— President-elect Joe Biden, in an exchange in a video posted on Twitter by the Biden-Harris transition team, Jan. 15
The incoming Biden administration, promoting its efforts to help small businesses during the pandemic, posted a video showing a conversation between Biden and the owner of a fledgling empanadas enterprise in Miami. The video, detailing her struggles to keep alive the business during the pandemic, has been viewed more than 1 million times.
As part of the conversation, Zavala made a pitch for helping small businesses, especially those with 10 or fewer people. Biden made the observation that “mom-and-pop small businesses” employ more people than “big corporations.”
Is Biden right? Well, it depends on what counts as a “mom-and-pop” small business — and a “big corporation.”
The Small Business Administration, in a fact sheet using Census Bureau data from 2013, says that 48 percent of workers at private employers are employed at small businesses, defined as 499 employees or fewer. That means 52 percent would work at companies of 500 or more.
On top of that, Zavala had mentioned a business of 10 people or fewer. The SBA fact sheet says just 17 percent of workers work at companies with under 20 people.
But the Biden-Harris transition team responded with 2020 Bureau of Labor Statistics data (from the Business Employment Dynamics quarterly census) that shows a slight edge for the businesses with less than 500 people — accounting for 52 percent of employment, compared with 48 percent for companies with more than 500 people.
It’s a close call either way, but are firms with fewer than 500 people really “mom-and-pop” businesses? The same BLS data shows that just under 10 percent are employed by companies with fewer than 10 employees — the firm size mentioned by Zavala that prompted Biden’s comment.
The transition team declined to explain what Biden means by “mom-and-pop” businesses, pointing instead to the SBA’s definition of a small business.
Zavala told the Miami Herald she wanted more help for “the true small businesses — the ones with five people, 10 people.” She said her business had fallen 60 percent during the pandemic, and she struggled to get a PPP loan, with the first two banks turning her down. “I was one of the few lucky ones,” she said. “But I had to hustle.”
In 2016, Half Moon employed 40 people, according to a profile in El Nuevo Herald. Zavala told The Fact Checker the company had about 100 employees before the pandemic and it has now shrunk to about 50 people.
At the same time, Biden also mentioned employment by “big corporations,” which would certainly narrow the number on the other side of the scale. The BLS data only has a statistic for companies with 1,000 or more employees, showing they employ 41 percent of the workforce.
But the Wall Street Journal in 2017 crunched Census Bureau data and found that companies with 10,000 or more employees (defined as “very large employers,” which would certainly include big corporations) employed nearly 28 percent of the U.S. workforce, compared with just over 34 percent for companies with under 100 workers (defined by the Journal as “small” businesses). So that comparison affirms Biden’s observation, though, ironically, the article was about how Americans increasingly were more likely to work at a large company rather than a small one.
“The coronavirus outbreak has plunged our economy into the worst downturn since the Great Depression, shuttering thousands of small businesses that American workers rely on for jobs,” said transition spokesman Andrew Bates. “Saving and strengthening small businesses is at the heart of President-elect’s American Rescue Plan, which leaders ranging from the Business Roundtable to Senator Bernie Sanders have welcomed.”
The Pinocchio Test
This is a good example of how definitions can make a difference in terms of accuracy. What’s a “mom-and-pop” business? What’s a “big corporation”? What’s even a small business — fewer than 500 people, 100 people or 10 people?
Biden was responding to a comment about very small businesses: 10 and under. But he did not necessarily embrace it as his definition of small business. His observation about “mom-and-pop small businesses” versus “big corporations” would be wrong if one looks only at the companies of smaller than 10 people. But depending on the metrics one uses, Biden is either narrowly correct — or just slightly off. So we will leave this unrated.
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