United States Small Business Administration
Office of Advocacy
RS 174
_______________________________________________________________________________________________

_______________________________________________________________________________________________

Purpose

Although much has been said about the relative wages and tenure of workers in large firms compared with small firms, there have been few well-designed surveys to determine the size and incidence of the differences. It is important to understand how the employment needs and practices of small and large firms have changed in today's information-based economy as well as to examine the extent to which smaller firms are offering relatively higher wages and demanding increased levels of education and skills.

Scope and Methodology

The study tabulates average hourly wages, education, and occupational composition of workers by firm size for the years 1983, 1988, and 1993. These worker attributes are separately examined for newly hired workers with job tenure of less than one year. The study also compares the number of new small firm hires and their comparative wages with the number and comparative wages of new large firm hires.

The data used in the tabulations were drawn from the May 1983, May 1988, and April 1993 Current Population Surveys (CPS). The CPS is distributed monthly to between 50,000 and 70,000 households by the U.S. Bureau of the Census. CPS data are the source of the household-based statistics on the labor force that are published by the U.S. Bureau of Labor Statistics. Using these data, it is possible to analyze by firm size worker attributes such as level of education, age, gender, and race, as well as job attributes such as occupation, industry, and wages. More than 27,000 individuals participated in each of the three survey panels.

Highlights

• Nearly two out of three newly hired workers in 1993 worked for small businesses (firms with fewer than 500 employees), indicating the importance of small businesses as providers of new jobs.
• The wage gap between large and small firm employees narrowed over the 10-year period studied and is smallest among newly hired workers. New hires in small firms received 93 percent of the wages of newly hired workers in large firms.
• The proportion of small firm workers with more than a year of job tenure rose between 1983 and 1993, while the opposite was true for large firms.
• Over the 10-year period, the proportion of workers in small firms in information-based occupations rose by 4 percent, while the comparative proportion in large firms was unchanged.

Ordering Information

The complete report is available from:

National Technical Information Service
U.S. Department of Commerce
5285 Port Royal Road
Springfield, VA 22161
(703) 487 - 4650
(703) 487 - 4639 (TDD)

Order Number: PB96 183611

Cost: A03; A01 Microf.
*Last Modified 6-11-01