Who Are the Job Creators?

One of my pet beefs is the frequently heard CFIB claim that small businesses are the job creators, not large enterprises.

What is small and what is big? It all depends on whether you look at the size of the workplace, or the number of employees of a company at all locations. Wal Mart may be modest in size by the former definition, but is huge by the latter.

The Table shows data from the Labour Force for the private sector only. Very small businesses with under 20 employees account for 39.0% of workers at the workplace level, but just 24.5% at the all locations level. Very big businesses with more than 500 workers account for just 7.8% of employees at the workplace level, but 41.6% at all locations.

As further shown, the distribution at the all locations level was pretty stable 2007 to 2010. Employment with companies of over 100 employees and over 500 combined was unchanged at 56.5% (despite, one could add, those corporate tax cuts which applied to large but not very small companies.)

And let me not even get started on the job quality dimension of large versus small.

(Thanks to Sylvain for crunching the numbers.)

Distribution of Private Sector Employees in 2010
<20 20-99 100-499 500
At Workplace 39.0% 33.9% 19.3% 7.8%
All Locations 24.5% 19.0% 14.9% 41.6%
All Locations
2007 24.2% 19.3% 14.1% 42.4%
Source: Labour Force Survey

12 comments

  • I have never understood the claim that small business create a good proportion of the jobs in the economy, least the desirable ones. I guess it must have been my couple of years working in the business register and working within all those business profiles and counts by business size.

    But the myth lives on, that small innovative companies will save us all. Just to mention one simple fact, what fraction of small business does an ounce of R&D. And of that fraction which is close to zero, how many do research that is not due to a linkage to a large company?

    Again, what proportion of small businesses provide formal or some type of legitimate informal training to employees? Ahhh, pretty close to zero, look at WES for evidence on that.

    I could go on.

  • Spell it out for me

    Thanks for that. The CFIB get way too much veneration in the press and among the pols for a lobby group that’s one of the biggest drivers of the downward spiral. Far too many of their small business clients just want to pay the lowest possible wages, with little to benefits, while complaining bitterly about all types of taxes, & investing nothing in their own workers’ training, & co-opting the government into importing temporary workers & immigrants from other lands to work for even less, all so the owners can build equity on everyone else’s backs — often founded on dubious claims of how they’re the great engines of the economy.

  • Nice work, Sylvain. I did a similar analysis in 2009, but including the public sector.

    The CFIB does not restrict its wild claims to the private sector. It takes credit for the majority of employment throughout the economy, which is even further from the truth.

    Another point is that much small-business employment is driven by orders from, and consumers employed by, large businesses and governments.

    Ironically, the CFIB itself is having to make this point in defending general corporate tax cuts that will not provide a dime to its supposed constituency: unincorporated businesses and Canadian-controlled private corporations with profits under $500,000.

  • “Ironically, the CFIB itself is having to make this point in defending general corporate tax cuts that will not provide a dime to its supposed constituency”

    The political reality is though that the CFIB and its members are for the most part fully aligned with the broader neoliberal project and the back scratching goes both ways. Organizations that ostensibly represent large Canadian Enterprises which have nothing to fear from increases in the min-wage routinely produce research and make petitions that are counter to the min-wage for example.

  • How many of those small businesses are franchises whose independence are only an accounting trick to appeal their investor’s inflated sense of self-importance?

  • Travis, I agree and was indeed trying to highlight the neoliberal solidarity that exists among business lobby groups, which may also help explain the CME’s intervention on this issue. Manufacturers would gain more per dollar devoted to accelerated writeoffs for manufacturing capital than to across-the-board rate reductions.

  • Erin,

    Yep and if we throw in the general neoliberal distaste for the progressive income tax system (and taxes in general) then you have a very workable and durable political coalition. The question for progressives is how do you drive a wedge into this troika?

  • I definitely agree with you Andrew. Small businesses pay less, hardly train employees, and don’t create many jobs on net. But I’m nervous about favouring big business and letting go of small ones. Even if small businesses are less productive than their counterparts, I’d rather see them flourish and not Walmarts and Second Cups.

    I’m worried that big business will get too big if we don’t support SMEs. And by that I mean at least leveling the field so small businesses have, at least, a chance to compete.

  • having a progressive political party that actually pushes the corporate tax cut issue was and is such a wedge issue. Even the small business group may be persuaded to go against such notions as many do not qualify. Sure teh CFIB holds some sway, but small businesses are not quite fully indoctrinated to the large business, if there is something in it for them then maybe, but this has nothing for their bottomline and hence will be against it.

    Even the Harper Tim Horton crowd was talking up a nasty darn storm about corporate tax cuts yet what happens.

    However for progressives, it is key to actual have a progressive that pushes such notions. Our progressive party, if you did not notice gets caught with their pants down last weekend, playing around with the biggest issue to come this side of Harper’s majority in 5 years. Sorry Duncan, I know you feel otherwise, but the bottomline is, the grand thinkers of the NDP blew that one.

    It was a huge political wedge issue, and to be silent on it, with such a gigantic political spotlight was a huge campaign gaffe. Plain and simple, they dropped the ball on the weekend.

    With a bit of scampering over the early part of this week, it seems like they cleaned a bit of dirt off there sleeves. But they got to stop wiping their nose with their sleeves.

    When an issue comes along as big and loud and negatively resonating as corporate tax cuts- don’t play around with it like the way they did on the weekend. Get behind it and blow the bull horn! I don;t even understand what the idea behind leaving the issue out of the wish list. Don;t tell me they didn’t think it needed to be on the list as it was talked about. One puts demands on the demands list and demands them when the are offered the opportunity. It was not on the demand list, hence something was going on.

    Phrack!!!!!!!!!

  • I dunno there is an argument to the effect that the demand for an expanded CPP system was a demand for a corpororate (more broadly defined) tax increase.

  • Yes I do understand cpp increases are a tax but that is not how anybody I know would run a campaign. Sorry Travis, Duncan already tried that.

    Potentially I am wrong, big nasty corporate tax cuts in a time where public services are being attacked is not something to build an election campaign on. But you might want tell that to the liberal, who just madesome gains in the polls.

  • I agree on the messaging completely. It was a huge tactical blunder.

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