Number of Non-employer Firms in State Continues to Shrink in 2009, Census Bureau Reports

TUSCALOOSA, Ala. — The number of non-employer businesses in Alabama that exploded between 2003 and 2004 took a drastic hit from the recession that started in 2007, according to new data from the U.S. Census Bureau.

According to Annette Watters, manager of the Alabama Data Center at The University of Alabama’s Culverhouse College of Commerce, the number of non-employer businesses, those without paid employees, declined by more than 8,300 between 2007 and 2009 across Alabama.

“Real estate agents, beauticians, and construction contractors are some examples of non-employer businesses,” Watters said.

In 2009, there were 305,420 non-employer firms in Alabama, a decrease of about 2.6 percent from 2007. This continues a decline first noticed following the beginning of the recession at the end of 2007.

“Non-employer firms generate a small percentage of total U.S. business receipts, but they constitute the majority of U.S. businesses,” said William G. Bostic Jr., associate director for economic programs at the U.S. Census Bureau. “The decline we have seen reflects the change in economic conditions during that time.”

These new figures released are from Non-employer Statistics: 2009, an annual report on businesses without paid employees. Data are available at the national, state, county and metropolitan area levels.

The non-employer businesses in this survey have annual receipts of $1,000 or more (except the construction industry, which includes receipts of $1 or more) and are subject to federal income taxes. Most non-employers are self-employed. Their businesses may or may not be their primary source of income.

Watters said real estate-related industries showed the largest decline in Alabama, responding to the housing market downturn, with lessors of real estate, offices of real estate agents and brokers, and activities related to real estate (such as those who appraise real estate or manage it for others) losing about 5,512 firms combined across the state between 2007 and 2009.

Overall, Alabama non-employer businesses generated approximately $10.7 billion in receipts during 2009, down from $13.5 billion in 2007.

Other highlights:

• Construction trades make up the largest number and percent of non-employer businesses in Alabama.  And non-employer construction businesses took big losses in Alabama between 2007 and 2009, going from 53,028 non-employer businesses in 2007 to 45,671 in 2009. (Non-employer statistics exclude businesses with paid employees.)

• Other hard hit sectors were trucking and retail trade. Each of those industry groups lost more than 2,000 non-employer businesses in Alabama between 2007 and 2009.

• In some sectors of the economy, non-employer businesses increased in Alabama between 2007 and 2009, contrary to the general trend. Non-employer businesses in the areas of health care, food service, administrative and support, waste management and remediation services, educational services and “other” services actually increased in number. “Other” services include hair, skin, nail and beauty and barber shops, as well as household repair, upholstery and other repair businesses with no paid employees other than the owner.

The 2009 Alabama non-employer statistics data covered 279,497 sole proprietorships, 13,351 corporations and 12,572 partnerships.This federal survey provides the only detailed information on the total number of non-employer businesses and the receipts they earn, down to the county level.