More Americans Work At Big Firms Than Small Ones

By:
Chris Gaetano
Published Date:
Apr 7, 2017
Big Fish

For generations, if you were a worker in the U.S., it was very likely that you were employed by a small business with fewer than 100 people. In the wake of the economic crisis of 2008, however, this is no longer the case, as large and very large companies now employ a larger percentage of the population than mid-sized or small businesses, according to the Wall Street Journal. Using census data, the WSJ calculated that 36.2 percent of people worked at either a large (2,500 to 9,999 people) or very large (10,000 or more people) company, versus 38.9 percent who worked for small (100 or fewer people) companies and 24.9 percent who worked for mid-sized (100 to 2,499 people).

Since 2014, the latest year for which there is census data, this is no longer the case. At this point, 39.2 percent were employed at either a large or very large company, while 26.5 percent worked at mid-sized companies and 34.3 percent worked at small companies. 

The effect has been sharper in some sectors than others. For instance, in 1980, small businesses employed 50.3 percent of all retail workers, while 34.8 percent were employed by large or very large companies. However, decades later it is these giants who now employ the biggest share of workers at 47.2, versus the 35.6 employed by small retailers today. And while finance had always had more people working in large or very large companies, employing 38.7 percent of the sector's workers versus 34.4 percent in small companies, the years have widened the gap. The 2014 numbers indicate that 45.4 percent of finance workers now work at large or very large companies, while 29.1 percent work at smaller firms. 

While generally one would expect smaller, more nimble competitors to emerge to challenge established giants, the WSJ said this is not happening as much, which could explain why big companies are taking up a higher share of employment than before. In 1980, 12.5 percent of companies were less than a year old. In 2014, this number has shrunk down to 8 percent. The WSJ also pointed to a momentum effect: these big companies have also made large gains in market share in between 1980 and 2014, which means they grow even bigger, and can operate more easily by taking advantage of things like economy of scale. 

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