”Survey says” looks at various rankings and scorecards judging geographic locations while noting these grades are best seen as a mix of art and data.
Buzz: States with smaller businesses — including California — tend to have higher pay, larger pay raises and faster job growth.
Source: My trusty spreadsheet analyzed the Bureau of Labor Statistics’ quarterly deep dive into unemployment insurance filings. I created a state-by-state yardstick for small businesses by comparing employment trends with the number of establishments — 2003’s second quarter (when this metric’s database starts) vs. 2021’s third quarter (latest figures available).
Top line
The key stat was the number of employees at workplace establishments. That average varies widely across the nation, but it’s a universally shrinking number as companies either get lean-and-mean or launch as startups.
Let’s start with the 10 states with the fewest employees per workplace. This group averaged 10.5 jobs per establishment as of September, down 22% since 2003.
It’s a curious mix, found mostly in the entrepreneurial West and old-school New England: Montana (8.6 jobs-per-establishment), Wyoming (9.4), California and Idaho (10.2), Vermont (10.4), Maine (10.6), New Hampshire (10.9), Rhode Island and Florida (11), and Oregon (11.2).
Compare that to the 10 states with the most employees per workplace, a group averaging 15.9 jobs per establishment, down 12% from 2003.
No surprise, these states are better known for their manufacturing mettle: Indiana (16.9), Ohio (16.6), Texas (16.4), Tennessee and the District of Columbia (16.2), Arizona (15.9), Michigan (15.4), Pennsylvania (15.1) and Minnesota and Wisconsin (14.9).
Details
Consider how these two groups compare …
Jobs? It’s still a large employer world. The 10 small-workplace states have a combined 31.6 million workers or 22% of all U.S. jobs. The 10 big-workplace states have 44.4 million jobs or 31%.
Job growth? Small firms are where hiring is most brisk. Employment in small-workplace states grew by 17% since 2013. Big-workplace states were up 12%. By the way, California had 14% growth, 17th among all states.
Wages? Small also pays. Paychecks in small-workplace states averaged $1,369 a week as of September. Big-workplace states were at $1,173. That’s 17% more for the small firms. California’s $1,576 was fourth-highest in the U.S.
Wage growth? The smaller the workplace, the bigger the rewards. Pay grew at a 3.7% annualized rate since 2013 in the small-workplace states vs. 3.1% in those big-workplace states. California had 3.9% growth in the small category — No. 3 among the states.
Bottom Line
Does size matter to state economies? Yes, just inversely.
This data set is by no means a perfect yardstick of how small businesses have fared so far this century. But if you’re looking for more opportunity and better pay, these stats suggest you eye states with strong small-business cultures.
And this the-smaller-the-better logic also helps explain why the much-discussed, high-profile departures from California of some big-name companies have had negligible impact on the state’s economic progress.
If businesses are fleeing California, why the 46% growth in workplaces since 2003 — ranked 11th-highest among the states?
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
