Introduction

In 2005, 7.5 million firms had employees and another 20.4 million firms had no employees across the nation. A nonemployer business is defined as a business that has no paid employees, has annual business receipts of $1,000 or more ($1 or more in construction industries) and is subject to federal income tax. Nonemployer businesses are generally small, such as real estate agents and independent contractors. They constitute nearly 75 percent of all businesses, but they contribute only about 3 percent of overall sales and receipts data. Generally, an establishment is a single physical location at which business is conducted or services or industrial operations are performed. However, for nonemployers, each distinct business income tax return filed by a nonemployer business is counted as an establishment. Nonemployer businesses may operate from a home address or a separate physical location. Despite the large presence of nonemployer businesses in the economy, little research has been done to examine the trends of these businesses.

As shown in Table 1, from 1997 through 2005, Nevada had the highest growth rate of nonemployer establishments with an increase of 74.4 percent. Overall, western states experienced a higher growth rate (33.2 percent) in nonemployer establishments than the nation (32.1 percent), despite Alaska having the lowest growth rate in the nation.

Table 1. Nonemployer Establishment Growth in Western United States, 1997 to 2005
State 1997 2005 Change Percentage Change Rank
Nevada 93,777 163,512 69,735 74.4% 1
Arizona 240,925 358,145 117,220 48.6% 4
Utah 126,190 175,121 48,931 38.8% 7
California 1,936,556 2,609,258 672,702 34.7% 11
Idaho 79,240 106,257 27,017 34.1% 14
Colorado 303,196 401,092 97,896 32.3% 17
Hawaii 70,203 87,717 17,514 25.0% 27
Washington 315,367 386,895 71,528 22.7% 32
Wyoming 34,179 41,861 7,682 22.5% 33
Montana 67,187 80,851 13,664 20.3% 38
New Mexico 96,964 116,614 19,650 20.3% 40
Oregon 209,846 246,129 36,283 17.3% 46
Alaska 48,964 50,928 1,964 4.0% 51
Western States 3,622,594 4,824,380 1,201,786 33.2%  
United States 15,439,609 20,392,068 4,952,459 32.1%  

Source: U.S. Department of Commerce. Nonemployer Statistics. U.S. Census Bureau, Economic Planning and Coordination Division, Register Analysis Branch, 1997 and 2005.

Table 2. Establishment Shares by Firm Size 2005
Area Name Total Establishments Firms with 1-4 Employees Firms with 5-9 Employees Firms with 10 or More Employees Nonemployer Firms
Churchill 1,838 14.1% 6.7% 7.8% 71.4%
Clark 151,057 13.6% 4.4% 7.3% 74.7%
Douglas 6,914 15.2% 4.1% 4.7% 76.0%
Elko 3,290 16.8% 6.3% 8.2% 68.7%
Esmeralda 83 13.3% 3.6% 3.6% 79.5%
Eureka 153 12.4% 5.9% 2.0% 79.7%
Humboldt 1,154 17.1% 6.8% 8.8% 67.4%
Lander 330 16.7% 3.6% 6.7% 73.0%
Lincoln 337 13.9% 6.8% 5.3% 73.9%
Lyon 3,368 11.2% 3.7% 5.1% 80.0%
Mineral 345 12.8% 4.3% 4.3% 78.6%
Nye 3,236 12.6% 4.0% 5.5% 77.8%
Pershing 326 17.2% 4.3% 5.8% 72.7%
Storey 274 21.9% 3.6% 3.6% 70.8%
Washoe 39,787 16.4% 5.6% 8.5% 69.6%
White Pine 737 15.5% 6.6% 6.5% 71.4%
Carson City 8,704 16.7% 4.8% 6.4% 72.1%
Nevada 222,073 14.4% 4.7% 7.3% 73.6%

Source: U.S. Department of Commerce. Nonemployer Statistics. U.S. Census Bureau, Economic Planning and Coordination Division, Register Analysis Branch, 2005. U.S. Department of Commerce. County Business Patterns. U.S. Census Bureau, Economic Planning and Coordination Division, Register Analysis Branch, 2005.

Map of establishments shares in 2005 from the table above

Establishments

Table 2 shows the establishment shares by firm size in 2005 for each county in Nevada as well as the state overall. In 2005, Nonemployer firms comprised between 67.4 percent and 80 percent of all establishments in the Nevada counties. Lyon County had the greatest percentage of establishments having no employees, and 2,694 (80 percent) nonemployer firms. Humboldt County had the smallest percentage of nonemployer firms with 778 (67.4 percent) establishments having no employees.

Humboldt County had the greatest percentage of large establishments, with 8.8 percent of its firms having 10 employees or more. Eureka County had the lowest percentage of large firms, with just 2 percent of its firms having 10 or more employees.

Table 3. Employee Shares by Firm Size
Area Name Total Employees Firms with 1-4 Employees Firms with 5-9 Employees Firms with 10 or more Employees Nonemployer Firms
Churchill 7,165 8.3% 11.0% 62.4% 18.3%
Clark 899,910 6.0% 5.4% 76.1% 12.5%
Douglas 24,976 10.9% 8.2% 59.9% 21.0%
Elko 18,914 7.2% 7.6% 73.2% 12.0%
Esmeralda 178 15.7% 11.8% 36.0% 37.1%
Eureka 679 7.6% 10.1% 64.4% 18.0%
Humboldt 6,258 6.5% 7.2% 73.9% 12.4%
Lander 1,034 11.7% 7.2% 57.8% 23.3%
Lincoln 836 12.1% 16.6% 41.4% 29.8%
Lyon 12,554 6.7% 6.1% 65.7% 21.5%
Mineral 1,534 6.9% 6.6% 68.8% 17.7%
Nye 10,818 8.5% 7.5% 60.7% 23.3%
Pershing 1,484 9.1% 6.4% 68.6% 16.0%
Storey 639 23.5% 11.0% 35.2% 30.4%
Washoe 219,602 7.0% 6.6% 73.8% 12.6%
White Pine 2,613 9.3% 11.2% 59.3% 20.1%
Carson City 32,010 9.9% 7.9% 62.6% 19.6%
Nevada 1,252,934 6.5% 5.9% 74.6% 13.1%

