One of the aspects of President Obama’s worldview that has drawn consistent fire is his evident hostility toward business. His comments in Roanoke, Virginia three weeks ago (“If you have a business, you didn’t build that”) are just the most recent in a long history of shameful displays of ignorance about the way a business is launched, how it is grown, and what makes it successful.
In his speeches, Obama tends to praise businesses only as a lead-in to calling for higher taxes on them. The President likes to attach a taint to the word “business,” as if every enterprise were Enron and every founder was Scrooge McDuck, hording piles of gold in his basement. This convenient dodge feeds a vague but satisfying resentment in some of Obama’s core constituencies toward big, faceless, evil “multinational corporations,” which are easy to hate.
But the reality about business in America is quite different, and those who understand this most keenly are those who have started businesses – and the family members who have supported them. They know firsthand that Obama’s attacks on business in general translate to a war on family business in particular.
Few people realize just how predominant family business is in the United States. So some statistics (available from the Census and the U.S. Small Business Administration) are instructive.
First, most businesses in the U.S. are not large. Over 78% of all businesses (21M out of 27M) in the United States are “non-employer” firms, meaning that they report no payroll. In other words, they are either partnerships or sole proprietorships. In fact, the vast majority (it varies from year to year, but typically around 70%) of all businesses are run as sole proprietorships.
Of the remaining 6+ million “employer firms,” nearly 90% employ fewer than 20 people. 1.3 million of these companies gross less than $100,000 each year. 3.7 million have gross receipts of less than $500,000 a year. 4.6 million – or 76% - of all “employer firms” in the United States gross under a million dollars each year.
In other words, most business in the United States is small business.