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October 1994, Vol. 117, No. 10
Small businesses and their employees
William J. Wiatrowski
A vital, yet volatile part of the U.S. economy consists of private sector businesses with fewer than 100 workers. Such enterprises, referred to here as "small establishments," often lead the way during times of prosperity and economic growth, as new enterprises open and existing ones hire more workers. But during business downturns, small establishments are often among the first to be forced to reduce employment or close.
One-half of the nearly 90 million people working for private businesses are in small establishments. The Nation is filled with success stories of establishments starting as small businesses: the story of Apple Computer Co. starting in a garage is just one example. Yet small businesses or small establishments are difficult to define, and data on these enterprises often use differing definitions. This article examines several data sources to determine what information is available, and discusses labor force characteristics of persons employed in small businesses, compensation costs, and working conditions. It also looks at data on current conditions in small businesses, as well as external influences, such as laws and regulations specifically aimed at small establishments.
What is a small establishment?
According to the Office of Management and Budget, an establishment is "an economic unit, generally at a single physical location, where business is conducted or where services or industrial operations are performed."1 An establishment is not necessarily a firm; it may be a branch plant, for example, or a warehouse. From this universe, establishments are grouped according to the number of workers they employ. For the purposes of this article, establishments with fewer than 100 workers are considered small establishments. Thus, small establishments may include a "Mom and Pop" grocery store or a small storage facility for IBM.
This excerpt is from an article published in the October 1994 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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1 Standard Industrial Classification Manual, 1987 (U.S. Office of Management and Budget, 1987), pp. 12.
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