Small businesses becoming nation's largest employers

Jack Faris has his own description of a small business.

"It's a business where the owner knows the names of his employees' kids," said Faris, president of the National Federation of Independent Business (NFIB), which keeps tabs on small business activities.

The NFIB actually puts the cutoff between large and small businesses at 500 employees but there are many theories about what differences lie between small and large businesses.

Some groups need classifications of businesses, like the Cape Girardeau Chamber of Commerce, which presents a "Small Business of the Year" award each year. The chamber limits its small business nominees to those with 50 or less employees.

Missouri, in determining its annual businesses of the year awards, places the big businesses at those with 251 or more employees. The state economic development group presents awards in three categories, with the smaller category including firms that employ 50 or less people.

Yet another group, the Federal Reserve Bank, counts businesses with fewer than 100 employees among its small business members.

Regardless of the number breakdown, small businesses are the nation's largest employer.

Small businesses under the NFIB definition account for more than 90 percent of all businesses in America and employ almost 60 percent of the national workforce, said Brad Jones, president of the Missouri NFIB.

"Small businesses have created two-thirds of the net new jobs since the early 1970s," he said.

Under the NFIB format, the number of small businesses nationally totals almost 12 million. Nearly 90 percent of that total, or about 10.8 million businesses, employ 20 persons or less.

A recent survey by the Small Business Works found that small businesses have become Missouri's largest employers, with total payrolls exceeding 54 percent of the state's employed workers.

If fewer than 500 employees are defined as small or medium-sized business, only 5.7 million businesses are large enough to have 500 employees.

Small business is the heart of our economy said Jones, who will be in Cape Girardeau for meetings this week. Small businesses account for more than 50 percent of all the sales in the nation, he said.

Totals could be even higher in Southeast Missouri, where small businesses provide the livelihood of more than 75 percent of the people and pay the majority of taxes. Counting the national breakdown -- 500 employees and under -- small business in Cape Girardeau County provide 90 percent of the jobs, which translates into probably 30,000 employees.

Procter & Gamble and Rubbermaid (formerly LeeRowan) are the only two manufacturers in the county with more than 500 employees. There are 135 manufacturers in the county, providing jobs to more than 7,000 workers.

The only other 500-plus employers are Cape Girardeau's two hospitals -- Southeast Missouri Hospital and St. Francis Medical Center -- and education -- Southeast Missouri State University and school districts. Mid-America Motel is the largest employer in the city with more than 1,800 employees spread throughout the region.

About 75 percent of the Cape Girardeau Chamber of Commerce members fit into the small business category under the chamber's definition of 50 employees and less.

These businesses employ up to about 50 percent of the workforce in our community, said John Mehner, chamber president.

Small business is playing a major role in the restructuring of U.S. industry. The number of new businesses has increased steadily during the past quarter-century. Over the past 25 years, small businesses have generated more than 67 percent of the new job growth --11.3 million of the 16.5 million new jobs generated during the same span.

Restaurants are included in the fastest-growing sectors of small business during the past two years. Other sectors include outpatient-care facilities, physician offices, trade contractors, computer and data-processing services, collection firms, dental labs, counseling and house cleaning services.

More than 140,000 small businesses are located in Missouri, with 116,000 employing 20 workers or less. Employment in these facilities total more than 2 million of the 2.8 million jobs in the state.

rowen@semissourian.com

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