Behind the Sound Bite: Therese Murray on small business job growth
Last week, Gov. Deval Patrick signed a piece of health-care legislation into law that was aimed at reducing costs for employers and improve quality of health care. In a written statement heralding the signing, Senate President Therese Murray was quoted as saying that “small businesses are the main job producers in Massachusetts.”
In this edition of Behind the Sound Bite, we looked behind the data of that claim and found that the answer depends on how you define a small business and what year you take your measure.
What is a small business?
To be considered a small business by the federal government, you need to have 500 or fewer employees. But the U.S. Small Business Administration uses a variety of measures to define a small business. For example, a manufacturer is deemed small if it has 500 or fewer employees. However, for most nonmanufacturing companies, the SBA says any company with $7 million or less in annual receipts is a small business.
How many small business are there in Massachusetts?
If you use the 500-employee measure, there were 141,783 small businesses in the Bay State as of 2007, the most recent year data is available. By contrast, there were only 2,984 large employees in the state as of 2007.
How many employees do small businesses in Massachusetts have?
Using the same definition of 500 employees or less, small businesses employed approximately 1.47 million people in 2007. That was 48 percent of the 3 million people employed. So, while there are many more small businesses in the state, large businesses still issue the paychecks of the majority of Massachusetts residents.
Do small businesses really produce the most job growth?
Based on data from 2005 to 2006, yes. From 2005 to 2006, SBA data shows that small businesses with 500 employees or less added 32,130 net new jobs. Large companies added slightly less – just 25,404. However, from 2004 to 2005, large companies outpaced smaller firms, adding 14,000 new jobs while small businesses added about 7,500.
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