Small Businesses Still Pessimistic

When the coronavirus first swept through the country, most small businesses were optimistic about a rapid return to normal. Only 39 percent told the Census Bureau's Small Business Pulse Survey during the week of April 26-May 2 that they expected it to be more than six months before their operations returned to normal. As the pandemic dragged on, however, business pessimism grew. By the week of May 17-23, a larger 52 percent majority of small businesses thought it would take more than six months before normal returned. 

Hope rekindled in June, however. During the week of June 7-13, the share of small businesses that thought it would be more than six months before a return to normal fell back below the 50 percent threshold—to 47.4 percent. But the optimism lasted only a week. As the summer surge commenced, the percentage of businesses expecting it to be more than 6 months before a return to normal again climbed above 50 percent. And that's where it has been, week after week, ever since. 

Percent of small businesses expecting it will be more than 6 months before operations return to normal, or operations will never return to normal, or the business has permanently closed

Week 1 (4/26-5/2):     37.6%

Week 2 (5/3-5/9):       39.0%

Week 3 (5/10-5/16):   41.6%

Week 4 (5/17-5/23):   51.8% (first time above 50 percent)

Week 5 (5/24-5/30):   50.8%

Week 6: (5/31-6/6):    51.1%

Week 7 (6/7-6/13):     47.4% (last time below 50 percent)

Week 8 (6/14-6/20):   50.3%

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Week 17 (9/27-10-3): 52.9%

Source: Census Bureau, Small Business Pulse Survey

Small Business Pulse Survey, Phase 2

It's baaack. Last week the Census Bureau released the first findings from phase 2 of the Small Business Pulse Survey, collected August 9-15. The Small Business Pulse Survey, which is measuring the impact of the coronavirus pandemic on small businesses, was on hiatus for six weeks as the bureau tinkered with questions and prepared for phase 2. Phase 1 of the survey lasted from April 27 to June 27. That was supposed to be the end of the Small Business Pulse Survey, but the coronavirus had other plans. Phase 2 of the survey will collect weekly data from August 9 through October 15. Whether there will be a phase 3 of the survey remains to be seen. Here's a look at some of the new phase 2 questions and answers during the week of August 9-15...

Supply chain problems are common:
"In the last week did this business have any of the following?"
Domestic supplier delays: 29.4%
Delays in delivery/shipping to customers: 18.0%
Difficulty locating alternative domestic suppliers: 12.6%
Production delays at this business: 9.0%
Foreign supplier delays: 10.0%
Difficulty locating alternative foreign suppliers: 3.7%
No supply chain problems: 61.5%

Most businesses are experiencing reduced operating capacity: 
"How would you describe this business's current operating capacity relative to one year ago?"
Decreased: 55.2%
No change: 37.5%
Increased: 7.3%

Physical distancing requirements are limiting operating capacity for many businesses:
"In the last week was this business's operating capacity affected by any of the following?"
Physical distancing of customers: 21.0%
Availability of personal protective equipment and/or related equipment or supplies: 21.0%
Availability of other supplies or inputs used to provide goods or services: 14.4%
Physical distancing of employees: 11.1%
Ability to rehire furloughed or laid off employees and/or hire new employees: 8.6%
Ability of employees to work from home: 3.2%
None of the above: 57.5%

Many businesses say they need to increase sales or obtain financial assistance:
"In the next 6 months, do you think this business will need to do any of the following?"
Increase marketing or sales: 32.8%
Obtain financial assistance or additional capital: 26.8%
Identify and hire new employees: 23.4%
Learn how to better provide for the safety of customers and employees: 19.3%
Identify new supply chain options: 14.1%
Develop online sales or websites: 13.9%
Permanently close this business: 5.5%
None of the above: 32.7%

Both phase 1 and phase 2 of the Small Business Pulse Survey have asked businesses how long it would be before operations return to normal. During the week of August 9-15, the 57 percent majority of small businesses said it would be more than 6 months before a return to normal. This was the highest level of pessimism recorded in any week of the survey.

