) (17.6) (6.8) (9.5) (1.2) (4.6) (8.0) (26.2) 1.2 (13.3) (0.8) (7.5) 0.9 40 20 43 1 42 3 23 49 22 7 48 17 28 4 31 21 5 35 46 32 12 9 39 2 14 33 10 25 13 45 6 51 26 11 8 24 30 27 38 47 34 41 19 29 37 50 15 44 18 36 16 Ann. percent change Rank e. = estimate. All estimates by Office of Advocacy. Notes: See Table 2 notes. On occasion, some state terminations result in successor firms which are not listed as new firms. Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Commerce: Bureau of the Census and U.S. Department of Labor: Employment and Training Administration. Small Business Economic Indicators 19 Table 9 Business Bankruptcies by State, 1990 - 2003 (Selected Years) State U.S. Total Yearly Change (%) Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Puerto Rico 1990 64,853 --1,356 164 2,377 467 7,391 1,088 445 114 129 2,842 2,366 74 365 2,041 1,090 893 560 1,324 1,338 318 1,356 1,838 1,633 1,771 288 1,319 223 425 354 490 1,120 348 2,606 1,280 209 1,778 1,716 1,061 1,751 327 404 388 1,274 5,318 895 179 2,958 1,978 381 1,366 136 --1995 51,959 --796 159 1,045 422 12,097 610 205 277 100 1,949 496 159 391 1,624 842 556 419 473 562 274 1,493 1,116 1,072 1,901 283 521 171 212 390 92 1,195 322 3,374 726 118 1,052 946 781 1,770 162 337 172 949 3,410 242 167 1,261 1,335 314 1,067 109 --2000 35,472 (5.8) 445 118 765 261 4,595 373 139 2,320 58 1,447 1,012 63 269 1,270 398 214 169 355 619 162 677 393 577 1,492 203 369 141 115 332 302 660 513 1,960 445 92 1,471 876 1,453 1,455 74 138 133 641 2,592 451 71 815 717 277 685 47 209 2001 40,099 13.0 428 104 753 290 5,238 467 156 1,374 49 1,896 1,162 68 303 1,547 604 289 220 474 716 151 758 427 688 1,887 289 505 149 144 419 334 730 620 2,432 613 115 1,794 941 1,389 1,541 64 147 164 886 3,155 475 97 924 642 322 734 45 333 2002 38,540 (3.9) 381 120 756 282 5,141 590 181 649 52 1,803 1,359 53 260 1,240 661 354 238 445 672 101 873 380 802 1,729 309 394 120 152 462 212 689 693 2,585 576 116 1,538 607 1,606 1,263 65 178 119 735 2,994 602 91 969 698 357 856 47 351 2003 35,037 (9.1) 287 121 701 429 4,501 552 187 505 55 1,534 1,585 72 225 991 640 323 303 327 499 105 523 396 684 1,379 282 378 98 238 321 178 734 774 1,987 528 105 1,426 612 1,591 1,193 48 142 110 597 3,153 519 78 956 737 290 722 44 254 (24.7) 0.8 (7.3) 52.1 (12.4) (6.4) 3.3 (22.2) 5.8 (14.9) 16.6 35.8 (13.5) (20.1) (3.2) (8.8) 27.3 (26.5) (25.7) 4.0 (40.1) 4.2 (14.7) (20.2) (8.7) (4.1) (18.3) 56.6 (30.5) (16.0) 6.5 11.7 (23.1) (8.3) (9.5) (7.3) 0.8 (0.9) (5.5) (26.2) (20.2) (7.6) (18.8) 5.3 (13.8) (14.3) (1.3) 5.6 (18.8) (15.7) (6.4) (27.6) 46 14 23 2 30 22 13 44 8 35 5 3 31 41 18 28 4 49 47 12 51 11 34 43 27 19 38 1 50 37 7 6 45 26 29 24 15 16 20 48 42 25 40 10 32 33 17 9 39 36 21 Ann. percent change Rank Note: U.S. totals include Puerto Rico, Guam, Virgin Islands and Northern Mariana Islands. A business bankruptcy is the legal recognition that a company is insolvent (i.e., not able to satisfy creditors or discharge liabilities); must restructure or completely liquidate under Chapter 7, 11, 12, or 13 of the federal bankruptcy laws. Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the Administrative Office of the U.S. Courts. Small Business Economic Indicators 20 Table 10 Financial Information by State, 2002 and 2003 (Billions of dollars unless noted) Proprietors' Income Percent 2003 Change 858.9 9.7 2.3 12.6 5.9 137.5 18.4 15.5 1.8 3.4 33.1 22.8 2.9 4.3 37.3 13.2 7.6 7.9 8.0 10.5 2.9 13.3 21.6 21.9 12.0 5.3 13.2 2.7 6.2 5.0 3.8 29.9 4.1 74.7 18.1 2.6 24.5 12.0 9.5 34.5 2.3 7.2 3.4 19.7 96.2 5.0 1.7 17.1 17.5 3.0 11.4 2.0 7.3 7.4 5.8 5.5 12.2 6.0 6.8 5.1 6.0 3.8 5.6 10.0 6.1 3.4 9.0 11.5 9.1 23.9 8.4 7.5 6.8 7.0 4.5 6.5 7.5 11.2 8.0 16.1 28.1 6.7 5.4 5.6 6.3 5.3 8.2 45.9 10.1 6.9 7.1 6.6 6.4 7.9 51.7 7.7 6.4 6.4 6.3 7.8 6.1 3.7 7.3 21.1 22 41 44 7 39 27 47 40 49 42 11 37 51 13 8 12 4 14 21 28 25 48 31 20 9 16 6 3 29 45 43 36 46 15 2 10 26 24 30 33 17 1 19 32 34 35 18 38 50 23 5 Wage-and-Salary Income Percent 2002 2003 Change Rank 4,970.0 60.5 11.9 80.0 33.4 641.7 86.9 80.1 16.8 41.4 246.6 144.4 20.9 17.2 239.7 96.3 43.9 43.0 56.8 59.5 18.5 102.0 149.9 173.4 101.2 31.8 92.0 10.9 28.0 37.8 22.7 180.9 24.0 399.4 131.0 9.1 189.7 44.2 55.3 206.0 17.2 56.8 10.3 88.6 354.4 34.2 9.6 139.1 111.5 20.5 91.5 7.6 5,087.1 62.2 12.4 83.3 34.1 661.2 88.1 81.5 17.3 42.5 256.9 147.5 22.0 17.6 242.3 98.0 45.1 43.4 58.4 61.1 19.0 105.4 151.0 175.6 104.6 32.8 94.0 11.4 29.0 40.4 23.4 186.3 24.9 404.1 132.9 9.6 192.3 44.8 56.3 210.9 18.0 58.2 10.7 91.3 359.2 34.9 9.8 144.4 114.4 20.8 94.0 7.9 2.4 2.8 4.0 4.2 2.3 3.0 1.4 1.7 3.0 2.7 4.2 2.2 5.4 2.7 1.1 1.8 2.8 1.0 2.8 2.7 2.9 3.3 0.8 1.3 3.4 3.0 2.1 4.7 3.5 6.8 3.0 3.0 3.6 1.2 1.4 5.2 1.4 1.4 1.8 2.4 4.7 2.5 3.4 3.0 1.4 1.8 2.5 3.9 2.6 1.5 2.7 4.0 23 8 6 34 16 46 40 20 29 7 35 2 26 49 39 25 50 24 28 22 15 51 47 14 19 36 5 12 1 17 21 11 48 43 3 44 42 37 33 4 32 13 18 45 38 31 10 30 41 27 9 2002 United States Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming 800.4 9.1 2.2 11.9 5.2 129.7 17.2 14.7 1.7 3.3 31.3 20.8 2.8 4.2 34.2 11.8 7.0 6.3 7.4 9.7 2.7 12.4 20.6 20.6 11.2 4.8 12.3 2.3 4.8 4.7 3.6 28.3 3.9 70.9 16.7 1.8 22.3 11.2 8.9 32.3 2.2 6.6 2.2 18.3 90.4 4.7 1.6 15.8 16.5 2.9 10.7 1.7 Rank Source: U.S. Small Business Administration, Office of Advocacy, from data provided by U.S. Department of Commerce: Bureau of Economic Analysis. Small Business Economic Indicators 21 Table 11 Nonfarm Private Employment by Industry, 2002 and 2003 (Thousands of jobs unless noted) Industry Total private Natural resources and mining Construction Manufacturing Wholesale trade, transportation and warehousing, and utilities Retail trade Financial activities Professional and business services Education and health services Leisure and hospitality Other services and information Annual Employment 2002 2003 108,829.0 582.0 6,716.0 15,259.0 10,472.0 15,025.0 7,847.0 15,976.0 16,199.0 11,986.0 8,767.0 108,356.0 570.0 6,722.0 14,525.0 10,363.0 14,912.0 7,974.0 15,997.0 16,577.0 12,125.0 8,591.0 Absolute change (473.0) (12.0) 6.0 (734.0) (109.0) (113.0) 127.0 21.0 378.0 139.0 (176.0) Percent change (0.4) (2.1) 0.1 (4.8) (1.0) (0.8) 1.6 0.1 2.3 1.2 (2.0) Source: U.S. Small Business Administration, Office of Advocacy, from employment data provided by the U.S. Department of Labor: Bureau of Labor Statistics. Small Business Economic Indicators 22 Table 12 Bank Lending Information by Size of Firm, 1991 - 2003 (Change in percent of senior loan