Bigger Than You Think: The Economic Impact of Microbusiness in the United States

With the generous support of the W.K. Kellogg Foundation, AEO embarked on a two-year study to build the data and the evidence base that documents the economic impact of microbusiness in the United States.  This report, Bigger than You Think: The Economic Impact of Microbusiness in the United States, is one of a series from that research.

The evidence gathered through AEO’s efforts goes far in filling the gap in the paucity of data on microbusinesses and paints a compelling portrait of a remarkably vigorous microbusiness community that plays an essential role in American economic productivity. Furthermore, in the current economic slump, microbusinesses have demonstrated a surprising resilience that contains lessons for accelerating the national economic recovery. And not least, microbusinesses demonstrate great success in spreading business participation and productivity across the economic spectrum, nurturing opportunity across gender and race barriers.

How great an impact can microbusinesses have in our new economy?  A lot greater than many previously thought! As summarized in AEO’s earlier report, The Power of One in Three, “if one in three Main Street microbusinesses hired a single employee, the United States would be at full employment.”   This statement has taken the nation by storm, yet many did not fully recognize the transformative nature of U.S. microbusiness. AEO’s current research details the potential of microbusiness by examining the characteristics of microbusiness types and exploring the ways in which microbusinesses can take advantage of non-standard work arrangements and recent technological advances.

As the U.S. economy evolves, microbusinesses are well-poised to capitalize on these changes in our labor markets and broader economy.   While individually small in scale, as a whole, microbusinesses play a significant role.   Ninety-two percent of all businesses are microbusinesses, and in 2011, the direct, indirect, and induced effects of microbusinesses on employment amounted to 41.3 million jobs, or 31 percent of all private sector employment.  Direct sales and receipts and indirect and induced economic output of microbusinesses combined to result in an almost $5 trillion economic impact.  Correspondingly, microbusinesses contributed $135.5 billion in tax and fee revenues to federal, state, and local governments.

Read the full report, Bigger than You Think: The Economic Impact of Microbusiness in the United States.