Small business owners used to be interested in employing others. While many still are, that fraction has been falling for many years. Consider figures from the Bureau of Labor Statistics (BLS). The government agency’s data show that back in 1995, 20.7 percent of self-employed heads of unincorporated businesses had employees. By 2010, the figure was down to 16.6 percent.
Source: Created from data from the U.S. Census
Data from another government agency, the Census Bureau, shows a similar pattern. Back in 1992, 26.2 percent of U.S. businesses employed at least one person. By 2010, only 20.5 percent had anyone on their payroll. As the figure below shows, the decline has been pretty steady since the Census Bureau began reporting annual data in 1997.
While a 4.6 percentage point change in the fraction of U.S. businesses that have employees might not sound like much, it’s a lot. If the same fraction of small businesses had employees in 2010 as did back in 1992, we would have 1.6 million more employers than we have now.
Even if the size of the average American business with employees remained at its 1992 level of just over 18 workers (it’s now slightly over 20), a shift of 1.6 million businesses from the non-employer side of the ledger to the employer side would mean 29 million more jobs than we currently have.