For small business employment, data from the U.S. census and ADP leading sources of employment data show very different numbers.
As per census data by the SBA, 50.2 percent of U.S employment lies in businesses with less than 500 employees.
Automatic Data Processing (ADP) uses payroll data to track U.S. employment. As per ADP’s data, the share of U.S. employment in businesses with not more than 500 employees is more than 30 percentage points.
Different definitions of “business”
Census is defined as measuring firms where as ADP is measuring establishments. The small establishments are very different than small firms.
According to the U.S. Census, “an establishment is a single physical location where business transactions take place and for which payroll and employment records are kept.” Firms are “groups of one or more establishments under common ownership or control.” There are many number of reasons for why measuring small establishments problematic while understanding small businesses. One of them is, if the policy makers want to put in policies to increase small business employment then small businesses are not accounting for an increase in share of total employment.