Source: Census Bureau, Small Business Pulse Survey

Only 38% of Small Businesses May be Left Standing

The nation's small businesses are reeling from the coronavirus pandemic. What was once thought to be a few weeks of lockdown has turned into months of disruption. A National Bureau of Economic Research study examined how big the impact of the pandemic is likely to be, querying small businesses on their ability to survive.

At the end of March/early April, NBER researchers asked a sample of small businesses whether they would still be in operation in December 2020 if the Covid crisis lasted one month, four months, or six months. The 72 percent majority of small businesses said they likely would be in operation in December if the Covid crisis lasted just one month. At four months, only 47 percent thought they would still be around in December. At six months, just 38 percent said it's likely they would survive. Here are the percentages of small businesses that think they could survive a 6-month Covid crisis by industry...

Percent of businesses likely to be in operation in December 2020 if Covid crisis lasts 6 months
Banking/finance: 59%
Real estate: 56%
Professional services: 54%
Construction: 45%
Arts/entertainment: 35%
Health care: 35%
Tourism/lodging: 27%
Personal services: 22%
Restaurant/bar: 15%

"The Covid-19 crisis represents a once-in-a-generaton crisis for America's small businesses," the NBER researchers conclude, "especially those that specialize in face-to-face service."

Source: National Bureau of Economic Research, How Are Small Businesses Adjusting to Covid-19? Early Evidence from a Survey, Working Paper 26989

Business Outlook Is More Pessimistic

Every week since the end of April, the Census Bureau has been asking the nation's small businesses about the impact of the coronavirus pandemic on their operations and outlook for the future. The most recent results, collected during the last full week of June, are the most pessimistic yet.

As of June 21-27, the 54 percent majority of small businesses believed it would be more than 6 months before their business operations returned to normal, up from 38 percent who felt this way in Week 1 of the survey. The 54 percent figure includes the 10 percent of businesses that say their operations will never return to normal.

Percentage of small businesses saying it will be more than 6 months before their business operations return to normal...

38% in Week 1 (April 26-May 2)
39% in Week 2 (May 3-9)
42% in Week 3 (May 10-16)
52% in Week 4 (May 17-23)
51% in Week 5 (May 24-30)
51% in Week 6 (May 31-June 6)
47% in Week 7 (June 7-13)
50% in Week 8 (June 14-20)
54% in Week 9 (June 21-27)

Source: Census Bureau, Small Business Pulse Survey

Most Small Businesses Badly Hurt by Covid-19

The 51.4 percent majority of the nation’s small businesses say the Covid-19 pandemic has had a large negative effect on them. Among small businesses in accommodations and food services, fully 83.5 percent say Covid-19 has hurt them badly—the highest percentage by industry sector. Among businesses in arts and entertainment, 75.2 percent say they have experienced a large negative effect from Covid-19, as have 74.3 percent of those in educational services and 69.5 percent of health care and social assistance firms.

This information comes from the Census Bureau’s new Small Business Pulse Survey, a weekly data collection effort to track the impact of the coronavirus pandemic on small business. The Census Bureau defines small businesses as single-location employer businesses with 1 to 499 employees and receipts of $1,000 or more. The first of what will be weekly releases reveals the status of small businesses as of April 26 through May 4.

Only 7.6 percent of small businesses say the Covid-19 pandemic has had little or no effect on them. Those most likely to report minimal impact are utilities (37 percent).

The Small Business Pulse Survey gets into the weeds, with state-level detail. In New York State, 62.2 percent of small businesses say the pandemic has had a large negative effect on them. In Texas, 48.9 percent say so. What are some of these negative effects? In the past seven days, nationally, three out of four small businesses say their operating revenues have declined, and more than one in four has had to reduce paid employees. Seventy-five percent of small businesses have requested assistance from the Paycheck Protection Program.

Source: Census Bureau, Small Business Pulse Survey: Tracking Changes During the Covid-19 Pandemic

How Often Do Workers Get Paid?

