Contents

Main Page
Introduction
Defining and Identifying Small Business Industries
Small Business Industries and Related Measures of Risk
Results
Discussion
Reference
Appendix

Defining and Identifying Small Business Industries

Small Business Establishments

Definitions for small business establishments vary slightly among agencies, as shown in Table 2. The U.S. Office of Management and Budget (OMB) defines an establishment as an economic unit, generally at a single physical location, where business is conducted or where services or industrial operations are performed [OMB 1987]. The BLS recognizes small business establishments in one citation as those having fewer than 100 employees [Wiatrowski 1994] and in another as those having fewer than 50 employees [BLS 1997c]. NOES defines small business establishments as those having fewer than 100 employees [Pedersen and Sieber 1988], whereas the OSHA Susan Harwood Training Grants Program defines them as those having 250 or fewer employees.

The SBA defines a business on the basis of company* size (i.e., the number of employees or the maximum annual revenue) to determine its eligibility for Federal assistance. Employment totals are used to determine eligibility in the following classifications: mining (fewer than 500employees); manufacturing (fewer than 500 to 1,000 employees, depending on the industry); transportation and public utilities (fewer than 500 to 1,500 employees, depending on the industry); and wholesale trade (fewer than 100 employees) [SBA 1997].

In this report, a small business establishment is considered a regional or branch office, storage facility, family-operated store, or any other business with fewer than 100 employees at a single site. Special trade contractors such as carpenters would also meet this definition when operating as a distinct economic unit with fewer than 100 employees at a single site.

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Description of the County Business Patterns 1994

The number of small business establishments and the number of employees who work in these establishments were obtained from the County Business Patterns 1994 [Bureau of the Census 1996]. These data are compiled annually by the U.S. Bureau of the Census. Data in the County Business Patterns series are presented by industry as defined in the Standard Industrial Classification Manual:1987 [OMB 1987]. All major economic divisions within private industry are represented in County Business Patterns, although the series does not include data on self- employed persons, domestic service employees, railroad employees, agricultural production workers, most government employees, and employees on oceanborne vessels in foreign countries.

According to the County Business Patterns 1994 [Bureau of the Census 1996], all private industry for that year consisted of 6.5 million establishments with 96.7 million employees. Allowing that small business establishments are those with fewer than 100 employees,

—more than 6.3 million small business establishments employed 53 million employees in private industry in 1994,

—98% of all private industry workplaces met the definition of small business establishments, and

—56% of the entire U.S. workforce in private industry was employed in such establishments [Bureau of the Census 1996].

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SIC Codes

The U.S. Government SIC codes group business establishments by the type of activity they perform or the product they manufacture [OMB 1987]. This multi- layer system proceeds from general industrial groupings (divisions) to specific industries. The 11 major industrial divisions include the following:

• Division A—Agriculture, Forestry, and Fishing (SIC 0109)
• Division B—Mining (SIC 1014)
• Division C—Construction (SIC 1517)
• Division D—Manufacturing (SIC 2039)
• Division E—Transportation, Communications, and Public Utilities (SIC 4049)
• Division F—Wholesale Trade (SIC 5051)
• Division G—Retail Trade (SIC 5259)
• Division H—Finance, Insurance, and Real Estate (SIC 6067)
• Division I—Services (SIC 7089)
• Division J—Public Administration (SIC 9197)
• Division K—Nonclassifiable Establishments (SIC 99)

The broad division categories (e.g., Division B, Mining) are divided into (1) major groups with two-digit codes (e.g., Major Group 14, Mining and Quarrying of Nonmetallic Minerals Except Fuels), (2) industry groups with three-digit codes (e.g., SIC 142, Crushed and Broken Stone), and (3) individual industries with four-digit codes (e.g., SIC 1422, Crushed and Broken Limestone). Activities or products associated with business establishments are most similar for establishments in the same four-digit SIC code. At this level, hazards and their effects are most likely to be similar among establishments. Preventive measures are also more likely to be generally applicable to the establishments classified together at the four-digit level. However, within some four-digit classifications, the types of activities performed are still significantly variable. An example of this variability occurs in SIC code 7539, Automobile Repair Shops, not elsewhere classified (NEC). This four-digit SIC code includes radiator repair shops as well as frame repair and automotive electrical repair.

OMB has developed a new classification system that will replace the SIC codes. The manual for the North American Industry Classification System (NAICS)—United States, 1997 [OMB 1998] was released in 1998. The NAICS uses a six-digit classification code that allows for greater flexibility in the coding structure compared with the four-digit SIC codes. The new system also provides more detail for newly developed service industries such as information services, health care provision, and high-tech manufacturing at the most basic level of industrial aggregation [Murphy 1998]. However, the transition from SIC codes to NAICS is expected to be difficult and is only in the initial stages. Therefore, data used for this investigation are limited to the four-digit SIC level and in many cases are available only at the three-digit SIC level.

In the County Business Patterns data as well as in the occupational injury, illness, and fatality data prepared by the BLS, data are not consistently available for each of the more than 900 four-digit SICs. Often data are available only at the three-digit level and occasionally at the two-digit level. The BLS annual Survey of Occupational Injuries and Illnesses (SOII) [BLS 1997c] is designed to provide information at the four-digit SIC level for manufacturing industries only and at the three-digit SIC level for all other industries. Despite the decreasing specificity of activities and hazards at the three-digit SIC level, occupational injury, illness, and fatality data for certain three-digit codes may nevertheless be important for this investigation when information at the four-digit level is lacking.

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Criterion for Small Business Industries

Small business establishments (those with fewer than 100 employees) are more prominent in some industry divisions than others (Table 1). Among the major industrial divisions, Services (SIC 7089), Retail Trade (SIC 5259), and Manufacturing (SIC 2039) have the greatest numbers of employees in establishments with fewer than 100 employees (33.2 million, 20.3million, and 18 million workers, respectively). Agriculture (SIC 0109) (87%), Construction (SIC 1517) (79%), Retail Trade (SIC 5259) (76%), and Wholesale Trade (SIC5051) (74%) have the highest percentages of employees in small business establishments.

Although the figures in Table 1 demonstrate that small business establishments exist in all major industry groups, this report distinguishes between a small business establishment and a small business industry. To identify industries that consist predominantly of small business establishments, small business industries were defined as those with SIC codes in which at least 80% of the employees work in establishments with fewer than 100 employees. The concept of a small business industry was used to help provide information about industrial segments consisting primarily of small business establishments and to determine which of these may be in greatest need of occupational safety and health prevention activities. By convention, 100employees was used as the cut-off for defining small business establishments—as previously established for NIOSH surveillance projects (Table 2). Many of the small business establishments with fewer than 100 employees are also much smaller, with fewer than 20 or even 10 employees. Small business establishments exist in all industries, but the intent of this investigation is to identify industries that are predominantly composed of small business establishments. Somewhat more arbitrary was the decision to limit small business industries to industries with SIC codes in which at least 80% (versus 70%, 75%, or 90%) of the employees work in establishments with fewer than 100 employees. Although choosing one of the latter numbers might have excluded some SIC codes or included others, it is unlikely that it would have had much influence on which small business industries were identified using this criterion. Ultimately, 253 SIC codes were identified as small business industries from a total of 936 four-digit SIC codes.

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Introduction

Related Measures of Risk