In 2022, nearly 30 million Americans operated businesses with no paid employees, a significant surge from 28.4 million in 2021. A total of 29,811,495 non-employer businesses signals a quiet revolution in entrepreneurship. It also sets the stage for National Small Business Week 2026, scheduled from May 3-9, which includes a virtual summit hosted by the U.S. Small Business Administration (SBA), according to Census. The event will recognize the rising economic power of these independent enterprises.

However, the total number of small businesses is expanding, particularly non-employer firms and those led by women, yet the proportional share of the very smallest employer establishments is slightly shrinking. This tension points to a fundamental shift in American entrepreneurship. While the White House reports 33 million small businesses in America, Census data for 2022 combines approximately 35.3 million firms (29.8 million non-employer businesses plus 5.5 million employer firms). The discrepancy between White House and Census data highlights varying definitions of 'small business' across government entities.

The continued growth in non-employer businesses and women-owned firms suggests a future for small business that is increasingly diverse and flexible. The evolution of non-employer and women-owned businesses could challenge traditional employment structures and necessitate new forms of support, moving beyond conventional indicators of small business health and economic impact.

How Small Employer Firms are Changing

The overall number of employer firms increased in 2022, reaching 5.52 million businesses with 1 to 499 employees, up from 5.38 million in 2021, according to Census. Despite this growth, the proportional share of the smallest employer establishments actually decreased. In 2022, 55.7% of all employer establishments had fewer than five employees, a drop from 56.6% in 2021.

While the total number of employer firms expands, the very smallest are not growing proportionally as fast as slightly larger small businesses. The slower proportional growth of the very smallest employer firms suggests a potential consolidation or different growth patterns within the small business sector. Scaling beyond a few employees may be becoming more common, or perhaps more challenging, for the smallest firms to maintain their proportional footprint.