Wednesday, January 18, 2017

Pass-Through Businesses Are A Majority Of US Companies And Employ More Than Half Of US Private Sector Workers

From Tax Foundation, "Pass-Through Businesses: Data and Policy" by Scott Greenberg:
Figure 1

Source: Tax Foundation

In addition, pass-through businesses [sole proprietorship, partnership, S corporation] are also responsible for more than half of private-sector jobs in the U.S. (Figure 2). In 2014, 57.3 percent of the U.S. private-sector workforce was employed or self-employed at a pass-through business [does not include unemployed individuals seeking work.] In numerical terms, U.S. pass-through businesses employed 73.0 million people in 2014, compared to 54.3 million employees of C corporations [may double count some individuals who were simultaneously self-employed as a sole proprietorship and employed by a different business as well.]

Within the pass-through sector, in 2014, S corporations had the most employees: 32.5 million people, or 25.5 percent of the private sector workforce. Although sole proprietorships are the most common form of business in the U.S., they accounted for only 19.6 percent of all private-sector jobs. This is because most sole proprietorships consist of one self-employed individual, without any other employees.

Figure 2

Source: Tax Foundation

In 49 out of 50 states, pass-through businesses employ over 50 percent of the private workforce. The one exception is Hawaii, where pass-through businesses account for 49.9 percent of private-sector jobs. In four states, pass-through businesses are responsible for over 65 percent of the private-sector workforce: Montana (68.6 percent), South Dakota (66.3 percent), Idaho (65.4 percent), and Vermont (65.2 percent).