U.S. business establishments with no paid employees increased by 2.2 million between 1997 and 2002 to 17.6 million, according to 2002 Economic Census data released today by the U.S. Census Bureau. These nonemployer businesses recorded sales or receipts of $770 billion in 2002, a 31 percent rise over 1997.

     Nonemployers consist mostly of individual proprietorships (15.4 million), but also include 1.1 million partnerships and 1.2 million corporations that do not file payroll taxes.

     Repair and personal services, as well as other industries that comprise the “other services (except public administration) sector,” experienced the greatest increase in number of businesses, with 523,000 new firms for a total of 2.5 million. Real estate and rental and leasing added 483,000 businesses to reach 1.9 million. Administrative and support and waste management and remediation establishments grew by 370,000 to nearly 1.3 million (see Table 1: Excel | PDF).

     The sector with the most nonemployer businesses was professional, scientific and technical services at 2.6 million. Close behind were other services (except public administration) at 2.5 million and construction at 2.1 million.

     The tabulations, titled 2002 Economic Census: Advance Nonemployer Statistics, show that four economic sectors accounted for more than half of the $770 billion in nonemployer receipts. They were: real estate and rental and leasing ($162 billion); construction ($115 billion); professional, scientific and technical services ($96 billion); and retail trade ($78 billion).

     The relatively small educational services sector showed the fastest growth in receipts, up 64 percent from $2.8 billion to $4.6 billion between 1997 and 2002 (this sector excludes most schools, colleges and universities). Real estate and rental and leasing, and administrative support and waste management and remediation, each gained 59 percent. The accommodation and food services sector saw a 57 percent hike in its receipts (see Table 2:  Excel | PDF).

     Nonemployers accounted for nearly one-third of all receipts in the real estate and rental and leasing sector, the highest of any sector. Nonemployers generated 16 percent of receipts in “other services (except public administration),” which was the second highest. Arts, entertainment and recreation, and educational services followed at 13 percent each.

      Overall, nonemployer businesses grew much faster than their paid-employee counterparts in both number of establishments and receipts.

     In sectors for which comparable data are available for both nonemployers and employers, nonemployers accounted for more than 70 percent of total establishments, but less than 4 percent of total sales or receipts.

     The final nonemployer statistics report, to be issued later this year, will include data for states, metropolitan and micropolitan statistical areas and counties. The tabulations also include links to annual statistics for 1998 through 2001.

     Nonemployer statistics were compiled primarily from business tax records. The data are subject to nonsampling error from such sources as errors of self-classification by industry on tax forms, as well as errors of response, nonreporting and coverage. Further information about methodology and data limitations may be found in the report.

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