Introduction

In 2007, 7.7 million firms had employees and another 21.7 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 2007, Nevada had the highest growth rate of nonemployer establishments with an increase of 86.1 percent. Overall, Western states experienced a higher growth rate (41.5 percent) in nonemployer establishments than the nation (40.6 percent), despite Alaska having the lowest growth rate in the nation.

Table 1. Nonemployer Establishment Growth in Western United States, 1997 to 2007
State Nonemployers 1997 Nonemployers 2007 Change Percentage Change National Rank
Nevada 93,777 174,492 80,715 86.1% 1
Arizona 240,925 389,134 148,209 61.5% 4
Utah 126,190 188,841 62,651 49.6% 10
Idaho 79,240 114,338 35,098 44.3% 13
California 1,936,556 2,757,179 820,623 42.4% 16
Colorado 303,196 426,017 122,821 40.5% 17
Hawaii 70,203 96,263 26,060 37.1% 22
Washington 315,367 412,651 97,284 30.8% 27
Wyoming 34,179 43,950 9,771 28.6% 30
New Mexico 96,964 123,567 26,603 27.4% 33
Montana 67,187 83,999 16,812 25.0% 40
Oregon 209,846 261,731 51,885 24.7% 43
Alaska 48,964 53,615 4,651 9.5% 51
Western States 3,622,594 5,125,777 1,503,183 41.5%  
United States 15,439,609 21,708,021 6,268,412 40.6%  

Source: U.S. Department of Commerce. Nonemployer Statistics. U.S. Census Bureau, Economic Planning and Coordination Division, Register Analysis Branch, 1997 and 2007.

Establishments

Table 2 shows the establishment shares by firm size in 2007 for each county in Nevada as well as the state overall. In 2007, nonemployer firms comprised between 66.2 percent and 81.2 percent of all establishments in the Nevada counties. Esmeralda County had the greatest percentage of establishments having no employees, with 69 of 85 establishments (81.2 percent) as nonemployer firms. Elko County had the smallest percentage of nonemployer firms with 2,166 (66.2 percent) establishments having no employees.

Humboldt County had the greatest percentage of large establishments, with 10.3 percent of its firms having 10 employees or more. Storey County had the lowest percentage of large firms, with just 2.6 percent of its firms having 10 or more employees.

Establishments by Firm Size 2007

Map of Nevada's 2007 establishment shares by firm size in 2007 to show that many firms had no employees

Table 2. Establishment Shares by Firm Size 2007
Area Name Total Establishments Firms with 1-4 Employees Firms with 5-9 Employees Firms with 10 or More Employees Nonemployer Firms
Churchill 1,900 14.6% 6.5% 8.1% 70.9%
Clark 164,281 13.4% 4.5% 7.4% 74.6%
Douglas 6,901 14.6% 4.6% 5.1% 75.7%
Elko 3,274 17.3% 7.2% 9.3% 66.2%
Esmeralda 85 11.8% 3.5% 3.5% 81.2%
Eureka 146 13.0% 2.7% 5.5% 78.8%
Humboldt 1,208 15.4% 7.5% 10.3% 66.8%
Lander 335 17.3% 3.9% 6.9% 71.9%
Lincoln 362 14.4% 5.5% 5.8% 74.3%
Lyon 3,754 12.4% 4.6% 5.3% 77.7%
Mineral 346 13.0% 4.3% 4.6% 78.0%
Nye 3,363 13.4% 4.8% 5.5% 76.2%
Pershing 310 18.7% 4.8% 5.2% 71.3%
Storey 392 19.4% 2.3% 2.6% 75.8%
Washoe 41,457 15.9% 5.8% 8.7% 69.6%
White Pine 808 15.5% 5.4% 6.4% 72.6%
Carson City 8,296 17.4% 4.8% 6.3% 71.5%
Nevada 237,331 14.1% 4.8% 7.5% 73.5%

Source: U.S. Department of Commerce. Nonemployer Statistics. U.S. Census Bureau, Economic Planning and Coordination Division, Register Analysis Branch, 2007. U.S. Department of Commerce. County Business Patterns. U.S. Census Bureau, Economic Planning and Coordination Division, Register Analysis Branch, 2007.

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 greatest percentage of employees works in large firms (10 or more employees). Storey County is the exception, with 38.1 percent of individuals working in nonemployer firms versus 36.6 percent of its employees working in firms of 10 or more employees. Eureka County has the highest percentage of employees (84.7 percent) working in large firms, while Storey County has the lowest percentage of workers (36.6 percent) employed by large firms.

In 11 counties in 2007, there were more nonemployer firms than employees working in establishments with less than 10 employees. Storey County had the greatest percentage of individuals in nonemployer firms (38.1 percent), while Elko County had the lowest percentage of workers (8.7 percent) in nonemployer firms.

