Founder Data ReportTwo Thirds of American Workplaces Have Fewer Than Five People on the Payroll
You can’t afford to risk your business without a Sidekick at your side.
Everyone says most businesses are small. Almost nobody has looked at how small. The government counts every workplace in the country four times a year, and once a year it sorts them by the size of the payroll.
The U.S. Bureau of Labor Statistics counts every workplace with at least one job covered by unemployment insurance. In the first quarter of 2025 there were 11,657,676 of them in the private sector, holding 131.34 million jobs. 7,826,020 of those workplaces — 67.1% — had fewer than five people on the payroll. Nearly nine in ten had fewer than twenty. The same workplaces hold a small share of the work: the under-five group accounts for 8.0% of private-sector employment, and everything under twenty accounts for 26.9%.
- In 2025Q1 the United States had 11,657,676 private workplaces holding 131.34 million jobs.
- 7,826,020 of them — 67.1% — had fewer than five people on the payroll.
- 89.7% had fewer than twenty. 96.2% had fewer than fifty.
- Those under-five workplaces hold 8.0% of private-sector jobs. The under-twenty group holds 26.9%.
- Workplaces with 250 or more people are 0.5% of the total and hold 27.2% of the jobs.
- The average private workplace employs 11.3 people. Because two thirds have fewer than five, the median one is far below that average.
Two thirds of the country’s workplaces would fit around one table
Start with the raw count. Of 11,657,676 private workplaces, 7,826,020 reported fewer than five people on the payroll — 67.1% of everything the government counts. Add the next band and 89.7% have fewer than twenty. Add one more and 96.2% have fewer than fifty. The share of workplaces falls at every single step up in size, without exception, all the way to the top of the scale.
One thing has to be said plainly before any of this is used, because it changes what the numbers mean. QCEW counts establishments — single physical locations — not companies. A chain with four hundred stores appears here as four hundred workplaces, most of them small. So this is a fact about how work is arranged across the country, not a count of independent businesses. It also covers employers only: every business with no employees at all — the Schedule C filers we looked at last week — is not in this file anywhere.
Both bars run on one axis to 100%, so the two can be read against each other. Each row is cumulative — it counts every workplace at or below that size. Slate is the share of workplaces; orange is the share of jobs. Read the ratio between each pair: at the tightest threshold the jobs bar is 11.9% of the workplaces bar, and it climbs to 58.1% at the loosest.
Source: U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages, private ownership, all industries, United States, first quarter 2025, by establishment size class, retrieved from the BLS open CEW data API on September 12, 2026. QCEW counts establishments — single physical locations — not firms.
The jobs are somewhere else
Run the same size classes against employment instead of establishment counts and the picture inverts. The under-five group, two thirds of all workplaces, holds 8.0% of private-sector jobs. At the other end, in the full nine-class detail, workplaces with 250 or more people are 0.5% of the total — fewer than one in two hundred — and they hold 27.2% of the jobs.
The job distribution is not simply the establishment distribution turned upside down. It peaks in the middle: the largest single share of private-sector employment, 17.2%, sits in workplaces with 20 to 49 people. Most American jobs are not at a tiny employer and not at a giant one. They are at a place with a few dozen people in it.
Bars run on a shared axis to 35% of all private-sector employment. These are shares of jobs, not of workplaces. The distribution is not a straight line down: it rises to a peak in the middle of the range and falls away at both ends. These five bands collapse the nine BLS size classes; in the full nine-class detail the single largest share is 20 to 49 people at 17.2%.
Source: U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages, private ownership, all industries, United States, first quarter 2025, by establishment size class, retrieved from the BLS open CEW data API on September 12, 2026. QCEW counts establishments — single physical locations — not firms.
What the average hides
Divide the jobs by the workplaces and the average private workplace employs 11.3 people. That number is close to useless as a description of a typical workplace, and the distribution shows why. A single band — fewer than five — holds 67.1% of all workplaces, which is more than half on its own, so the median workplace sits inside it. The average is being dragged upward from the other end, by the 0.2% of workplaces with 500 or more people, where a single location can hold thousands.
This is the ordinary shape of a skewed distribution, and it is the reason “the average small business” is such a slippery phrase. The average describes almost nobody. Drawn to scale, the composition is stark: one segment takes up two thirds of the bar and the top two bands are thin enough that they cannot carry a label.
One bar, every private workplace in the United States, drawn to scale. The last two segments are genuinely that thin: workplaces with 100 or more people are 1.6% of the total. The legend carries every figure, because at this scale the smallest segments cannot be labelled.
Source: U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages, private ownership, all industries, United States, first quarter 2025, by establishment size class, retrieved from the BLS open CEW data API on September 12, 2026. QCEW counts establishments — single physical locations — not firms.
Two thirds of the workplaces in the country have fewer than five people in them. If that is you, you are not operating below scale. You are the scale.
If you are one of the seven point eight million
Founders running a business of three or four people tend to describe themselves as being at the start of something — as if the real business begins at fifteen or fifty. The count says otherwise. Fewer than five on the payroll is not an early stage of the economy. It is the most common arrangement in it, by a margin of roughly three to one over the next band up the scale.
What the second chart adds is the other half of the truth, and it is worth holding both at once. Being typical in number is not the same as being typical in weight: the under-five group is 67.1% of the workplaces and 8.0% of the jobs. The lesson is not that small workplaces are marginal. It is that the advice, the software and the benchmarks aimed at “small business” are usually written for the band where the employment sits — twenty to a hundred people — and then sold to the two thirds who are nowhere near it. Read every benchmark asking which of those two groups it was built for.
Source: U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages, private ownership, all industries, United States, first quarter 2025, by establishment size class, retrieved from the BLS open CEW data API on September 12, 2026. QCEW counts establishments — single physical locations — not firms.
Frequently Asked Questions
How many small businesses are there in the United States?
The BLS Quarterly Census of Employment and Wages counted 11,657,676 private establishments in the first quarter of 2025, of which 7,826,020 — 67.1% — had fewer than five people on the payroll and 89.7% had fewer than twenty. Note that these are establishments, meaning single physical locations, rather than firms, and that businesses with no employees are not included.
What percentage of businesses have fewer than 5 employees?
67.1% of U.S. private establishments had fewer than five employees in 2025Q1 — 7,826,020 workplaces. They account for 8.0% of private-sector employment.
What is the average number of employees at a US business?
The average private establishment employed 11.3 people in 2025Q1 (131.34 million jobs across 11,657,676 establishments). The average is a poor guide to the typical case: because 67.1% of establishments have fewer than five people, the median establishment falls well below the average.
Do small businesses employ most American workers?
Not at the smallest sizes. Establishments with fewer than twenty people are 89.7% of all private establishments but hold 26.9% of private-sector jobs. You have to go up to establishments with fewer than a hundred people — 98.4% of the total — before the group holds a majority of jobs, at 57.1%.
Does QCEW count businesses or locations?
Locations. QCEW counts establishments — economic units at a single physical location — so a company operating in fifty places is counted fifty times. It also covers only employers whose jobs are covered by unemployment insurance, which means businesses with no employees do not appear in it at all.
Published by The Lonely Entrepreneur — the community and coaching platform for entrepreneurs who are building alone. lonelyentrepreneur.com
This article is for educational purposes and is not a substitute for professional financial or legal advice.