It depends. Some get a paycheck every week, while others get paid only once a month. No single pay schedule accounts for the majority of businesses, according to data collected by the Bureau of Labor Statistics...

Percent distribution of private businesses by length of pay schedule, 2019
Weekly: 33.8%
Biweekly: 42.2%
Semimonthly: 18.6%
Monthly: 5.4%

The construction industry is most likely to pay every week (76 percent of construction businesses pay weekly). The financial activities industry is the one most likely to pay only monthly (8 percent of financial activities businesses pay monthly).

The less workers are paid, the more frequently they receive a paycheck, according to a BLS analysis of pay schedules in 2013. Among workers paid weekly, average hourly earnings were $18.62 in 2013. Among those paid biweekly, average hourly earnings were a higher $24.81. Earnings were highest among those paid semimonthly or monthly, an average of $29.75 and $28.45 per hour, respectively.

Source: Bureau of Labor Statistics, Length of Pay Periods in the Current Employment Statistics Survey and How Frequently Do Private Businesses Pay Workers?

47% of Private-Sector Employers Provide Health Insurance

Only 47 percent of private-sector businesses provided health insurance for their employees in 2017, according to the Employee Benefit Research Institute. This is well below the 56 percent of 2008, but higher than the 45 percent of 2016. By size of establishment, this is the percentage of businesses that offer health insurance...

Percent of establishments offering health insurance to employees, 2017
Less than 10 employees: 23.5%
10 to 24 employees: 49.2%
25 to 99 employees: 74.6%
100 to 999 employees: 96.3%
1,000 or more employees: 99.3%

One factor behind the decline in the provision of employer-provided health insurance since 2008, says EBRI, was the introduction of the Affordable Care Act. The ACA allowed those working for smaller establishments to get health insurance in the marketplace. A factor behind the increase in the provision of health insurance between 2016 and 2017, says EBRI, is the low unemployment rate. The provision of health insurance has become a tool for recruiting and retaining workers in a tight labor market.

Source: Employee Benefit Research Institute, After Years of Erosion, More Employers are Offering Health Coverage; Worker Eligibility Higher

The Most Successful Entrepreneurs Are...

Does age predict entrepreneurial success? Yes, say many Americans, and they would be right. But they would be wrong about the age that predicts success. According to a recent study, it's not youthfulness that leads to entrepreneurial success...

"We find that age indeed predicts success, and sharply, but in the opposite way that many observers and investors propose. The highest success rates in entrepreneurship come from founders in middle age and beyond."

You read that right: "middle age and beyond." This is the conclusion reached by researchers from MIT and the Census Bureau after linking IRS, Census Bureau, patent, and third-party venture capital databases. They crunched the numbers to determine the average age of founders for the 1 in 1,000 fastest growing new businesses in the past decade. Average age = 45.0. Notably, the average age of successful entrepreneurs does not vary much by industry sector, including high tech.

There's a good reason for this surprising finding: experience is the key to success. "These findings are consistent with theories in which key entrepreneurial resources (such as human capital, financial capital, and social capital) accumulate with age," explain the researchers. "To the extent that venture capital targets younger founders, early-stage finance appears biased against the founders with the highest likelihood of successful exits or top 1 in 1,000 growth outcomes."

Source: Census Bureau, Working Papers, Age and High-Growth Entrepreneurship

Counties Without Businesses

Some of the nation's 3,142 counties lack certain essential businesses. These "business deserts" were tallied recently by the Census Bureau's Andrew W. Hait, using data from the bureau's 2015 County Business Patterns...

Number of counties lacking employer establishments
Gas stations: 22
Commercial banks: 37
Religious organizations: 42
Grocery stores: 48
Offices of lawyers: 215
Child care services: 287
Dentist's offices: 305
Doctor's offices: 344
Hardware stores: 489
Beauty salons: 802
Drinking places: 926
Movie theaters: 1,586

While counties may have no employer establishments, Hait notes, their populations may be served by nonemployers—independent contractors and sole proprietors. He cites the example of child care service. While 2,855 counties in the U.S. have at least one employer child care service, a larger 3,117 have nonemployer (home-based) child care services.

