Small business employment and revenue fall in Q4-2024

In the final quarter of 2024, US small business employment fell by 16,800 jobs (-0.13%) to 13,132,700. Over the same period, average real revenue fell by $6,300 per business to $151,880.* The 4.06% quarterly decline in revenue was the fastest since Q4-2019, when the Small Business Index began tracking revenue.

Higher interest rates contributed to these challenges. The recent Small Business Index Annual Report by Professor Ufuk Akcigit et al. found small businesses have had up to 30% lower revenue growth and up to 4% lower employment growth due to difficulty accessing financing. Despite the overall downward trend, however, three sectors enjoyed strong employment growth in Q4-2024. See table below for details.

Largest decline in leisure and hospitality sector employment but utilities sector enjoys exceptional jobs growth

The leisure and hospitality sector (NAICS 71-72) lost more small business jobs than any other sector in Q4-2024. Over the same period, data from the U.S. Bureau of Labor Statistics shows overall employment in the sector increased by 87,000 jobs (0.51%). This indicates jobs have moved from smaller to larger businesses. The leisure and hospitality sector also shows declining real revenue at small businesses in Q4-2024—down by $4,980 per business to a quarterly average of $97,810. Use the green button on the table above to see quarterly revenue data.

Returning to employment, the utilities sector (NAICS 22) was the standout performer in Q4-2024. Despite providing less than 1% of small business jobs in the US, the sector had the largest increase in small business employment of all 12 sectors tracked by the Small Business Index, adding 11,700 jobs. The 17.42% quarterly growth rate was the sector’s fastest since Q3-2015, which is when the Small Business Index’s employment records begin.

While small business employment in the utilities sector grew apace in Q4-2024, average real revenue did not (see table, above). In fact, the sector shows the largest quarterly decline in revenue of all 12 sectors tracked by the Small Business Index (-$20,090 per business).

Mideast and Far West both lose 6,000 small business jobs, but New England and the Great Lakes maintain growth

Regionally, the Mideast (Delaware, District of Columbia, Maryland, New Jersey, New York, Pennsylvania) and the Far West (Alaska, California, Hawaii, Nevada, Oregon, Washington) had the largest declines in small business employment in Q4-2024 (see table above for details). State-level data shows New York (-4,400 jobs) and California (-2,100 jobs) made significant contributions, respectively, to these regional declines (see table below for details). In the Southwest, Texas had 4,000 fewer small business jobs in Q4-2024. 

New England (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont) and the Great Lakes (Illinois, Indiana, Michigan, Ohio, Wisconsin) fared better in Q4-2024. Both regions enjoyed four consecutive quarters of small business employment growth in 2024. State-level data is not currently available in New England but in the Great Lakes region, Michigan and Illinois had notable growth in Q4, adding 1,900 and 1,600 jobs, respectively. 

Turning back to revenue, all eight US regions show declines in Q4-2024. Similar to employment, the Far West region shows the largest decline. Use the green button on the table above to see the latest quarterly revenue data by region. The table below shows state-level data.

* Note: The Index is deflated to 2017 dollars to remove the impact of inflation and track real changes in revenue. It is also seasonally adjusted.