Employees by Firm Size 2007

Map of Nevada's employee shares by firm size in 2007 to show that there were 10 or more employees

Table 2. Establishment Shares by Firm Size 2007
Area Name Total Employees Firms with 1-4 Employees Firms with 5-9 Employees Firms with 10 or More Employees Nonemployer Firms
Churchill 7,910 7.7% 9.6% 65.6% 17.0%
Clark 988,543 5.8% 5.5% 76.3% 12.4%
Douglas 26,095 9.4% 8.3% 62.3% 20.0%
Elko 24,879 6.2% 7.2% 77.9% 8.7%
Esmeralda 212 9.9% 8.4% 49.1% 32.5%
Eureka 1,242 3.8% 2.3% 84.7% 9.3%
Humboldt 7,902 5.4% 7.5% 76.9% 10.2%
Lander 1,940 7.1% 4.5% 76.0% 12.4%
Lincoln 955 12.1% 13.0% 46.8% 28.2%
Lyon 13,808 7.7% 7.9% 63.3% 21.1%
Mineral 1,540 7.3% 6.8% 68.3% 17.5%
Nye 11,328 9.0% 9.0% 59.4% 22.6%
Pershing 1,355 8.8% 6.4% 68.6% 16.3%
Storey 780 19.0% 6.3% 36.6% 38.1%
Washoe 231,816 6.7% 6.9% 74.0% 12.5%
White Pine 3,371 9.3% 9.2% 64.1% 17.4%
Carson City 31,153 10.4% 8.1% 62.4% 19.1%
Nevada 1,370,298 3.9% 5.6% 77.8% 12.7%

Source: U.S. Department of Commerce. Nonemployer Statistics. U.S. Census Bureau, Economic Planning and Coordination Division, Register Analysis Branch, 2007. U.S. Department of Commerce. County Business Patterns. U.S. Census Bureau, Economic Planning and Coordination Division, Register Analysis Branch, 2007.

Nonemployer Statistics by Industry

Table 4 depicts the growth in nonemployer establishments by industry in the state of Nevada from 2003 to 2007. In 2007, more than a 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 31 percent of total receipts.

Overall, Nevada experienced 22.3 percent growth in nonemployer establishments from 2003 to 2007. All sectors had some positive growth during this period. The sector experiencing the highest growth in establishments was the Utilities Sector with a 64.2 percent increase. The sector with the smallest establishment growth rate over this period was the Wholesale Trade Sector, which experienced an 8.6 percent increase.

 The changes in nonemployer receipts by industry are also shown in Table 4. In Nevada, each sector experienced higher nonemployer receipts in 2007 than 2003. Overall, Nevada nonemployer receipts increased by 21.8 percent over the four-year period. The Utilities Sector had the highest growth rate with an 82.7 percent increase in total receipts. The Manufacturing Sector had the lowest growth rate in total receipts for nonemployer firms, experiencing a modest 8.4 percent increase.

Table 1. Eureka County Demographics, Area and Agricultural Data (Nonemployer Establishments by year)
NAICS Sector 2003 Number 2003 Receipts ($1000) 2007 Number 2007 Receipts ($1000) 2003-2007 Number 2003-2007 Receipts
Forestry and Ag Services 647 23,162 772 30,006 19.3% 29.5%
Mining 333 16,596 387 29,582 16.2% 78.2%
Utilities 67 3,738 110 6,829 64.2% 82.7%
Construction 9,467 615,803 10,973 694,548 15.9% 12.8%
Manufacturing 1,949 127,164 2,217 137,893 13.8% 8.4%
Wholesale trade 3,130 295,004 3,399 350,357 8.6% 18.8%
Retail trade 13,994 691,641 16,317 792,440 16.6% 14.6%
Transportation and Warehousing 4,403 263,307 5,826 395,504 32.3% 50.2%
Information 2,555 139,179 3,121 186,398 22.2% 33.9%
Finance and Insurance 9,132 678,716 10,494 800,097 14.9% 17.9%
Real Estate and Rental and Leasing 24,288 1,989,118 30,284 2,231,931 24.7% 12.2%
Professional, Scientific and Technical Services 22,190 1,239,623 26,404 1,526,344 19.0% 23.1%
Administrative and Waste Management 8,753 311,679 12,897 421,406 47.3% 35.2%
Educational Services 1,840 38,839 2,865 49,125 55.7% 26.5%
Health Care and Social Assistance 8,146 371,113 9,768 477,979 19.9% 28.8%
Arts, Entertainment and Recreation 10,383 493,809 13,336 690,364 28.4% 39.8%
Accommodation and Food Service 1,789 128,302 2,171 144,687 21.4% 12.8%
Other Services 19,663 583,563 23,151 792,503 17.7% 35.8%
Total 142,729 8,010,356 174,492 9,757,993 22.3% 21.8%

Source: U.S. Department of Commerce. Nonemployer Statistics. U.S. Census Bureau, Economic Planning and Coordination Division, Register Analysis Branch, 2007.

Conclusion

Nonemployer firms comprise nearly 75 percent of all businesses in Nevada. From 1997 to 2007, Nevada experienced an 86.1 percent increase in nonemployer establishments, outpacing the national growth rate by more than 45.5 percent. Additionally in 2007, 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.

MontBlanc, E., Harris, T., and Price, S. 2007, 2007 Trends in Nonemployer Statistics in Nevada, Extension | University of Nevada, Reno, FS-09-34

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