Defining and Identifying Small Business Industries
Small Business Establishments
Definitions for small business establishments vary slightly among
agencies, as shown in Table 2. The U.S. Office of Management and Budget
(OMB) defines an establishment as an economic unit, generally at a
single physical location, where business is conducted or where services
or industrial operations are performed [OMB 1987]. The BLS recognizes
small business establishments in one citation as those having fewer
than 100 employees [Wiatrowski 1994] and in another as those having
fewer than 50 employees [BLS 1997c]. NOES defines small business establishments
as those having fewer than 100 employees [Pedersen and Sieber 1988],
whereas the OSHA Susan Harwood Training Grants Program defines them
as those having 250 or fewer employees.
The SBA defines a business on the basis of company* size (i.e., the
number of employees or the maximum annual revenue) to determine its
eligibility for Federal assistance. Employment totals are used to
determine eligibility in the following classifications: mining (fewer
than 500employees); manufacturing (fewer than 500 to 1,000 employees,
depending on the industry); transportation and public utilities (fewer
than 500 to 1,500 employees, depending on the industry); and wholesale
trade (fewer than 100 employees) [SBA 1997].
*A company is all business establishments under a common ownership.
In this report, a small business establishment is considered a regional
or branch office, storage facility, family-operated store, or any
other business with fewer than 100 employees at a single site. Special
trade contractors such as carpenters would also meet this definition
when operating as a distinct economic unit with fewer than 100 employees
at a single site.
The number of small business establishments and the number of employees
who work in these establishments were obtained from the County Business
Patterns 1994 [Bureau of the Census 1996]. These data are compiled
annually by the U.S. Bureau of the Census. Data in the County Business
Patterns series are presented by industry as defined in the Standard
Industrial Classification Manual:1987 [OMB 1987]. All major economic
divisions within private industry are represented in County Business Patterns, although the series does not include data
on self- employed persons, domestic service employees, railroad employees,
agricultural production workers, most government employees, and employees
on oceanborne vessels in foreign countries.
TABLE 2.
Definitions of small business establishments cited in the literature
Agency/source
Definition of small business establishments
BLS [Wiatrowski 1994]
<100 employees (per establishment)
BLS [1997c]
In the1995 SOII*: <50 employees (per establishment)
NIOSH [Pedersen and Sieber 1988]
For the National Occupational Exposure Survey: <100 employees (per establishment)
OSHA [1997]
For the OSHA Susan Harwood Training Grant Program: <250 employees (per establishment)
SBA [1997]
To determine the eligibility of small business establishments for federal assistance, definitions vary by SIC code and are established as a maximum number of employees or millions of dollars in annual revenue per company as follows:
—Agriculture [SIC 0111-0971]: ranges from $0.5 to $5 million, depending on specific industry
—Mining [SIC 1011-1499]: 500 employees or $5 million, depending on specific industry
—Construction Trades [SIC 1521-1799]: ranges from $7 to $17 million, depending on specific industry
—Manufacturing [SIC 2011-3999]: ranges from 500 to 1,000 workers, depending on specific industry
—Transportation and Public Utilities [SIC 4011-4971]: ranges from 500 to 1,500 employees or $5 to $25 million, depending on specific industry
—Wholesale Trade [SIC 5012-5199]: 100 employees
—Retail trade [SIC 5211-5999]: ranges from $5 to $21 million, depending on specific industry
—Finance, Insurance, Real Estate [SIC 6021-6799]: ranges from $5 to $15 million in annual revenue, or $100 million in assets, depending on specific industry
—Services [SIC 7011-8999]: ranges from $5 to $21.5 million, depending on specific industry
—Nonclassifiable establishments [SIC 9999]: $5 million
*
Survey of Occupational Injuries and Illnesses [BLS 1997c].
According to the County Business Patterns 1994 [Bureau of the Census
1996], all private industry for that year consisted of 6.5 million
establishments with 96.7 million employees. Allowing that small business
establishments are those with fewer than 100 employees,
—more than 6.3 million small business establishments employed 53 million employees
in private industry in 1994,
—98% of all private industry workplaces met the definition of small
business establishments, and
—56% of the entire U.S. workforce in private industry was employed
in such establishments [Bureau of the Census 1996].
