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Small business drives the U.S. economy

Provides jobs for over half of the nation's private work force

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[AUG. 12, 2005]  WASHINGTON -- Small business drives the U.S. economy by providing jobs for over half of the private work force. Moreover, the latest figures show that small businesses with fewer than 20 employees increased employment by 853,074 during 2001-2002.

These and other statistics outlining the contribution of small business to the economy are contained in the Small Business Profiles for the States and Territories, 2005 Edition, issued Aug. 4 by the Office of Advocacy of the U.S. Small Business Administration.

"Small business drives the American economy," said Dr. Chad Moutray, chief economist for the Office of Advocacy. "Main Street provides the jobs and spurs our economic growth. American entrepreneurs are creative and productive, and these numbers prove it."

Small businesses are job creators. Data and research funded by the Office of Advocacy show that small businesses represent 99.7 percent of all firms, they create more than half of the private nonfarm gross domestic product, and they create 60 percent to 80 percent of the net new jobs.

In 2004, there were an estimated 23,974,500 businesses in the U.S. Of the 5,683,700 firms with employees, 5,666,600 were small firms (fewer than 500 employees). The latest data also show that in 2002 women owned 6,492,795 firms, blacks owned 1,197,988 firms, Hispanics owned 1,574,159 firms, Asians owned 1,105,329 firms, and American Indians and Alaskan natives owned 206,125 firms.

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In 2004, there was strong growth of 7.3 percent in proprietor's income -- a partial measure of small-business income. Business bankruptcies decreased by 2.1 percent, and self-employment increased by 2.2 percent. This and other data for each state and territory are available in individual economic profiles on the Office of Advocacy website, at

The Office of Advocacy, the "small business watchdog" of the government, examines the role and status of small business in the economy and independently represents the views of small business to federal agencies, Congress and the president. It is the source for small-business statistics presented in user-friendly formats, and it funds research into small-business issues.

[News release from the Office of Advocacy, U.S. Small Business Administration]

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