officer responses on bank lending practices) Tightening loan standards Large and medium Small 0 4 9 22 20 21 25 45 51 40 51 60 44 34 25 11 9 5 10 7 36 0 (7) 2 (7) (6) (7) (5) (8) (4) (1) 7 (3) (6) (6) (7) (17) (7) (12) (13) (18) (19) (8) 3 4 (2) 1 5 9 12 16 36 Stronger demand for loans Large and medium Small (12) (23) (39) (32) (53) (45) (36) (55) (70) (53) (40) (50) (23) (5) (9) 9 (2) 0 0 20 28 (9) 29 26 19 13 5 5 1 12 10 (3) 3 4 29 35 31 31 38 26 9 18 (0) 20 6 (9) 6 (27) (30) NA NA NA Year Quarter 2003 4 3 2 1 2002 4 3 2 1 2001 4 3 2 1 2000 4 3 2 1 1999 4 3 2 1 1998 4 3 2 1 1997 4 3 2 1 1996 4 3 2 1 1995 4 3 2 1 1994 4 3 2 1 1993 4 3 2 1 1992 4 3 2 1 1991 4 3 2 1 (2) 4 13 14 18 6 15 42 40 32 36 45 27 24 21 9 2 2 8 4 15 (5) (2) 2 (4) (2) (4) (5) (12) (2) 2 4 (2) (2) (7) (5) (18) (7) (9) (12) (9) (12) (2) (2) (5) (2) (7) 0 5 9 7 32 (4) (12) (22) (21) (48) (36) (29) (45) (50) (42) (35) (30) (13) (4) 5 (2) (4) 0 10 11 8 0 21 15 19 20 11 15 4 18 24 14 7 25 17 18 32 19 38 26 17 14 12 32 (2) 7 25 (12) (25) NA NA NA Notes: NA = not available. Figures should be used with caution because the sample size of the survey is relatively small -about 80 respondentsbut they do represent a sizable portion of the market. Small firms are defined as having sales of less than $50 million. The survey asks the following question to gauge lending standards, "Over the past three months, how have your bank’s credit standards for approving applications for C&I loans or credit lines--other than those to be used to finance mergers and acquisitions--to large and middle-market firms and to small firms changed?" The survey asks the following question to gauge lending demand, "Apart from normal seasonal variation, how has demand for C&I loans changed over the past three months?" Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the Federal Reserve Board. Small Business Economic Indicators 23 Table 13 Opening and Closing Establishments, 1992 - 2003 (In thousands, seasonally adjusted) Year 2003 Quarter 3 2 1 4 3 2 1 4 3 2 1 4 3 2 1 4 3 2 1 4 3 2 1 4 3 2 1 4 3 2 1 4 3 2 1 4 3 2 1 4 3 2 1 4 3 Opening Establishment Number Employment 328 331 332 349 341 348 338 352 335 339 343 353 355 354 357 365 346 338 335 320 336 353 347 335 328 321 331 327 328 318 321 311 306 306 306 295 314 309 290 286 302 293 308 289 295 1,499 1,527 1,540 1,643 1,680 1,804 1,804 1,838 1,759 1,815 1,787 1,828 1,890 1,789 1,918 2,032 1,946 2,012 2,011 1,798 1,965 2,153 2,155 2,004 1,913 1,756 1,844 1,869 1,863 1,778 1,753 1,724 1,679 1,697 1,653 1,632 1,745 1,747 1,593 1,596 1,642 1,536 1,899 1,636 1,745 Closing Establishments Number Employment 318 328 334 329 325 334 331 335 367 333 337 336 348 325 328 326 339 337 318 318 316 296 323 328 308 304 299 300 293 299 298 294 291 286 274 284 268 285 278 263 255 272 273 271 273 1,431 1,564 1,555 1,610 1,629 1,719 1,729 1,769 1,955 1,876 1,900 1,772 1,859 1,714 1,727 1,775 1,872 1,812 1,898 1,757 1,719 1,838 1,934 1,961 1,758 1,579 1,593 1,528 1,559 1,544 1,526 1,536 1,519 1,473 1,376 1,476 1,304 1,491 1,448 1,375 1,333 1,408 1,642 1,398 1,571 Number 10 3 (2) 20 16 14 7 17 (32) 6 6 17 7 29 29 39 7 1 17 2 20 57 24 7 20 17 32 27 35 19 23 17 15 20 32 11 46 24 12 23 47 21 35 18 22 Net Employment 68 (37) (15) 33 51 85 75 69 (196) (61) (113) 56 31 75 191 257 74 200 113 41 246 315 221 43 155 177 251 341 304 234 227 188 160 224 277 156 441 256 145 221 309 128 257 238 174 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 Note: Establishments could be new ventures or new affiliates of existing ventures. Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Labor: Bureau of Labor Statistics. Small Business Economic Indicators 24 Table 14 Establishment Turnover by Industry, 2002 and 2003 (In thousands, seasonally adjusted) 2002 Industry Establishment births Natural resources and mining Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Utilities Information Financial activities Professional and business services Education and health services Leisure and hospitality Other services and information Establishment closures Natural resources and mining Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Utilities Information Financial activities Professional and business services Education and health services Leisure and hospitality Other services and information Employment change from births and closures Natural resources and mining Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Utilities Information Financial activities Professional and business services Education and health services Leisure and hospitality Other services and information Q1 7 44 10 22 30 9 0 8 29 73 22 29 18 10 46 13 25 35 11 0 9 10 74 10 10 19 (4) (2) (59) (10) 32 (12) 1 1 (12) 1 (7) 60 (2) Q2 7 45 10 23 32 10 0 7 31 72 25 30 19 10 46 13 25 36 11 0 9 10 77 10 10 20 (6) (8) (56) (15) 32 (5) (1) (8) (4) (39) 17 80 3 (17) (56) (109) (14) (13) 3 (5) (71) (13) 12 94 9 12 Q3 7 45 10 22 32 10 0 6 30 71 23 29 19 11 46 13 24 33 10 0 8 11 74 11 11 19 1 (10) (34) (13) 39 (4) 2 (11) (10) (34) (1) 44 2 4 (24) (135) (13) (100) 5 (2) (67) 19 20 86 (47) (13) Q4 7 46 10 22 31 9 0 7 32 76 24 30 18 10 46 13 25 36 11 0 8 10 73 10 10 20 2 (1) (46) (16) (12) (14) (1) (10) 1 (5) 5 67 (6) (5) (21) (166) (11) (40) (17) (9) (24) 36 (23) 112 (42) (2) Q1 7 45 9 21 30 9 0 6 29 70 24 29 18 12 47 13 25 35 11 0 7 12 74 12 12 20 (8) (6) (42) (10) 6 (10) (11) (3) (44) 3 49 1 9 (41) (152) (18) (104) (24) 17 (19) 77 (127) (10) 2003 Q2 6 45 10 21 29 9 0 6 30 67 23 28 18 10 47 12 24 34 10 0 8 10 79 10 10 19 (4) (12) (44) (16) 5 (5) (10) (4) (66) (12) 57 (5) 9 1 (190) (4) 38 (48) (5) (31) 41 17 59 4 3 Q3 6 44 9 21 29 9 0 6 29 68 23 28 17 11 46 12 24 33 10 0 7 11 70 11 11 20 (2) (13) (35) (14) 21 (4) (2) (6) 4 (20) 2 60 (4) (18) 35 (117) (1) 9 (1) (30) 23 89 59 (30) (19) Employment change from continuing establishments Natural resources and mining (5) Construction (9) Manufacturing (173) Wholesale trade (3) Retail trade 24 Transportation and warehousing (12) Utilities (3) Information (34) Financial activities 22 Professional and business services (22) Education and health services 107 Leisure and hospitality 14 Other services and information 12 Note that the figures do not add to the totals as some establishments have unclassified industry codes. Source: U.S. Small Business Administration, Office of Advocacy, from employment data provided by the U.S. Department of Labor: Bureau of Labor Statistics. Small Business Economic Indicators 25