Source: U.S. Department of Commerce. Nonemployer Statistics. U.S. Census Bureau, Economic Planning and Coordination Division, Register Analysis Branch, 2005. U.S. Department of Commerce. County Business Patterns. U.S. Census Bureau, Economic Planning and Coordination Division, Register Analysis Branch, 2005.

Map of employee shares in 2005 from the table above

Employees

Table 3 examines the employee shares by firm size. Each nonemployer firm was assigned one employee to represent the business owner. For all but one county the majority of employees work in firms with 10 employees or more. Esmeralda County is the lone exception, with 37.1 percent of individuals working in nonemployer firms versus 36 percent of its employees working in firms of 10 or more employees. Clark County has the highest percentage of employees (76.1 percent) working in large firms, while Storey County has the lowest percentage of workers (35.2 percent) employed by firms of 10 or more employees.

In 11 counties in 2005, there were more nonemployer firms than employees working in establishments with less than 10 employees. Esmeralda County had the greatest percentage of individuals in nonemployer firms (37.1 percent), while Elko County had the lowest percentage of workers (12.0 percent) in nonemployer firms.

Nonemployer Statistics by Industry

Table 4 depicts the growth in nonemployer establishments by industry in the state of Nevada from 2003 to 2005. In 2005, more than one-third of all nonemployer firms were in the Real Estate and Rental and Leasing Sector and the Professional, Scientific and Technical Services Sector, accounting for more than 43 percent of total receipts.

Overall, Nevada experienced a 14.6-percent growth in nonemployer establishments from 2003 to 2005. All sectors had some positive growth during this period. The sector experiencing the highest growth in establishments was the Real Estate and Rental and Leasing Sector with a 31-percent increase.

The sector with the smallest establishment growth rate over this period was the Manufacturing Sector, which experienced just a 0.5-percent increase.

The changes in nonemployer receipts by industry are also shown in Table 4. In Nevada, each sector experienced higher nonemployer receipts in 2005 than 2003. Overall, Nevada nonemployer receipts increased by 22.1 percent over the 2-year period. The Utilities Sector had the highest growth rate with a 44.8-percent increase in total receipts. The Accommodation and Food Service Sector had the lowest growth rate in total receipts for nonemployer firms, experiencing a modest 4.9-percent increase.

Table 4. Nevada Nonemployment Statistics by NAICS Sector, 2003-2005
NAICS Sector 2003 Nonemployer Establishments Number 2003 Receipts($1000) 2005 Nonemployer Establishments Number 2005 Receipts($1000) Percent Change 2003-2005 Number 2003-2005 Receipts
Forestry and Ag Services 647 23,162 686 26,418 6.0% 14.1%
Mining 333 16,596 380 23,539 14.1% 41.8%
Utilities 67 3,738 86 5,411 28.4% 44.8%
Construction 9,467 615,803 10,785 734,285 13.9% 19.2%
Manufacturing 1,949 127,164 1,959 140,249 0.5% 10.3%
Wholesale trade 3,130 295,004 3,215 316,232 2.7% 7.2%
Retail trade 13,994 691,641 14,877 744,543 6.3% 7.6%
Transportation and Warehousing 4,403 263,307 5,179 352,073 17.6% 33.7%
Information 2,555 139,179 2,920 179,018 14.3% 28.6%
Finance and Insurance 9,132 678,716 10,549 762,591 15.5% 12.4%
Real Estate and Rental and Leasing 24,288 1,989,118 31,810 2,739,518 31.0% 37.7%
Professional, Scientific and Technical Services 22,190 1,239,623 24,179 1,475,139 9.0% 19.0%
Administrative and Waste Management 8,753 311,679 9,686 370,271 10.7% 18.8%
Educational Services 1,840 38,839 2,321 46,725 26.1% 20.3%
Health Care and Social Assistance 8,146 371,113 9,144 417,032 12.3% 12.4%
Arts, Entertainment and Recreation 10,383 493,809 12,001 600,344 15.6% 21.6%
Accommodation and Food Service 1,789 128,302 1,997 134,556 11.6% 4.9%
Other Services 19,663 583,563 21,738 710,731 10.6% 21.8%
Total 142,729 8,010,356 163,512 9,778,675 14.6% 22.1%

Source: U.S. Department of Commerce. Nonemployer Statistics. U.S. Census Bureau, Economic Planning and Coordination Division, Register Analysis Branch, 2005.

Conclusion

Nonemployer firms comprise nearly 75 percent of all businesses in Nevada. From 1997 to 2005, Nevada experienced a 74.4-percent increase in nonemployer establishments, outpacing the national growth rate by more than 42 percent. Additionally in 2005, nonemployer firms outnumbered all individuals working in firms with less than 10 employees. Considering this information, it is important to further examine the impacts of rural nonemployer establishments in Nevada and the western United States.

Price, S. and Harris, T. 2008, Trends in Nonemployer Statistics in Nevada (2005), Extension | University of Nevada, Reno, FS-08-13

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