Source: Census Bureau, Filling the Void in Counties Lacking Key Businesses

The Brewery Explosion

Pity the thirsty masses of 2006. Back then, there were only 398 breweries in the entire United States. Today, there are 2,843, according to the Bureau of Labor Statistics—a more than seven-fold increase. In 2006, no state had more than 50 breweries. Today, 15 states have more than 50 and 10 states have more than 100. California has the most—333 in 2016, up from just 45 in 2006. Colorado is second with 204 breweries, up from 22 in 2006.

Not only are more breweries dotting the landscape, but there are also more brewery workers than ever before. After falling slightly between 2006 and 2010 as a consequence of the Great Recession, brewery employment surged 61 percent between 2010 and 2016 to more than 40,000. The rise in brewery employment accounted for more than half the employment growth in the U.S. beverage manufacturing industry during those years, the BLS reports.

Unfortunately, the trend in the average weekly wage for those working at breweries is not as impressive as brewery growth. Between 2006 and 2016, the average fell 25 percent to $969.

Source: Bureau of Labor Statistics, Spotlight on Statistics, Industry on Tap: Breweries

Start-Up Firms Boost Employment

If you've ever wondered how many startup firms are in the United States, it's your lucky day because the Bureau of Labor Statistics counts them: in 2017, there were 415,226 startups. The BLS defines startups as firms that are no more than 1 year old. The annual number of startups has climbed 27 percent since hitting a low in 2010. But the 2017 number is still 9 percent below the 2006 peak...

Number of startup firms
2017: 415,226
2010: 326,091 (low)
2006: 457,223 (high)
2000: 417,515
1994: 403,747 (start of data series)

In every year since 1994, startups have accounted for most job growth. Of the 2.1 million net increase in jobs in 2017, startups accounted 1.7 million—or 84 percent of the total.

Source: Bureau of Labor Statistics, Job Gains among Startup Firms in 2017

Age Distribution of American Businesses

The Census Bureau's new Annual Survey of Entrepreneurs is a welcome addition to business statistics, providing more timely information on U.S. businesses and business owners. Rather than waiting for economic census updates every five years, the new survey will provide economic and demographic characteristics of businesses and their owners annually in the years between the economic census—thanks to a public-private partnership with the Census Bureau, the Ewing Marion Kauffman Foundation, and the Minority Business Development Agency. Data on the characteristics of businesses and the gender, ethnicity, and race of business owners are available for the nation, states, and 50 largest metropolitan areas.

U.S. firms with paid employees by age of firm, 2014
Total firms: 5,437,782 (100.0%)
Less than 2 years: 481,981 (8.9%)
2 to 3 years: 723,679 (13.3%)
4 to 5 years: 519,712 (9.6%)
6 to 10 years: 1,146,177 (21.1%)
11 to 15 years: 2,398,315 (44.1%)
16 or more years: 167,917 (3.1%)

Source: Census Bureau, Annual Survey of Entrepreneurs

41% of Full-Service Restaurants Are Ethnic

What is the single most popular type of restaurant in the United States? Fast-food restaurants serving hamburgers, of course. There are 53,000 of them, according to the 2012 economic census. They account for 23.6 percent of the nation's 225,000 fast-food restaurants with employees. After hamburgers are sandwich/sub shops (18.5%), pizza (15.8%), Chinese (10.0%), and Mexican (8.8%).

What's the most popular type of full-service restaurant in the United States? The answer is "other ethnic"—a category that includes Thai, Indian, Cambodian, Japanese, Ethiopian, and all other ethnic restaurants except Mexican, Italian, and Chinese. There are 31,000 "other ethnic" restaurants, accounting for 13.5 percent of the nation's 232,000 full-service restaurants with employees. Second in popularity is Mexican (9.4%) followed by Italian (9.2%) and Chinese (8.6%). The four ethnic categories account for a substantial 41 percent of the nation's full-service restaurants.

