A woman wearing an apron and clutching boxes stands in front of a work area.
The number of people electing to work for themselves reached a record high in 2021, with 5.4 million new company applications submitted nationally; 2022 has followed closely behind. Even while not every company will have employees, the spike might contribute to an increase in small business employment in the coming years.
This research defines small firms as those with fewer than 500 employees, which account for more than 99.9% of the nation’s enterprises. In 2019, the most recent year for which Statistics of U.S. Companies are available, there were more than 6 million. These small firms employed around 61.7 million people, or slightly less than half of all private workers, and paid pay of over $3 trillion.
Swyft Filings utilized Census Bureau data to determine which states have the greatest employment rates among small enterprises. States are ranked according to the percentage of their workforce employed by small companies in 2019. The data excludes enterprises without employees, private residences, railways, agricultural production, and the vast majority of government agencies.
In most states, small firms employ less than half of the private workforce.
State-by-state heat map illustrating the percentage of private workers employed by small firms.
In 2019, 46% of employees worked for small enterprises on a national scale. The majority of states also fall inside this area. Yet, there are important outliers.
Throughout much of the northwest quadrant of the United States, smaller enterprises employed a greater proportion of the overall workforce. Twenty percentage points more than the national average, almost two-thirds of Montana’s workforce is employed by small businesses. According to the Small Business Association, the leading small business industries in Montana and bordering states include construction, professional/scientific/technical services, and real estate/leasing (SBA).
The comparatively cheap cost of living in the Midwest and the Mountains allows small enterprises to employ more workers than in places with a higher cost of living or where they must compete with larger, better-paying firms. According to a Montana High Tech Business Association study, the state’s enterprises benefit from its quality-of-life traits, such as work-life balance, outdoor activities, and the natural beauty of the region.
Vermont and Maine also distinguished themselves, notably in the Northeast. According to the SBA, the two greatest industries for small companies were construction and professional/scientific/technical services. The majority of Vermont’s small enterprises are unincorporated or sole proprietorships with a single owner who may or may not have workers.
A heat map depicting the average number of private workers in each state, averaging 22 per firm in the United States.
Tiny enterprises have less than 500 employees, with the vast majority having substantially fewer. Roughly nine out of ten U.S. businesses have less than twenty employees. On average, U.S. enterprises have roughly 22 employees.
Washington, D.C. has the highest average employment per firm in the state, at 28. Likewise, the northern Mountain area has the lowest averages, specifically Montana, Idaho, and Wyoming, with Vermont closely following.