The U.S. Government SIC codes group business establishments by the
type of activity they perform or the product they manufacture [OMB
1987]. This multi- layer system proceeds from general industrial groupings
(divisions) to specific industries. The 11 major industrial divisions
include the following:
The broad division categories (e.g., Division B, Mining) are divided
into (1) major groups with two-digit codes (e.g., Major Group 14,
Mining and Quarrying of Nonmetallic Minerals Except Fuels), (2) industry
groups with three-digit codes (e.g., SIC 142, Crushed and Broken Stone),
and (3) individual industries with four-digit codes (e.g., SIC 1422,
Crushed and Broken Limestone). Activities or products associated with
business establishments are most similar for establishments in the
same four-digit SIC code. At this level, hazards and their effects
are most likely to be similar among establishments. Preventive measures
are also more likely to be generally applicable to the establishments
classified together at the four-digit level. However, within some
four-digit classifications, the types of activities performed are
still significantly variable. An example of this variability occurs
in SIC code 7539, Automobile Repair Shops, not elsewhere classified
(NEC). This four-digit SIC code includes radiator repair shops as
well as frame repair and automotive electrical repair.
OMB has developed a new classification system that will replace the
SIC codes. The manual for the North American Industry Classification
System (NAICS)—United States, 1997 [OMB 1998] was released in 1998.
The NAICS uses a six-digit classification code that allows for greater
flexibility in the coding structure compared with the four-digit SIC
codes. The new system also provides more detail for newly developed
service industries such as information services, health care provision,
and high-tech manufacturing at the most basic level of industrial
aggregation [Murphy 1998]. However, the transition from SIC codes
to NAICS is expected to be difficult and is only in the initial stages.
Therefore, data used for this investigation are limited to the four-digit
SIC level and in many cases are available only at the three-digit
SIC level.
In the County Business Patterns data as well as in the occupational
injury, illness, and fatality data prepared by the BLS, data are not
consistently available for each of the more than 900 four-digit SICs.
Often data are available only at the three-digit level and occasionally
at the two-digit level. The BLS annual Survey of Occupational Injuries
and Illnesses (SOII) [BLS 1997c] is designed to provide information
at the four-digit SIC level for manufacturing industries only and
at the three-digit SIC level for all other industries. Despite the
decreasing specificity of activities and hazards at the three-digit
SIC level, occupational injury, illness, and fatality data for certain
three-digit codes may nevertheless be important for this investigation
when information at the four-digit level is lacking.
Small business establishments (those with fewer than 100 employees)
are more prominent in some industry divisions than others (Table 1).
Among the major industrial divisions, Services (SIC 7089), Retail
Trade (SIC 5259), and Manufacturing (SIC 2039) have the greatest numbers
of employees in establishments with fewer than 100 employees (33.2
million, 20.3million, and 18 million workers, respectively). Agriculture
(SIC 0109) (87%), Construction (SIC 1517) (79%), Retail Trade (SIC
5259) (76%), and Wholesale Trade (SIC5051) (74%) have the highest
percentages of employees in small business establishments.
Although the figures in Table 1 demonstrate that small business establishments
exist in all major industry groups, this report distinguishes between
a small business establishment and a small business industry. To identify
industries that consist predominantly of small business establishments,
small business industries were defined as those with SIC codes in
which at least 80% of the employees work in establishments with fewer
than 100 employees. The concept of a small business industry was used
to help provide information about industrial segments consisting primarily
of small business establishments and to determine which of these may
be in greatest need of occupational safety and health prevention activities.
By convention, 100employees was used as the cut-off for defining small
business establishments—as previously established for NIOSH surveillance
projects (Table 2). Many of the small business establishments with
fewer than 100 employees are also much smaller, with fewer than 20
or even 10 employees. Small business establishments exist in all industries,
but the intent of this investigation is to identify industries that
are predominantly composed of small business establishments. Somewhat
more arbitrary was the decision to limit small business industries
to industries with SIC codes in which at least 80% (versus 70%, 75%,
or 90%) of the employees work in establishments with fewer than 100
employees. Although choosing one of the latter numbers might have
excluded some SIC codes or included others, it is unlikely that it
would have had much influence on which small business industries were
identified using this criterion. Ultimately, 253 SIC codes were identified
as small business industries from a total of 936 four-digit SIC codes.