Source: Census Bureau, 2012 Economic Census

Startup Firms Account for Most Job Gains

New research data from the Bureau of Labor Statistics reveals the importance of startup firms to employment growth. Startup firms (less than 1 year old) accounted for fully 60 percent of the 2.7 million net gain in employment between March 2014 and March 2015, according to the data. "More than half of these jobs were from firms with fewer than 10 employees," reports the BLS. Older firms (10 years or older) accounted for 29 percent of the gain.

Source: Bureau of Labor Statistics, Entrepreneurship facts: Announcing New Research Data on Job Creation and Destruction by Firm Age and Size

Where Do All Those Pumpkins Come From?

Six states produce most of the nation's pumpkins: Illinois, California, Ohio, Michigan, New York, and Pennsylvania. In Illinois, 77 percent of the pumpkin harvest ends up in a pie rather than on a porch. In the five other states, 88 to 99 percent of pumpkins are for the porch.

Source: USDA, Economic Research Service, Pumpkins: Background & Statistics

How Valuable Is a For-Profit College Degree?

Less valuable than a degree from a public institution, according to a recent field experiment. By submitting fictitious resumes to real job postings on an online job board, researchers compared employer response to college degrees from different types of schools.

Employers do notice and care about where you got your degree, the researchers discovered. A resume listing a bachelor's degree in business from a for-profit school was 22 percent less likely to get a callback than a resume listing the same degree from a nonselective public school.

Source: National Bureau of Economic Research, Working Paper 20528, The Value of Postsecondary Credentials in the Labor Market: An Experimental Study ($5)

Book Store Jobs, 2004 and 2014

The number of Americans employed at book stores and news dealers fell 41 percent between 2004 and 2014, from 151,100 to 89,600—a loss of more than 60,000 jobs.

Source: Bureau of Labor Statistics, Spending and Employment related to Books and other Reading Materials

State of the News Media 2014

Good news: Digital news outlets have created 5,000 full-time editorial jobs in the past decade.
Bad news: "It is far from clear there is a digital news business model to sustain these outlets."

Source: Pew Research Journalism Project, State of the News Media 2014

Eating Out by Age

The great majority of Americans eat out during an average week. Among people aged 20 or older, 81 percent got at least one prepared meal from a restaurant, grocery store deli, or vendor in the past seven days. Age is one of the most important determinants of how often people eat out. The oldest adults are more than twice as likely as the youngest to not eat out at all during an average week (28 versus 12 percent). The youngest adults are nearly four times as likely as the oldest to eat out eight or more times per week (16 versus 4 percent).

Number of meals prepared away from home in past week: 0
Total people: 19.3%
Aged 20 to 39: 12.1%
Aged 40 to 54: 20.0%
Aged 55 to 64: 22.6%
Aged 65 or older: 28.2%

Number of meals prepared away from home in past week: 8+
Total people: 9.5%
Aged 20 to 39: 16.0%
Aged 40 to 54: 10.0%
Aged 55 to 64: 9.1%
Aged 65 or older: 4.4%

Source: USDA, Economic Research Service, Flexible Consumer Behavior Survey, 2009-10

Eating Out: Meals per Week

Question: "During the past 7 days, how many meals did you get that were prepared away from home such as restaurants, fast food places, food stands, grocery stores, or from vending machines?" Among Americans aged 20 or older, these are their answers...

None: 19.3%
One: 17.0%
Two: 17.1%
Three: 13.1%
Four: 8.5%
Five: 7.3%
Six: 3.0%
Seven: 5.1%
Eight or more: 9.5%

Since the last time this question was asked in 2007-08, a statistically significant change occurred in only one category: the percentage who got eight or more meals away from home fell by 3 percentage points, from 12.5 to 9.5 percent.

Source: USDA, Economic Research Service, Flexible Consumer Behavior Survey, 2009-10